Chapter 3

Tuesday Feb 3, 2009

  1. Identifying Revenues & Expenses

The following transactions are July 2009activities of Bill’s Extreme Bowling Inc., which operated several bowling centers. If revenue/expense is to be recognized in July, indicate the amount. If revenue/expense is not to be recognized in July, explain why.

  1. Bill’s collected $12,000 from customers for games played in July
  1. Bill’s billed a customer for $250 for a party held at the center on the last day of July. The bill is to be paid in August.
  1. Bill’s received $1,000 from credit sales made to customers last month (in June)
  1. The Men’s and women’s bowling leagues gave Bill’s advance payments totaling $1500 for the fall season that starts in September.
  1. Bill’s paid $1500 to plumbers for repairing a broken pipe in the restrooms
  1. Bill’s paid $2,000 for the June electricity bill and received the July bill for $2,500, which will be paid in August
  1. Bill’s paid $5475 to employees for work in July.
  1. Determining Financial Statement Effects of Various Transactions

For each of the transactions below list accounts affected as well as if it is an asset, liability, SE. Show how each of the accounts are affected: assets, liabilities, SE, NI, revenues, and expenses. (Use back of sheet)

  1. Paid wages expense for the period
  2. Borrowed cash from local bank
  3. Purchased equipment on credit
  4. Earned sales revenue, collected cash
  5. Incurred utilities expenses, on credit
  6. Earned sales revenue, on credit
  7. Paid cash on account
  8. Incurred delivery expenses, paid cash.
  9. Earned service revenue, collected half in cash, balance on credit
  10. Collected cash from customers on account
  11. Incurred advertising expense, paid half in cash, balance on credit

Assets / Liabilities / Stockholders’ Equity / Net Income / Revenues / Expenses
a. / – / NE / Wages expense (+E) – / – / NE / –
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
  1. Prepare Journal Entries for each of the following January 2009 transactions. I would begin by using the same form using in the question 3 and then write the journal entry. Be sure to watch that debits = credits. Clue: Unearned Revenue may be used which is a liability.
  1. Received $500 deposit from a customer who wanted her piano rebuilt in February.
  1. Rented a part of the building to a bicycle repair shop for $300 rent received in January.
  1. Delivered five rebuild pianos to customers who paid $14,500 in cash.
  1. Delivered two rebuilt pianos to customers for $7,000 charged on account.
  1. Received $6,000 from customers as payment on their accounts.
  1. Received an electric and gas utility bill for $350 for January services to be paid in February.
  1. Ordered $800 in supplies
  1. Paid $17,00 on account in January
  1. Paid $10,000 in wages to employees in January for work done this month.
  1. Received and paid cash for the supplies in (g)