1460T_c03.qxd11/18/0508:34 am Page106 EQA 106 Chapter 3 The Accounting Information System (L0 4,BE3-7 Catherine Janeway Company's weekly payroll,paid on Fridays,totals $6,000.Employees work a 5) 5-day week.Prepare Janeway's adjusting entry on Wednesday,December 31,and the journal entry to record the $6,000 cash payment on Friday,January 2. (L0 5)BE3-8 Included in Martinez Company's December 31 trial balance is a note receivable of $10,000.The note is a 4-month,12%note dated October 1.Prepare Martinez's December 31 adjusting entry to record $300 of accrued interest,and the February 1 journal entry to record receipt of $10,400 from the borrower. (LO 5)BE3-9 Prepare the following adjusting entries at August 31 for Walgreens. (a)Interest on notes payable of $400 is accrued. (b)Fees earned but unbilled total $1,400. (c) Salaries earned by employees of $700 have not been recorded. (d) Bad debt expense for year is $900. Use the following account titles:Service Revenue,Accounts Receivable,Interest Expense,Interest Payable, Salaries Expense,Salaries Payable,Allowance for Doubtful Accounts,and Bad Debt Expense. (L05) BE3-10 At the end of its first year of operations,the trial balance of Rafael Company shows Equipment $30,000 and zero balances in Accumulated Depreciation-Equipment and Depreciation Expense.Depre- ciation for the year is estimated to be $3,000.Prepare the adjusting entry for depreciation at December 31, and indicate the balance sheet presentation for the equipment at December 31. (Lo 8)BE3-11 Willis Corporation has beginning inventory $81,000;Purchases $540,000;Freight-in $16,200;Pur- chase Returns $5,800;Purchase Discounts $5,000;and ending inventory $70,200.Compute cost of goods sold. (L0 7)BE3-12 Karen Sepaniak has year-end account balances of Sales $828,900;Interest Revenue $13,500;Cost of Goods Sold $556,200;Operating Expenses $189,000;Income Tax Expense $35,100;and Dividends $18,900. Prepare the year-end closing entries. (L0 9)*BE3-13 Smith Company had cash receipts from customers in 2007 of $152,000.Cash payments for op- erating expenses were $97,000.Smith has determined that at January 1,accounts receivable was $13,000, and prepaid expenses were $17,500.At December 31,accounts receivable was $18,600,and prepaid ex- penses were $23,200.Compute(a)service revenue and (b)operating expenses. ⊕ (L0 10)*BE3-14 Assume that Best Buy made a December 31 adjusting entry to debit Salaries Expense and credit Salaries Payable for $3,600 for one of its departments.On January 2,Best Buy paid the weekly payroll of $6,000.Prepare Best Buy's(a)January 1 reversing entry;(b)January 2 entry(assuming the reversing en- try was prepared);and (c)January 2 entry (assuming the reversing entry was not prepared). EXERCISES s (L0 4)E3-1 (Transaction Analysis-Service Company)Beverly Crusher is a licensed CPA.During the first month of operations of her business(a sole proprietorship),the following events and transactions occurred. April 2 Invested $32,000 cash and equipment valued at $14,000 in the business 2 Hired a secretary-receptionist at a salary of $290 per week payable monthly. 3 Purchased supplies on account $700.(Debit an asset account.) 7 Paid office rent of $600 for the month. 11 Completed a tax assignment and billed client $1,100 for services rendered.(Use Service Revenue account.) 12 Received $3,200 advance on a management consulting engagement. 17 Received cash of S2,300 for services completed for Ferengi Co. 21 Paid insurance expense $110. 30 Paid secretary-receptionist $1,160 for the month. 30 A count of supplies indicated that $120 of supplies had been used. 30 Purchased a new computer for $6,100 with personal funds.(The computer will be used exclusively for business purposes.) Instructions Journalize the transactions in the general journal.