Problem 1 (Journalizing)

Holz Disc Golf Course was opened on March 1 by Ian Holz. The following selected
events and transactions occurred during March.

March 1 Invested $20,000 cash in business.

3 Purchased Rainbow Golf Land for $15,000 cash. The price consists of land
$12,000, shed $2,000, and equipment $1,000. (Make one compound entry)

5 Paid advertising expenses of $900.

6 Paid cash $600 for a one-year insurance policy.

10 Purchased golf discs and other equipment for $1,050 from Stevenson
Company payable in 30 days.

18 Received $1,100 in cash for golf fees (Holz records golf fees as service
revenue).

19 Sold 150 coupon books for $10 each. Each book contains 4 coupons that
enable the holder to play one round of disc golf.

25 Withdrew $800 cash for personal use.

30 Paid salaries of $250.

30 Paid Stevenson Company in full.

31 Received $2,700 cash for golf fees.

Holz Disc Golf uses the following accounts: Cash, Prepaid Insurance, Land, Buildings,
Equipment, Accounts Payable, Unearned Service Revenue, Owner’s Capital, Owner’s
Drawings, Service Revenue, Advertising Expense, and Salaries and Wages Expense.

Instructions

Journalize the March transactions.

Problem 2 (Journalizing, Posting, Trial Balance)

Emily Valley is a licensed dentist. During the first month of the operation of her business,
the following events and transactions occurred.

April 1 Invested $20,000 cash in her business.

1 Hired a secretary-receptionist at a salary of $700 per week payable monthly.

2 Paid office rent for the month $1,100.

3 Purchased dental supplies on account from Dazzle Company $4,000.

10 Performed dental services and billed insurance companies $5,100.

11 Received $1,000 cash advance from Leah Mataruka for an implant.

20 Received $2,100 cash for services performed from Michael Santos.

30 Paid secretary-receptionist for the month $2,800.

30 Paid $2,400 to Dazzle for accounts payable due.

Emily uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable,
No. 126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No.
301 Owner’s Capital, No. 400 Service Revenue, No. 726 Salaries and Wages Expense,
and No. 729 Rent Expense.

Instructions

(a) Journalize the transactions.

(b) Post to the ledger accounts.
(c) Prepare a trial balance on April 30, 2017
Problem 2 (Journalizing, Posting, Trial Balance)

Maquoketa Services was formed on May 1, 2017. The following transactions took
place during the first month.

Transactions on May 1:

1. Jay Bradford invested $40,000 cash in the company, as its sole owner.

2. Hired two employees to work in the warehouse. They will each be paid a salary of
$3,050 per month.

3. Signed a 2-year rental agreement on a warehouse; paid $24,000 cash in advance

for the first year.

4. Purchased furniture and equipment costing $30,000. A cash payment of $10,000

was made immediately; the remainder will be paid in 6 months.

5. Paid $1,800 cash for a one-year insurance policy on the furniture and equipment.

Transactions during the remainder of the month:

6. Purchased basic office supplies for $420 cash.

7. Purchased more office supplies for $1,500 on account.

8. Total revenues earned were $20,000—$8,000 cash and $12,000 on account.

9. Paid $400 to suppliers for accounts payable due.

10 Received $3,000 from customers in payment of accounts receivable.

.
11 Received utility bills in the amount of $380, to be paid next month.
.
12 Paid the monthly salaries of the two employees, totaling $6,100.
.

Instructions

(a) Prepare journal entries to record each of the events listed. (Omit explanations.)

(b) Post the journal entries to T-accounts.

(c) Prepare a trial balance as of May 31, 2017.

Problem 3 (Journalizing, Posting, Trial Balance)

The Starr Theater, owned by Meg Vargo, will begin operations in March. The Starr will
be unique in that it will show only triple features of sequential theme movies. As of March
1, the ledger of Starr showed: No. 101 Cash $3,000, No. 140 Land $24,000, No. 145
Buildings (concession stand, projection room, ticket booth, and screen) $10,000, No.
157 Equipment $10,000, No. 201 Accounts Payable $7,000, and No. 301 Owner’s
Capital $40,000. During the month of March, the following events and transactions
occurred.

March 2 Rented the three Indiana Jones movies to be shown for the first 3 weeks of
March. The film rental was $3,500; $1,500 was paid in cash and $2,000 will
be paid on March 10.

3 Ordered the Lord of the Rings movies to be shown the last 10 days of
March. It will cost $200 per night.

9 Received $4,300 cash from admissions.

10 Paid balance due on Indiana Jones movies rental and $2,100 on March 1
accounts payable.

11 Starr Theater contracted with Adam Ladd to operate the concession stand.
Ladd is to pay 15% of gross concession receipts, payable monthly, for the
rental of the concession stand.

12 Paid advertising expenses $900.

20 Received $5,000 cash from customers for admissions.

20 Received the Lord of the Rings movies and paid the rental fee of $2,000.

31 Paid salaries of $3,100.

31 Received statement from Adam Ladd showing gross receipts from

concessions of $6,000 and the balance due to Starr Theater of $900
($6,000 3 15%) for March. Ladd paid one-half the balance due and will
remit the remainder on April 5.

31 Received $9,000 cash from customers for admissions.

In addition to the accounts identified above, the chart of accounts includes: No. 112
Accounts Receivable, No. 400 Service Revenue, No. 429 Rent Revenue, No. 610
Advertising Expense, No. 726 Salaries and Wages Expense, and No. 729 Rent
Expense.
Instructions

(a) Enter the beginning balances in the ledger. Insert a check mark (✓) in the
reference column of the ledger for the beginning balance.

(b) Journalize the March transactions. Starr records admission revenue as service
revenue, rental of the concession stand as rent revenue, and fi lm rental expense
as rent expense.

(c) Post the March journal entries to the ledger. Assume that all entries are posted
from page 1 of the journal.

(d) Prepare a trial balance on March 31, 2017.

Problem 4
The trial balance of Avtar Sandhu Co. shown below does not balance.

AVTAR SANDHU CO.

Trial Balance
June 30, 2017

Debit Credit
Cash $ 3,340
Accounts Receivable $ 2,812
Supplies Equipment 1,200
Equipment 2,600
Accounts Payable 3,666
Unearned Service Revenue 1,100
Owner’s Capital 8,000
Owner’s Drawings 800
Service Revenue 2,480
Salaries and Wages Expense 3,200
Utilities Expense 810
$12,522 $17,846

Each of the listed accounts has a normal balance per the general ledger. An
examination of the ledger and journal reveals the following errors.

1. Cash received from a customer in payment of its account was debited for $580,
and Accounts Receivable was credited for the same amount. The actual
collection was for $850.
2. The purchase of a computer on account for $710 was recorded as a debit to
Supplies for $710 and a credit to Accounts Payable for $710.
 3. Services were performed on account for a client for $980. Accounts Receivable
was debited for $980, and Service Revenue was credited for $98.
4. A debit posting to Salaries and Wages Expense of $700 was omitted.
5. A payment of a balance due for $306 was credited to Cash for $306 and credited
to Accounts Payable for $360.The withdrawal of $600 cash for Sandhu’s
personal use was debited to Salaries and Wages Expense for $600 and credited
to Cash for $600.
Instructions
Prepare a correct trial balance. (Hint: It helps to prepare the correct journal entry for the
transaction described and compare it to the mistake made.)

Reference: Accounting Principles, 12th Edition, Weygant J.K., Kimmel, P.D., Kieso,
D. E.