John Jackson opened JJCo on August 1, accounting cycle. 2020. During August, the following transactions were completed.

1. Jack invested $15,000 cash in the company.
2. Purchased used car for $10,000, paying $3,000 cash and the balance on account.
3. Purchased office supplies for $1000 on account.
4. Paid $2,000 cash on a 1-year insurance policy effective August 1.
5. Billed customers $3,500 for services performed.
6. Paid $1,000 cash on amount owed on car and $500 on amount owed on office supplies.
7. Paid $3,000 cash for employee salaries.
8. Collected $1,500 cash from customers billed in the fifth transaction above.
9. Billed customers $3,500 for services performed.
10. Paid $290 for maintenance of the car during month.
11. Jack withdrew $1000 cash from the company.

Instructions:

1) Journalize above transactions.

2) Journalize the following adjustments.

• Services performed but unbilled and uncollected at end of period were $1,500.
• Depreciation on equipment for the month was $200.
• The insurance expired for the current month
• A count shows $300 of office supplies on hand at end of month.
• Accrued but unpaid employee salaries were $500.

3) Journalize closing entries.

4) The financial manager is responsible for making decisions that maximize shareholders' wealth. In doing so, they make use of time value of money concept. In your own words, briefly discuss the concept of time value of money making sure to cover the three elements used in the time value of money concept as well as the concepts of present value / future value and their respective uses. Give brief examples to support your answer.

5) The output of an accounting system is a set of reports or financial statements needed by stakeholders. In your own few words, (i) give example of a stakeholder, (ii) name 2 financial statements, (iii) state the purpose of or the information relayed by the two statements you named.

6) How do Bonds issued by a company defer from Stocks issued by a company? Briefly discuss.

Answer rating: 100% (QA)

1 Journal Entries 2 Adjusting Entries 3 Trial Balance 4 Income Statement 5 Statement of Owners Equit... View the full answer