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January Transactions for John Michel Co.

Chapter 1 summarizes transactions for John Michel advertising company in January including investing cash, purchasing office equipment and supplies, earning and receiving service revenue, paying expenses, declaring and paying dividends, renting an office and paying rent, receiving fees, paying wages, and receiving and paying utility and telephone bills. Chapter 2 provides instructions to journalize transactions and post entries to T-accounts for fees earned, supplies purchased and received, cash received from customers, and payments to creditors. Chapter 3 provides adjusting entries for accrued fees and wages, prepaid rent and insurance, and depreciation of equipment to record on January 31st. Chapter 4 provides instructions to prepare closing entries to move revenue and expense accounts

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63 views2 pages

January Transactions for John Michel Co.

Chapter 1 summarizes transactions for John Michel advertising company in January including investing cash, purchasing office equipment and supplies, earning and receiving service revenue, paying expenses, declaring and paying dividends, renting an office and paying rent, receiving fees, paying wages, and receiving and paying utility and telephone bills. Chapter 2 provides instructions to journalize transactions and post entries to T-accounts for fees earned, supplies purchased and received, cash received from customers, and payments to creditors. Chapter 3 provides adjusting entries for accrued fees and wages, prepaid rent and insurance, and depreciation of equipment to record on January 31st. Chapter 4 provides instructions to prepare closing entries to move revenue and expense accounts

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Phương Linh
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EXERCISE REVISION

CHAP 1.
Examine the transactions during the month of January for John Michel advertising company
1. John Michel invests $50,000 cash in the business
2. Purchases office equipment, $15000, pays $7500 in cash and agrees to pay the rest next
month
3. Purchases art supplies, $9000
4. Earns service revenue for $14000. Received 10,000 in cash and the rest on account.
5. Pays $5000 of amount owned to T&L supply Co
6. Declares and pays $7,000 dividends
7. Rents an office, pays $4000 2-month rent in advance
8. Collects a fee of $7000 for placing advertisements
9. Pays the secretary two weeks wages, $3000
10. Receives and pays the utility bill, $500
11. Receives (but does not pay) telephone bill, $350

CHAP 2.
a) Journalize these transactions:
1. Billed customers for fees earned, $25,000
2. Purchase supplies on account, $2,800
3. Received cash from customers on account, $53,280
4. Paid creditors on account, $21,000
b) Post these entries in T-accounts: Supplies, Accounts Receivable, Accounts Payable, Cash, Fees
Earned
CHAP 3.
On Jan 31, the following data were accumulated. Prepare adjusting entries:
- Fees accrued but unbilled are $10,000
- The supplies account balance on Jan 31 is $4,000. The supplies on hand are $2,000
- Wages accrued but not paid are $5,000
- On Jan2nd, John Michel Advertising Co paid $4000 rent in advance for January and
February. By Jan 31, half of the prepaid rent has expired and should be treated as expense
- On Jan 8th: purchase 1-year insurance which costs $2400. By Jan31, prepaid insurance has
expired 200.
- On Jan 31st, Depreciation equipment for Jan, record $350 of depreciation expense – art
equipment and $250 of depreciation expense – office equipment

CHAP 4.
Prepare Closing Entries (Income Summary)

TP Holdings, Capital $800,000


TP Holdings, Drawing 20,000
Service Revenue 250,000
Rent Revenue 200,000
Wages Expense 300,000
Supplies Expense 9,000
Miscellaneous Expense 13,000
Journalize the entries required to close the accounts.

CHAP 5.
On June 10, Spinner Company purchased $10,000 of merchandise from Lawrence Company, FOB
shipping point, terms 2/10, n/30. Spinner pays the freight costs of $600 on June 11. Damaged
goods totaling $700 are returned to Lawrence for credit on June 12. The fair value of these goods
is $300. On June 19, Spinner pays Lawrence in full, less the purchase discount. Both companies
use a perpetual inventory system.
Instructions
(a) Prepare separate entries for each transaction on the books of Spinner Company.
(b) Prepare separate entries for each transaction for Lawrence Company. The merchandise
purchased by Spinner on June 10 had cost Lawrence $6,400.

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