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Chambers Brokerage Services, Inc.

Solving Financial Accounting Problems Using Microsoft Excel for Windows by Rex A Schildhouse.

See attached file for full problem description.

Problem P2-3A, Chambers Brokerage Services, Inc. was formed on May 1, 2006. The following transactions took place during the first month.

1. Stockholders invested cash in the company in exchange for common stock. $120,000
2. Hired two employees to work in the warehouse. They will each be paid a salary of $20,000 per month.
3. Signed a 2-year rental agreement on a warehouse; paid $36,000 cash in advance for the first year. (Hint; The portion of the
related to May 2006 is an expense for this month.)
4. Purchased furniture and equipment costing $70,000 A cash payment of $20,000 was made immediately;
the remainder will be paid in 6 months.
5. Paid $3,000 cash for a one-year insurance policy on the furniture and equipment. (Hint: The portion of the cost related to
May 2006 is an expense for this month.)
Transactions during the remainder of the month:
6. Purchased basic office supplies for cash $1,000
7. Purchased more office supplies on account $3,000
8. Total revenues earned were $30,000 of this amount $10,000 was cash, and $20,000
9. Paid to suppliers on accounts payable due $800
10. Received cash from customers in payment of accounts receivable $5,000
11. Received utility bills to be paid next month in the amount of $400
12. Paid the monthly salaries of the two employees totaling $4,000

Instructions:
(a) Prepare journal entries to record each of the events listed.
(b) Post the journal entries to T accounts.
(c) Prepare a trial balance as of May 31, 2006.
"(d) Prepare an income statement and a retained earnings statement for Chambers Brokerage Services for the month ended May 31, 2006,
and a balance sheet as of May 31, 2006."

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Solution Preview

Solving Financial Accounting Problems Using Microsoft Excel for Windows by Rex A Schildhouse

Problem P2-3A, Chambers Brokerage Services, Inc. was formed on May 1, 2006. The following transactions took place during the first month.

1. Stockholders invested cash in the company in exchange for common stock. $120,000
2. Hired two employees to work in the warehouse. They will each be paid a salary of $20,000 per month.
3. Signed a 2-year rental agreement on a warehouse; paid $36,000 cash in advance for the first year. (Hint; The portion of the
related to May 2006 is an expense for this month.)
4. Purchased furniture and equipment costing $70,000 A cash payment of $20,000 was made immediately;
the remainder will be paid in 6 months.
5. Paid $3,000 cash for a one-year insurance policy on the furniture and equipment. (Hint: The portion of the cost related to
May 2006 is an expense for this month.)
Transactions during the remainder of the month:
6. Purchased basic office supplies for cash $1,000
7. Purchased more office supplies on account $3,000
8. Total revenues earned were $30,000 of this amount $10,000 was cash, and $20,000
9. Paid to suppliers on accounts payable due $800
10. Received cash from customers in payment of accounts receivable $5,000
11. Received utility bills to be paid next month in the amount of $400
12. Paid the monthly salaries of the two employees totaling $40,000

Instructions:
(a) Prepare journal entries to ...

Solution Summary

This solution is comprised of a detailed explanation to prepare journal entries to record each of the events listed, post the journal entries to T accounts, prepare a trial balance as of May 31, 2006, prepare an income statement and a retained earnings statement for Chambers Brokerage Services for the month ended May 31, 2006, and a balance sheet as of May 31, 2006.

$2.19