ACCT 2000 Exam One Review Problem 1 The following problem is designed to help you review the beginning steps in the accounting cycle which were learned in chapters 1 through 3 In this problem you will complete several of the accounting cycle steps for Landry Accounting Services To aid in your process you will use the provided Working Papers to record your work Steps in the Accounting Cycle Covered in this Review 1 Analyze Business Transactions 2 Journalize the Transactions 3 Post to Ledger Accounts 4 Prepare an Unadjusted Trial Balance Needed Information On December 1 2012 Lauren Landry launched a CPA firm called Landry Accounting Services which is organized as a corporation and provides bookkeeping tax and general accounting services Landry adopts the calendar year for reporting purposes and expects to prepare the company s first set of financial statements on December 31 2012 The chart of accounts for its accounting system is included on the following page 1 Balance Sheet Accounts Chart of Accounts Assets Current Assets Cash includes cash on hand and checking account Accounts receivable Supplies Prepaid Insurance Prepaid Rent Deposits Liabilities Current Liabilities Accounts Payable Unearned Revenue Salaries Payable Interest Payable Income Tax Payable Notes Payable Plant Fixed Assets Land Equipment Furniture Accumulated Depreciation Income Statement Accounts Revenues Service Revenue Shareholders Equity Common Stock Dividends Retained Earnings Operating Expenses Salaries Expense Rent Expense Advertising Expense Automobile Expense Supplies Expense Insurance Expense Utilities Expense Telephone Expense Postage Expense Depreciation Expense Interest Expense Dues Subscriptions Expense Miscellaneous Expense 2 December Transactions Dec 1 Landry invested 15 000 cash a 2 000 computer system and 3 500 of office furniture in the business in exchange for common stock Dec 1 Borrowed 6 000 by signing an 10 note payable with a local bank The principal and interest is due in one year Dec 2 Paid 900 of general liability and property insurance The disbursement by ck 1000 was for a half year of service beginning December 1st Dec 2 Rented office space Issued ck 1001 for 3 000 representing the first month s rent of 2 000 and a 1 000 security deposit Hint debit the Deposits account a current asset for the security deposit Dec 4 Purchased 400 of office supplies on account from Corporate Supply Co Dec 6 Billed Tiger Inc 1 100 for accounting services performed from Dec 1 Dec 6 Dec 8 Hired Heather Brown as a part time administrative assistant for 15 per hour as needed Dec 9 Issued ck 1002 for 200 for advertising in a local newspapers Dec 10 Completed consulting and set up of an accounting system for Megan Taylor s new interior design firm Received 900 after services were completed Dec 13 Paid for the supplies purchased on December 4 with ck 1003 Dec 15 Issued ck 1004 for 300 to Heather Brown for salary Dec 20 Received 800 in advance from Erin Graham a client The 800 represents payment for accounting services to be provided in December and January Dec 27 Purchased 150 in office supplies on account from Simply Office Supplies Dec 30 Issued ck 1005 for 250 for utilities Dec 31 Received telephone bill of 100 Dec 31 Issued ck 1006 to Landry for 500 in cash dividends Dec 31 Received 700 from Tiger Inc for partial payment of the invoice sent on Dec 6 3 The following problem is designed to help you review the preparation of the financial statements Problem 2 Income Statement Retained Earnings Statement Balance Sheet In this problem you will prepare the financial statements for Merrell Enterprises To aid in your process you will use the provided Working Papers to record your work Needed Information You are provided with the following information for Merrell Enterprises effective as of its December 31 2012 year end Accumulated depreciation equipment Accounts payable Accounts receivable Cash Common stock Cost of goods sold Depreciation expense Dividends Equipment Income tax expense Income taxes payable Insurance expense Interest expense Inventory Land Mortgage payable Notes payable Prepaid insurance Retained earnings beginning Sales revenue Short term investments Salaries and wages expense Salaries and wages payable 878 933 670 1 393 1 269 1 104 2 543 291 369 209 179 254 444 1 090 3 223 3 623 184 104 1 600 5 223 1 279 656 266 4 1 Prepare an income statement for Merrell Enterprises for the year ended December 31 2012 2 Prepare a retained earnings statement for Merrell Enterprises for the year ended December 31 2012 3 Prepare a classified balance sheet for Merrell Enterprises as of December 31 2012