(Omit explanations.) (L0 4)E3-2 (Corrected Trial Balance)The trial balance of Wanda Landowska Company (shown on the next page)does not balance.Your review of the ledger reveals the following:(a)Each account had a106 • Chapter 3 The Accounting Information System BE3-7 Catherine Janeway Company’s weekly payroll, paid on Fridays, totals $6,000. Employees work a 5-day week. Prepare Janeway’s adjusting entry on Wednesday, December 31, and the journal entry to record the $6,000 cash payment on Friday, January 2. BE3-8 Included in Martinez Company’s December 31 trial balance is a note receivable of $10,000. The note is a 4-month, 12% note dated October 1. Prepare Martinez’s December 31 adjusting entry to record $300 of accrued interest, and the February 1 journal entry to record receipt of $10,400 from the borrower. BE3-9 Prepare the following adjusting entries at August 31 for Walgreens. (a) Interest on notes payable of $400 is accrued. (b) Fees earned but unbilled total $1,400. (c) Salaries earned by employees of $700 have not been recorded. (d) Bad debt expense for year is $900. Use the following account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries Expense, Salaries Payable, Allowance for Doubtful Accounts, and Bad Debt Expense. BE3-10 At the end of its first year of operations, the trial balance of Rafael Company shows Equipment $30,000 and zero balances in Accumulated Depreciation—Equipment and Depreciation Expense. Depre￾ciation for the year is estimated to be $3,000. Prepare the adjusting entry for depreciation at December 31, and indicate the balance sheet presentation for the equipment at December 31. BE3-11 Willis Corporation has beginning inventory $81,000; Purchases $540,000; Freight-in $16,200; Pur￾chase Returns $5,800; Purchase Discounts $5,000; and ending inventory $70,200. Compute cost of goods sold. BE3-12 Karen Sepaniak has year-end account balances of Sales $828,900; Interest Revenue $13,500; Cost of Goods Sold $556,200; Operating Expenses $189,000; Income Tax Expense $35,100; and Dividends $18,900. Prepare the year-end closing entries. *BE3-13 Smith Company had cash receipts from customers in 2007 of $152,000. Cash payments for op￾erating expenses were $97,000. Smith has determined that at January 1, accounts receivable was $13,000, and prepaid expenses were $17,500. At December 31, accounts receivable was $18,600, and prepaid ex￾penses were $23,200. Compute (a) service revenue and (b) operating expenses. *BE3-14 Assume that Best Buy made a December 31 adjusting entry to debit Salaries Expense and credit Salaries Payable for $3,600 for one of its departments. On January 2, Best Buy paid the weekly payroll of $6,000. Prepare Best Buy’s (a) January 1 reversing entry; (b) January 2 entry (assuming the reversing en￾try was prepared); and (c) January 2 entry (assuming the reversing entry was not prepared). EXERCISES E3-1 (Transaction Analysis—Service Company) Beverly Crusher is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred. April 2 Invested $32,000 cash and equipment valued at $14,000 in the business. 2 Hired a secretary-receptionist at a salary of $290 per week payable monthly. 3 Purchased supplies on account $700. (Debit an asset account.) 7 Paid office rent of $600 for the month. 11 Completed a tax assignment and billed client $1,100 for services rendered. (Use Service Revenue account.) 12 Received $3,200 advance on a management consulting engagement. 17 Received cash of $2,300 for services completed for Ferengi Co. 21 Paid insurance expense $110. 30 Paid secretary-receptionist $1,160 for the month. 30 A count of supplies indicated that $120 of supplies had been used. 30 Purchased a new computer for $6,100 with personal funds. (The computer will be used exclusively for business purposes.) Instructions Journalize the transactions in the general journal. (Omit explanations.) E3-2 (Corrected Trial Balance) The trial balance of Wanda Landowska Company (shown on the next page) does not balance. Your review of the ledger reveals the following: (a) Each account had a (L0 4) (L0 4) (L0 4, 5) (L0 5) (L0 5) (L0 5) (L0 8) (L0 7) (L0 9) (L0 10) 1460T_c03.qxd 11/18/05 08:34 am Page 106