Reference no: EM131062788
Comprehensive Problem 1, Period 2: The Accounting Cycle
During the month of May 20--, The General's Favorite Fishing Hole engaged in the following transactions. These transactions required an expansion of the chart of accounts as shown below.
Assets
101 Cash
122 Accounts Receivable
142 Office Supplies
144 Food Supplies
145 Prepaid Insurance
146 Prepaid Subscriptions
161 Land
171 Buildings
171.1 Accum. Depr.-Buildings
181 Fishing Boats
181.1 Accum. Depr.-Fishing Boats
182 Surround Sound System
182.1 Accum. Depr.-Surround Sound Sys.
183 Big Screen TV
183.1 Accum. Depr.-Big Screen TV
Liabilities
202 Accounts Payable
219 Wages Payable
Owner's Equity
311 Bob Night, Capital
312 Bob Night, Drawing
313 Income Summary
Revenues
401 Registration Fees
404 Vending Commission Revenue
Expenses
511 Wages Expense
512 Advertising Expense 521 Rent Expense
523 Office Supplies Expense
524 Food Supplies Expense
525 Telephone Expense 533 Utilities Expense
535 Insurance Expense
536 Postage Expense
537 Repair Expense
540 Depr. Exp.-Buildings
541 Depr. Exp.-Surround Sound Sys.
542 Depr. Exp.-Fishing Boats
543 Depr. Exp.-Big Screen TV
546 Satellite Programming Exp.
548 Subscriptions Expense
May 1 In order to provide snacks for guests on a 24-hour basis, Night signed a contract with Snack attack. Snack Attack will install vending machines with food and drinks and pay a 10% commission on all sales. Estimated payments are made at the beginning of each month. Night received a check for $200, the estimated commission on sales for May.
2 Night purchased a surround sound system and big screen TV with a digital satellite system for the guest lounge. The surround sound system cost $3,600 and has an estimated useful life of five years and no salvage value. The TV cost $8,000, has an estimated useful life of eight years, and has a salvage value of $800. Night paid cash for both items.
2 Paid for May's programming on the new digital satellite system, $125.
3 Night's office manager returned $100 worth of office supplies to Gordon Office Supply. Night received a $100 reduction on the account.
3 Deposited registration fees, $52,700.
3 Paid rent lodge and campgrounds for the month of May, $40,000.
3 In preparation for the purchase of a nearby campground, Night invested an additional $600,000.
4 Paid Gordon Office Supply on account, $400.
4 Purchased the assets of a competing business and paid cash for the following: land, $ 100,000; lodge, $530,000; and fishing boats, $9,000. The lodge has a remaining useful life of 50 years and a $50,000 salvage value. The boats have remaining lives of five years and no salvage value, Paid May's insurance premium for the new camp, $1,000. (See above transaction.)
5 Purchased food supplies from Acme Super. Market on account, $22 9,50.
5 Purchased office supplies from Gordon Office Supplies on account, $1,200.
7 Night paid $40 each for one-year subscriptions to Fishing Illustrated, Fishing Unlimited, and Fish Master. The magazines are published monthly.
10 Deposited registration fees, $62,750.
13 Paid wages to fishing guides, $30,000. (Don't forget wages payable.)
14 A guest became ill and was unable to stay for the entire week. A refund was issued in the amount of $1,000.
17 Deposited registration fees, $63,000.
I 9 Purchased food supplies from Acme Super Market on account, $18,400.
21 Deposited registration fees, $63,400.
23 Paid $2,500 for advertising spots on National Sports Talk Radio.
25 Paid repair fee for damaged boat, $850.
27 Paid wages to fishing guides, $30,000.
28 Paid $1,800 for advertising spots on billboards.
29 Purchased food supplies from Acme Super Market on account, $14,325.
30 Paid utilities bill, $3,300.
30 Paid telephone bill, $1,800.
30 Paid Acme Super Market on account,$47,350.
31 Bob Night withdrew cash forpersonal use, $7,500.
Adjustment information at the end of May is provided below.
(a) Total vending machine sales were $2,300 for the month of May. A 10% commission is earned on these sales.
(b) Straight-line depreciation is used for the 10 boats purchased on April 2 for $60,000. The useful life for these assets is five years and there is no salvage value. A full month's depreciation was taken in April on these boats. Straight-line depreciation is also used for the two boats purchased in May. Make one adjusting entry for all depreciation on the boats.
(c) Straight-line depreciation is used to depreciate the surround sound system.
(d) Straight-line depreciation is used to depreciate the big screen TV.
(e) Straight-line depreciation is used for the building purchased in May.
(f) On April 2, Night paid $9,000 for insurance during the six-month camping season. May's portion of this premium was used up during this month.
(g) Night received his May issues of Fishing Illustrated, Fishing Unlimited, and Fish Master.
(h) Office supplies remaining on hand, $150.
(i) Food supplies remaining on hand, $5,925.
(j) Wages earned, but not yet paid, at the end of May, $6,000.
REQUIRED
1. Enter the transactions in a general journal. Enter transactions from May 1-4 on page 5, May 5-28 on page 6, and the remaining entries on page 7. To save time and space, don't enter descriptions for the journal entries.
2. Post the entries to the general ledger. (If you are not using the working papers that accompany this text, you will need to enter the account titles, account numbers, and balances from April 30 in the general ledger accounts.)
3. Prepare a trial balance on a work sheet.
4. Complete the work sheet.
5. Journalize the adjusting entries on page 8 of the general journal.
6. Post the adjusting entries to the general ledger.
7. Prepare the income statement.
8. Prepare the statement of owner's equity.
9. Prepare the balance sheet.
10. Journalize the closing entries on page 9 of the general journal.
11. Post the closing entries to the general ledger.
12. Prepare a post-closing trial balance.