Question

Record the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet category or on the income statement by entering the account name and amount and indicating whether it is an addition (+) or subtraction (-). Column headings reflect the expanded balance sheet equation; items that affect net income should not be shown as affecting stockholders' equity. The first transaction is provided as an illustration. a. During the month, Supplies Expense was debited $2,800 for supplies purchased. The cost of supplies used during the month was $1,200. Record the adjustment to properly reflect the amount of supplies used and supplies still on hand at the end of the month. b. During the month, the board of directors declared a cash dividend of $3,000, payable next month. c. Employees were paid $2,520 in wages for their work during the first three weeks of the month. d. Employee wages of $660 for the last week of the month have not been recorded. e. Revenues from services performed during the month totaled $6,120. Of this amount, $3,120 was received in cash and the balance is expected to be received within 30 days. f. A contract was signed with a newspaper for a $240 advertisement; the ad ran during this month but will not be paid for until next month. g. Merchandise that cost $816 was sold for $1704. Of this amount, $1,320 was received in cash and the balance is expected to be received within 30 days. h. Independent of transaction a, assume that during the month, supplies were purchased at a cost of $264 and debited to the Supplies (asset) account. A total of $156 of supplies were used during the month. Record the adjustment to properly reflect the amount of supplies used and supplies still on hand at the end of the month L Interest of $324 has been earned on a note receivable but has not yet been received. J. Issued 400 shares of $22 par value common stock for $8,800 in cash. Required: a. Indicate the financial statement effect. b. Prepare the journal entry for the above transactions

Answer 1

Transaction No.	Particulars	Debit	Credit
1	Inventory A/c……………...Dr	$                                                2,800
	To Accounts Payables A/c		$                                            2,800
2	Cost of Goods Sold A/c….Dr	$                                                1,200
	To Inventory A/c		$                                            1,200
3	Retained Earnings A/c…..Dr	$                                                3,000
	To Dividend Payable A/c		$                                            3,000
4	Wages Payable……….Dr	$                                                2,520
	To Cash A/c		$                                            2,520
5	Wages A/c……….Dr	$                                                    660
	To Wages Payable A/c		$                                               660
6	Accounts Recievables A/c………….Dr	$                                                6,120
	To Income from Services Sales A/c		$                                            6,120
7	Cash A/c………Dr	$                                                3,120
	To Accounts Recievables A/c		$                                            3,120
8	Advertisement Expense…..Dr	$                                                    240
	To Accounts Payables A/c		$                                               240
9	Accounts Recievables A/c………….Dr	$                                                1,704
	To income from Merchandise Sales A/c		$                                            1,704
10	Cash A/c………Dr	$                                                1,320
	To Accounts Recievables A/c		$                                            1,320
11	Cost of Goods Sold A/c….Dr	$                                                    816
	To Inventory A/c		$                                               816
12	Cost of Goods Sold A/c….Dr	$                                                    156
	To Inventory A/c		$                                               156
13	Interest Recievable A/c…….Dr	$                                                    324
	To Interest Income A/c		$                                               324
14	Cash A/c………Dr	$                                                8,800
	To Common Stock A/c		$                                            8,800

Financial Statement Effect

Transaction No.	Assets	Liabilities	Stockholders Equity	Income Statement
1	Suppplies + $ 2800	Accounts Payables   $ 2800
2	Supplies Used $ (1600)			Cost of Goods Sold $ 1600
3		Dividend Payable $ 3000	Dividend Payable $ (3000)
4	Cash $ (2520)	Wages Payable $ (2520)
5		Wages Payable $ 660		Wages $ 660
6	Accounts Recievables $ 6120			Income from Serivces $6120
7	Cash $ 3120
7	Accounts Recievables $ (3120)
8		Accounts Payables   $ 240		Advertisement Expense $ 240
9	Accounts Recievables $ 1704			Income from Serivces $1704
10	Cash $ 1320
10	Accounts Recievables $ (1320)
11	Supplies Used $ (816)			Cost of Goods Sold $ 816
12	Supplies Used $ (156)			Cost of Goods Sold $ 156
13	Interest Recievable $ 324			Interest Income $ 324
14	Cash $8800		Common Stock $ 8800