Question

Using the information given in P15-11 and P15-12, record the transactions in general journal form. Then post the journal entries to ledger T-accounts, like those shown in Table 15-11. (To help keep track of your postings, give each journal entry the same reference number or letter shown in the problems, and insert that number or letter to the left of the amount recorded in the T-accounts.)
In P15-12,
Analyze the following accrual-type events, and add them to the work sheet you prepared for P15-11.
1. Adjust for the expiration of 1 month’s rent.
2. Adjust for the expiration of 1 month’s accident insurance.
3. Adjust for the “using up” of the vehicles during the month. (Assume the vehicles have a useful life of 48 months from the beginning of the year.)
4. Accrue 1 month’s interest owed on the $180,000 loan. The interest rate on the borrowing is 8 percent a year. (Add a column for Interest payable.)
In p15-11.
Ted’s Ambulette provides services to and from hospitals and nursing homes. Ted, who went into business recently, keeps records on a work sheet similar to that illustrated in the text. At the start of the new year, his work sheet shows these balances: Cash—$30,000; Accounts receivable—$15,000; Fuel and parts inventory—$8,000; Vehicles—$192,000; Accounts payable—$12,000; Loans payable—$180,000; Ted Elias, Capital—$53,000. (You will also need columns for Investments, Prepaid rent, Prepaid insurance, and Withholding tax payable.) These transactions occurred in the first month of the new year:
1. Ted leased a garage to store his vehicles and to make minor repairs. He paid $6,000 for 2 months’ rent.
2. Ted bought accident insurance for a 2-year period, paying $12,000.
3. He received $13,000 from charge-account customers he had billed last year.
4. During the month he purchased $10,000 of fuel and repair parts on credit.
5. He received $50,000 during the month from customers who paid in cash.
6. At month-end, he sent out bills for $14,000 to charge-account customers.
7. He paid $12,000 to suppliers from whom he had purchased on account.
8. Ted’s drivers and other employees earned $30,000. He paid them $28,000 and withheld $2,000 in taxes, which he will pay the government next month.
9. On the 15th of the month, Ted invested some of his cash in a 6-month $20,000 Treasury note.
10. During the month, Ted used $6,000 in fuel and repair parts from inventory.
11. Ted paid utility bills amounting to $3,000. He also received a utility bill for $1,000 that he had not paid at month-end. Record the opening balances on a work sheet similar to that illustrated in the text, and then analyze these transactions on the work sheet.



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  • CreatedDecember 30, 2014
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