Question

7. The following invoices are being entered into the account- ing system. Using the chart of accounts in Figure 2-1, determine the changes to the balance sheet, income statement, job cost ledger, and equipment ledger as the result of entering each of the following invoices: a. A $5,000 invoice for concrete charged to job cost code 302.01.32300M b. A $12,350 invoice from a subcontractor for plumb- ing charged to job cost code 309.02.22100S. Ten percent retention is withheld from the invoice. c. A $255 phone bill charged to job costcode 315.01.018000 d. A $1,352 bill for main office rent e. A $112 invoice for office supplies for the main office f. A $375 invoice for repairs to Backhoe 2 g. A $563 invoice for nails. The nails will be placed in inventory until they are needed on the jobs, at which time they will be billed to the jobs.

Answer 1

Answer:

The changes have been highlighted with the use of following table:

Invoice Sr. No.	Changes in Balance Sheet	Changes in Income Statement	Changes in Job Cost Ledger	Changes in Equipment Ledger
a)	Current Assets (Work in Process) will Increase and Current Liabilities (Accounts Payable) will Increase	No change	Job cost code 302.01.02620M will increase with the cost of material	No change
b)	Current Assets (Work in Process) will Increase with $12,350 and Current Assets (Cash) will decrease by $11,115, Current Liabilities (Accounts Payable) will Increase	No change	Job cost code 309.02.15100S will increase with the cost of plumbing	No change
c)	Current Assets (Work in Process) will Increase and Current Liabilities (Accounts Payable) will Increase	No change	Job cost code 315.01.01800O will increase with the value of telephone expenses	No change
d)	Current Liabilities (Rent Payable) will Increase and Retained Earnings will Decrease because of reduction in net income	Operating Expenses (Office Rent) will Increase resulting in reduction in net income	No change	No change
e)	Current Liabilities (Accounts Payable) will Increase and Retained Earnings will Decrease because of reduction in net income.	Operating Expenses (Office Supplies) will Increase resulting in reduction in net income	No change	No change
f)	Current Liabilities (Accounts Payable) will Increase and Retained Earnings will Decrease because of reduction in net income.	Operating Expenses (Repairs to Equipment ) will Increase resulting in reduction in net income	No change	No change
g)	Current Assets (Inventory) will Increase and Current Liabilities (Accounts Payable) will Increase	No change	No change	No change