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1 ASSETS 11 CURRENT ASSETS 111 Cash 112 Account Receivable 113 114 12 121 122 122 1 122 2 Office Supplies Prepaid Rent FIXED ASSETS Land OFFICE FURNITURE Office Furniture Org. Val. Acc. Depr. Office Furniture
BALANCE SHEET ACCOUNTS 2 LIABILITIES 2 Accounts Payable 1 2 Notes Payable 2 2 Unearned Service Revenue 3 24 Salary Payable
3 3 1 3 2 3 3
INCOME STATEMENT ACCOUNTS (Part of Stockholders Equity) 5 EXPENSES 5 Rent Expense 1 5 Salary Expense 2 5 Utilities Expense 3 5 Supplies Expense 4 5 Depr. Office Furniture 5
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TRANSACTION
On December 1 Suppose Air & Sea Travel prepays three months rent on December,2010. If the lease specifies a monthly rental amount of $1,000, the entry to record the payment for three months debit prepaid rent. On December 2 The owners invest $50,000 of their money to begin the business, and Air & Sea Travel issues common stock to them. On December 3 Air & Sea Travel paid cash of $700 for office supplies. On December 12 Air & Sea Travel purchased furniture on account for $16,500 and made the following entry. On December 14 Air & Sea Travel pays its employee a monthly salary of $1,900, half on the 15th and half on the last day of the month. During April, the agency paid the employees first half-month of $950 and made the following entry: On December 17 The owners withdrew $1,600 for personal use. On December 21 Badwin Investment Bankers agrees to pay the travel agency $450 monthly. If Air & Sea Travel collects the first amount, the increases in assets and liabilities are recorded. On December 22 Air & Sea Travel performs services for customers on account for $5,000.
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On December 24 Air & Sea Travel purchases land for a future office location, paying cash of $40,000. On December 26 Air & Sea Travel pays $2,700 for the following cash expenses : office rent $1,100, employe salary $1,200, and utilities $400. On December 28 Air & Sea Travel received $2,870 from service revenue on December.
ADJUSMENT
At December 31 Prepaid rent is adjusted to remove one months expense from the assets account. The adjusment transfers one-third of the assets balance. At December 31 To measure the businesss supplies expense during December, the owners count the supplies on hand a the end of the month. The count indicates that supplies costing $400 remain. Adjusting entry to update the Supplies account and to record the supplies expense for the month. At December 31 Depreciation of office furniture for the year (value of economy 5 years). At December 31
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The second payday of the month, the second half-month amount of $950. At December 31 During the last 10 days of the month, the travel agency will earn one third of the $450.
ANSWER
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To pay salary
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December, 2010 Unadjusted Process Transactions ACC ACCOUNT NAME DEBIT CREDIT
TOTAL
ADJUSMENT
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JOURNAL
DEBIT CREDIT
Dec 31
Dec 31
Dec 31
Dec 31
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LEDGER
CASH DATE DESC BEGINNING BALANCE DEBI T 0 CRED IT
CURRENT BALANCE
DATE
CRED IT
DATE
CRED IT
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CURRENT BALANCE
OFFICE FURNITURE- ORG.VAL DEBI CRED DATE DESC T IT BEGINNING 0 BALANCE CURRENT BALANCE
ACC.DEPR. OFFICE FURNITURE DEBI CRED DATE DESC T IT BEGINNING 0 BALANCE CURRENT BALANCE ACCOUNT PAYABLE DEBI DESC T BEGINNING BALANCE CURRENT BALANCE UNEARNED SERVICE REVENUE DEBI CRED DATE DESC T IT BEGINNING 0 BALANCE
DATE
CRED IT 0
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CURRENT BALANCE SALARY PAYABLE DEBI DESC T BEGINNING BALANCE CURRENT BALANCE COMMON STOCK DEBI DESC T BEGINNING BALANCE
DATE
CRED IT 0
DATE
CRED IT 0
DATE
CRED IT 0
CURRENT BALANCE RENT EXPENSE DATE DESC BEGINNING BALANCE DEBI T 0 CRED IT
CURRENT BALANCE
SALARY EXPENSE
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DATE
DEBI T 0
CRED IT
CURRENT BALANCE
DATE
UTILITIES EXPENSE DEBI DESC T BEGINNING 0 BALANCE CURRENT BALANCE SUPPLIES EXPENSE DEBI DESC T BEGINNING 0 BALANCE
CRED IT
DATE
CRED IT
CURRENT BALANCE DEPR.OFFICE FURNITURE EXPENSE DEBI CRED DATE DESC T IT BEGINNING 0 BALANCE CURRENT BALANCE
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TOTAL
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TOTAL REVENUE
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2 LIABILITIES
TOTAL LIABILITIES TOTAL CURRENT ASSETS 12 FIXED ASSETS 3 STOCKHOLDERS EQUITY TOTAL EQUITY
Closing Revenues
Closing Expenses
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