Problem 4-2 Write Journal entries for the following transactions that occurred at Woodside Company during May

and explain how each would be disclosed in Woodsides financial Statements. 1. The company prepaid $ 14,340 rent for the period May 1 October 31. Dr. Prepaid rent $ 14,340 Cr. Cash $ 14,340 2. Sales discounts and allowances were $34,150. Dr. Sales discounts and allowances $ 34,150 Cr. Provision for sales discounts and allowances $ 34,150 3. A loan for $ 3,500 at 12 percent interest continued to be owed to the company by one of its employees, who made no payments related to this loan during May. Dr. Interest receivable $ 420 Cr. Interest income $ 420 4. Depreciation expense was $ 13,660. Dr. Depreciation expense $ 13,660 Cr. Accumulated depreciation $ 13,660 5. Customers paid $ 2,730 for services they will not receive until sometime in June. Dr. Cash $ 2,730 Cr. Deferred Revenue $ 2,730 6. The company purchased $ 172 worth of stamps and used $ 100 worth of them. Dr. Stamp expense $ 100 Dr. Stamp inventory $ 72 Cr. Cash $ 172 7. The Allowance for Doubtful Accounts was increased by $ 1,350, reflecting a new estimate of uncollectible accounts. Dr. Bad debt expense $ 1,350 Cr. Allowance for doubtful accounts $1,350

Case 4-3 Copies Express Copies Express was incorporated on November 20, 2009, and began operating on January 2, 2010. The balance sheet as of the beginning of operations is shown in Exhibit 1. In preparing financial statements for the first year of operations, the accountant reviewed the record of cash receipts and cash disbursements for Copies Express. This information appears in Exhibit 2. In addition, the accountant examined certain other information relative to operations. These additional items appear in Exhibit 3.

Exhibit 1 Copies Express, Inc. Balance Sheet As of January 2, 2010 Assets Cash Supplies Building and equipment Land Total Liabilites and Owners' Equity Accounts payable Bank loan Capital stock Total $2,000 24,400 300,000 12,000 338,400 $10,400 24,000 304,000 338,400

Exhibit 2 Copies Express, Inc. Cash Receipts and Disbursements : 2010 Cash receipts: Cash Sales Collect accounts receivable Total Cash dibursement: Wages and salaries Heat, light , power Additional supplies Selling and administration Interest (Note 1) Payment - bank lian (12/31) Payment - accounts payable Total

$176,450 64,750 241,200

$85,750 15,000 52,600 28,375 2,880 12,000 10,400 207,005

Exhibit 3 Other Information Relative to Operations 1. At the end of 2010, Copies Express owed $ 9,875 to suppliers for the purchase of photocopy supplies for which it had not yet paid. 2. The yearly depreciation expense on the buildings and equipment was $ 15,000. 3. At the end of 2010, Copies Espress was owed $ 11,000 for copying services by customers who had not ye paid. Copies Express expected that all of these customers would pay within 30 days. 4. An inventory taken of the supplies at year-end revealed that the years cost of supplies was $60,250. 5. Income taxes for 2010 were expected to be $ 11,593. They were unpaid as of December 31, 2010. Questions 1. Prepare an income statement for 2010 and a balance sheet as of December 31,2010. 2. Be prepared to explain the derivation of each number of these financial statements. 1. Dr. Cash Cr. Sales 2. Dr. Account receivable Cr. Sales Dr. Cash Cr. Account receivable 3. Dr. Wages and salaries expense Cr. Cash $ 176,450 $ 176,450 $ 67,750 $67,750 $ 64,750 $64,750 $ 85,750 $ 85,750

4. Dr. Heat, light , power expense Cr. Cash 5. Dr. Supplies inventory Cr. Cash 6. Dr. Selling and administration expense Cr. Cash 7. Dr. Interest expense Cr. Cash 8. Dr. Bank loan Cr. Cash 9. Dr. Accounts payable Cr. Cash 10. Dr. Supplies inventory Cr. Accounts Payable 11. Dr. Depreciation expense Cr. Accumulated depreciation 12. Dr. Accounts receivable Cr. Sales 13. Dr. Cost of supplies used Cr. Supplies inventory 14. Dr. Taxes expense Cr. Taxes payable 15. Dr. Income Summary Cr. Retained earnings

$ 15,000 $ 15,000 $ 52,600 $ 52,600 $ 28,375 $ 28,375 $ 2,880 $ 2,880 $ 12,000 $ 12,000 $ 10,400 $10,400 $ 9,875 $ 9,875 $ 15,000 $ 15,000 $ 11,000 $ 11,000 $ 60,250 $60,250 $ 11,593 $ 11,593 $ 33,352 $ 33,352