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 are the correct closing journal entries to close the Income Summary to Retained Earnings?

	A.	Retained Earnings 3,082 Income Summary 3,082
	B.	Income Summary 3,082 Retained Earnings 3,082
	C.	Income Summary 3,267 Retained Earnings 3,267
	D.	Retained Earnings 13,818 Income Summary 13,818

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

	A.	Sales Revenue 12,266 Service Revenue 25,337 Income Summary 37,603
	B.	Income Summary 37,603 Sales Revenue 12,266 Service Revenue 25,337
	C.	Sales Revenue 12,266 Service Revenue 8,930 Income Summary 21,196
	D.	Sales Revenue 10,946 Service Revenue 25,337 Income Summary 36,283

Answer 1

What are the correct closing journal entries to close the Income Summary to Retained Earnings?

OPTION B

Income Summary 3,082 Retained Earnings 3,082

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

OPTION A

Sales Revenue	12,266
Service Revenue	25,337
Income Summary	37,603

JOURNAL ENTRIES

The Golf Club Journal entries Date Account 1-Sep Cash Common Stock No. 1 Credit Debit $ 180,000 Calculation =60,000*3 brothers $ 180,000 2 $ 45,000 three month's rent 2-Sep Prepaid Rent Cash $ 45,000 3 2-Sep Furniture Fixtures Equipment Cash Notes Payable $ 18,300 $ 5,100 $ 79,200 $ 20,520 =102,600*20% $ 82,080 two-year, 6% APR, note 4 $ 3,600 6-month policy 3-Sep Prepaid Insurance Cash $ 3,600 5 $ 675 3-Sep Office supplies Accounts Payable $ 675 6 $ 1,200 =100 shirts * $12 3-Sep Inventory - Shirts Merchandise Accounts Payable $ 1,200 7 $ 4,200 3-Sep Inventory - Concessions Merchandise Cash Accounts Payable $ $ 1,260 -4,200*30% 2,940 8 $ 168,750 3-Sep Cash Unearned Revenue =75 members* $2,250 $ 168,750 twelve-month memberships 9 $ 7,200 6-month contract 3-Sep Prepaid Maintenance Cash $ 7,200 10 5-Sep Cash Accounts Receivable Service Revenue $ $ 650 2,350 $ 3,000 =50 hours * $60/hour 11 $ 400 6-Sep Legal expenses Accounts Payable $ 400 12 8-Sep Cash Accounts Receivable Sales Revenue $ $ 430 516 $ 946 -44 shirts * $21.50 $ 528 -44 shirts * $12 8-Sep Cost of goods sold Inventory - Shirts Merchandise $ 528 13 $ 250 14-Sep Office supplies Accounts Payable $ 250 14 $ 3,100 15-Sep Salaries expense Cash $ 3,100 15 $ 56,250 15-Sep Cash Unearned Revenue =25 members* $2,250 $ 56,250 twelve-month memberships 16 $ 5,200 15-Sep Accounts Receivable Sales Revenue $ 5,200 $ 2,800 15-Sep Cost of goods sold Inventory - Concessions Merchandise $ 2,800 17 $ 1,800 16-Sep Inventory - Concessions Merchandise Accounts Payable $ 1,800 18 $ 2,525 =1,200+400+675+250 18-Sep Accounts Payable Cash $ 2,525 19 =1,080*30% 19-Sep Cash Accounts Receivable Sales Revenue $ $ 324 756 $ 1,080 =36 shirts * $30 $ 432 = 36 shirts * $12 19-Sep Cost of goods sold Inventory - Shirts Merchandise $ 432 20 $ 3,000 22-Sep Dividends Cash $ 3,000 21 $ 516 26-Sep Cash Accounts Receivable $ 516 22 $ 980 28-Sep Utility expense Accounts Payable $ 980 23 $ 4,680 30-Sep Accounts Receivable Service Revenue $ 4,680 24 $ 240 30-Sep Cash Sales Revenue $ 240 =8 shirts * $30 $ 96 =8 shirts * $12 30-Sep Cost of goods sold Inventory - Shirts Merchandise $ 96 25 $ 4,800 30-Sep Accounts Receivable Sales Revenue $ 4,800 $ 2,400 30-Sep Cost of goods sold Inventory - Concessions Merchandise $ 2,400 $ 4,400 26 30-Sep Cash Accounts Receivable $ 4,400 $ 1,250 27 30-Sep Cash Service Revenue $ 1,250 $ 2,650 28 30-Sep Fixtures Cash $ 2,650

$ 2,590 Adjusting entries AJE 1 30-Sep Depreciation expense Accumulated Depreciation-Furniture Accumulated Depreciation-Fixtures Accumulated Depreciation-Equipment $ $ $ 305 85 2,200 =18,300/5*1/12 =5,100/5*1/12 =79,200/3*1/12 AJE 2 $ 60 =((100-44-36-8)*$12)-(7*$12) 30-Sep Cost of goods sold Inventory - Shirts Merchandise $ 60 $ 125 =(4,200-2,800+1,800-2,400)-675 30-Sep Cost of goods sold Inventory - Concessions Merchandise $ 125 AJE 3 $ 3,300 30-Sep Salaries expense Salaries Payable $ 3,300 AJE 4 $ 500 =(675+250)-425 30-Sep Supplies expense Office supplies $ 500 AJE 5 $ 15,000 -45,000/3 months 30-Sep Rent expense Prepaid Rent $ 15,000 AJE 6 $ 410 =82,080*6%*1/12 30-Sep Interest expense Interest Payable $ 410 $ 600 =3,600/6 months AJE7 30-Sep Insurance expense Prepaid Insurance $ 600 AJE 8 $ 14,063 =168,750/12 months 30-Sep Unearned Revenue Service Revenue $ 14,063 AJE 9 $ 1,200 =7,200/6 months 30-Sep Maintenance expense Prepaid Maintenance $ 1,200 $ 2,344 AJE 10 30-Sep Unearned Revenue Service Revenue =56,250/12 months *0.5 month $ 2,344 From Sep 15 to Sep 30

Closing entries CJE1 30-Sep Sales Revenue Service Revenue Income Summary $ 12,266 $ 25,337 $ 37,603 CJE 2 $ 34,521 30-Sep Income Summary Cost of goods sold Salaries expense Utility expense Legal expenses Rent expense Insurance expense Supplies expense Depreciation expense Maintenance expense Interest expense $ 6,441 $ 6,400 $ 980 $ 400 $ 15,000 $ 600 $ 500 $ 2,590 $ 1,200 $ 410 CJE 3 $ 3,082 30-Sep Income Summary Retained Earnings $ 3,082 CJE 4 $ 3,000 30-Sep Retained Earnings Dividends $ 3,000

Note: As its a long question, did not get time to do Ledger, Worksheet and Financial Statements