Dana La Fontsee opened Pro Window Washing Inc. on July 1, 2012. During July the following transactions were completed:
July 1 Issued 15,529 shares of common stock for $15,529 cash.
1 Purchased used truck for $11,529, paying $2,018 cash and the balance on account.
3 Purchased cleaning supplies for $933 on account.
5 Paid $1,800 cash on 1-year insurance policy effective July 1.
12 Billed customers $4,850 for cleaning services.
18 Paid $1,013 cash on amount owed on truck and $534 on amount owed on cleaning supplies.
20 Paid $2,047 cash for employee salaries.
21 Collected $1,674 cash from customers billed on July 12.
25 Billed customers $2,603 for cleaning services.
31 Paid $363 for maintenance of the truck during month.
31 Declared and paid $623 cash dividend.
1. Journalize the July transactions. (Credit account titles are automatically indented when the amount is entered. Record journal entries in the order presented in the problem.)
For example: Date, Account Titles and Explanation, Debit, Credit
Dicker Company accumulates the following adjustment data on December 31.
2. Indicate the type of adjustment (prepaid expense, accrued revenue, and so on) and the status of the accounts before adjustment (overstated or understated).
For example: Item, Type of Adjustment, Accounts Before Adjustment
(a) Supplies of $400 are on hand. Supplies account shows $1,600 balance.
(b) Service Revenue earned but unbilled total $700.
(c) Interest of $300 has accumulated on a note payable.
(d) Rent collected in advance totaling $1,100 has been earned.
The solution journalizes transactions and identifies types of adjustments in an Excel spreadsheet.
Problem 7.18: Transaction Analysis-Various Accounts
Enter the following column headings across the top of a sheet of paper:
Enter the transaction/adjustment letter in the first column, and show the effect, if any, of each of the transactions/adjustments on the appropriate balance sheet category or on the income statement by entering the amount and indicating whether it is an addition ( +) or a subtraction (-). You may also write the journal entries to record each transaction/adjustment.
a. Wages of $768 accrued at the end of the prior fiscal period were paid this fiscal
b. Real estate taxes of $2,400 applicable to the current period have not been accrued.
c. Interest on bonds payable has not been accrued for the current month. The company has outstanding $360,000 of7.5% bonds.
d. The premium related to the bonds in part c has not been amortized for the current month. The current-month amortization is $70.
e. Based on past experience with its warranty program, the estimated warranty expense for the current period should be 0.2% of sales of $918,000.
f. Analysis of the company's income taxes indicates that taxes currently payable are
$76,000 and that the deferred tax liability should be increased by $21,000.