Question

Use the following TRANSACTIONS AND ADDITIONAL INFORMATION to complete the General Journal, Ledger, Worksheet and Financial Statements for the first month of operations for The Golf Club. Use the Perpetual Inventory method as discussed in class for all sales of merchandise.

TRANSACTION #	DATE	TRANSACTION DESCRIPTION
1	Sept 1	At the beginning of September, three brothers organized The Golf Club by contributing $60,000 each to begin the new business in exchange for shares of stock.
2	Sept 2	Signed a one-year lease on an existing golf club and golf course for The Golf Club and made a $45,000 advance payment for the first three month’s rent.
3	Sept 2	The Golf Club purchased the following fixed assets, paying 20% down and giving a two-year, 6% APR, note for the balance. Principle and interest are due at maturity. Furniture………………..$18,300 Fixtures…………………$5,100 Equipment……………...$79,200                                       $102,600
4	Sept 3	Purchased a 6-month insurance policy on The Golf Club and its contents and paid the premium of $3,600 in advance.
5	Sept 3	Purchased office supplies for $675 on an open account from Kelli’s Office Supplies. The Golf Club has 30 days to pay for the supplies.
6	Sept 3	Purchased on account a total of 100 shirts with an embroidered Golf Club logo from C & C Creations at a price of $12 per shirt. These shirts are available for resale to customers.
7	Sept 3	Purchased concessions for $4,200 from Delta Distributing, Inc. These concessions consist of energy drinks, chips, crackers, nuts etc., and are available for resale to customers. The Golf Club paid 30% down and put the balance on account.
8	Sept 3	Sold 75, twelve-month memberships to The Golf Club for $2,250 each. All membership dues were collected in cash.
9	Sept 3	Purchased a 6-month maintenance contract with Larry’s Landscaping to provide grounds maintenance. Paid $7,200 in advance for this service.
10	Sept 5	Provided 50 hours of golf lessons to members. Fees are charged at a rate of $60/hour. Of these fees, $650 was collected in cash and the balance was billed to individual member’s accounts.
11	Sept 6	Received a bill for $400 from The Golf Club’s attorney for legal services rendered.
12	Sept 8	Sold 44 shirts to a corporate member, Allen & Associates for $21.50 each. Collected $430 in cash and the balance is owed to The Golf Club on account.
13	Sept 14	Purchased an additional $250 in office supplies on open account from Kelli’s Office Supplies.
14	Sept 15	Paid wages and salaries of $3,100 to Golf Club employees.
15	Sept 15	Sold 25, twelve-month memberships to the club for $2,250 each. Collected the dues in cash.
16	Sept 15	The concessions stand reported sales of merchandise for $5,200 for the first half of the month. The concessions that were sold had an original cost of $2,800. All of these transactions were billed directly to each member’s account.
17	Sept 16	Purchased additional concessions for $1,800 from Delta Distributing on open account.
18	Sept 18	Paid the total amounts due to C&C Creations, the Golf Club’s attorney and Kelli’s Office Supplies.
19	Sept 19	Sold 36 shirts to individual customers for $30 each. Collected 30% in cash, the balance is owed to the Golf Club on account.
20	Sept 22	The Golf Club declared and paid a dividend of $1,000 to each shareholder.
21	Sept 26	Collected the balance of what was owed on account from Allen & Associates.
22	Sept 28	Received a utility bill that totaled $980 for the month. It is due Oct. 14.
23	Sept 30	Fees for golf lessons for the last half of September (billed to members accounts) = $4,680
24	Sept 30	Cash sales of shirts (8 @ $30 each) = $240
25	Sept 30	Sales for concessions during the last half of September (20% collected in cash) = $4,800 Cost of concessions sold from September 16-30 = $2,400
26	Sept 30	Cash received during September for services billed to member’s accounts = $4,400
27	Sept 30	Cash received for visitor’s greens fees (fee to play the golf course) = $1,250
28	Sept 30	Purchased additional fixtures for the golf club totaling $2,650. The total amount was paid in cash.

1. Depreciation expense for the month of September should be calculated using the straight-line method with the following useful lives (no salvage value is anticipated. If necessary, round to the nearest whole dollar):

                                    Furniture                       5 years

                                    Fixtures                        5 years

                                    Equipment                    3 years                                      

2. At the end of the month, a physical count was taken of the Golf Club’s assets, inventories and supplies. It revealed the following information:
3. Seven of the shirts for resale were on hand at September 30.
4. Concession merchandise still on hand as of September 30 amounted to $675.
5. Salaries earned by employees but unpaid at September 30 totaled $3,300

4.   There were $425 of Office Supplies still on hand as of September 30.

What is the correct closing journal entry for the Expense items to Income Summary?

	A.	Income Summary 23,785 Rent Expense    15,000 Insurance Expense 600 Maintenance Expense    1,200 Salary Expense     3,300   Supplies Expense    500 Depreciation Expense    2,590 Interest Expense    410 Loss on Shrinkage 185
	B.	Income Summary 34,521 COGS 6,256 Rent Expense    15,000 Insurance Expense    600 Maintenance Expense    1,200 Salary Expense    6,400 Supplies Expense    500 Legal Expense    400 Utilities Expense    980 Depreciation Expense    2,590 Interest Expense 410 Loss on Shrinkage 185
	C.	Income Summary 29,856 COGS    6,256 Rent Expense    15,000 Insurance Expense    600 Maintenance Expense    1,200 Salary Expense    3,300 Supplies Expense    500 Depreciation Expense    2,590 Interest Expense 410
	D.	Income Summary 34,336 COGS    6,256 Rent Expense    15,000 Insurance Expense    600 Maintenance Expense    1,200 Salary Expense    6,400 Supplies Expense    500 Legal Expense    400 Utilities Expense    980 Depreciation Expense   2,590 Interest Expense    410

What is the correct adjusting journal entry for Unearned Revenue/Service Revenue?

	A.	Service Revenue 16,407 Unearned Revenue 16,407
	B.	Unearned Revenue 16,407 Service Revenue 16,407
	C.	Service Revenue 18,751 Unearned Revenue 18,751
	D.	Unearned Revenue 18,751 Service Revenue 18,751

Answer 1

Answer is B.

Income Summary	34,521
COGS	6,256
Rent Expense	15,000
Insurance Expense	600
Maintenance Expense	1,200
Salary Expense	6,400
Supplies Expense	500
Legal Expense	400
Utilities Expense	980
Depreciation Expense	2,590
Interest Expense	410
Loss on Shrinkage	185

Answer is
B. Unearned Revenue16,407
Service Revenue16,407

Service Revenue earned = 75*2250/12 + 25*2250/24