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the following information is available to assist Caruso Corporation?s accountants in making adjusting entries




Question;Preparing Adjusting Entries P 2.;On November 30, the end of the current fiscal;year, the following information is available to assist Caruso Corporation?s;accountants in making adjusting entries;a.;Caruso Corporation?s Supplies account shows a beginning balance;of $2,350. Purchases during the year were $4,218. The end-of-year inventory;reveals supplies on hand of $1,397.;b. The Prepaid Insurance account shows the;following on November 30;Beginning balance $4,720;July 1;4,200;October 1;7,272;The beginning balance represents the unexpired;portion of a one-year policy purchased the previous year. The July 1 entry;represents a new one-year policy, and the October 1 entry represents additional;coverage in the form of a three-year policy.;c. The following table contains the cost and;annual depreciation for buildings and equipment, all of which Caruso;Corporation purchased before the cur-rent year;Account Cost;Annual Depreciation;Buildings $298,000;$16,000;Equipment 374,000;40,000;d. On September 1, the company completed;negotiations with a client and accepted an advance payment of $18,600 for;services to be performed in the next year. The $18,600 was credited to the;Unearned Service Revenue account.;e. The company calculated that as of November;30, it had earned $7,000 on an $11,000 contract that would be completed and;billed in January.;f. Among the liabilities of the company is a;note payable in the amount of $300,000. On November 30, the accrued interest on;this note amounted to$18,000.;g. On Saturday, December 2, the company, which;is on a six-day workweek, will pay its regular salaried employees $15,000.;h. On November 29, the company completed;negotiations and signed a con-tract to provide services to a new client at an;annual rate of $17,500.;i.;Management estimates income taxes for the year to be;$23,000.;Required;1. Prepare adjusting entries in journal form;for each item listed above.;2. Explain how the conditions for revenue;recognition are applied to transactions e and;h;P 4.;Melvin Patel bid for and won a concession to rent bicycles in the local;park during the summer. During the month of June, Patel completed the following;transactions for his bicycle rental business;June;2 Began business;by placing $7,200 in a business checking accounting the name of the corporation;in exchange for 7,200 shares of $1 par value common stock.;3 Purchased;supplies on account for $150.;4 Purchased 10;bicycles for $2,500, paying $1,200 down and agreeing to pay the rest in 30;days.;5 Paid $2,900 in;cash for a small shed to store the bicycles and to use for other operations.;8 Paid $400 in;cash for shipping and installation costs (considered an addition to the cost of;the shed) to place the shed at the park entrance.;9 Hired a;part-time assistant to help out on weekends at $7 per hour.;10 Paid a;maintenance person $75 to clean the grounds.;June;13 Received $970;in cash for rentals.;17 Paid $150 for;the supplies purchased on June 3.;18 Paid a $55 repair;bill on bicycles.;23 Billed a;company $110 for bicycle rentals for an employee outing.;25 Paid the $100;fee for June to the Park District for the right to operate the bicycle;concession.;27 Received $960;in cash for rentals.;29 Paid the;assistant wages of $240.;30 Declared and;paid a dividend of $500.;Required;1. Prepare;entries to record these transactions in journal form.;2. Set up the;following T accounts and post all the journal entries: Cash, Accounts;Receivable, Supplies, Shed, Bicycles, Accounts Payable, Common Stock;Dividends, Rental Revenue, Wages Expense, Maintenance Expense, Repair Expense;and Concession Fee Expense.;3. Prepare a;trial balance for Patel Rentals, Inc., as of June 30, 2010.;4. Compare and;contrast how the issues of recognition, valuation, and classification are;settled in the transactions of June 3 and 10.


Paper#44183 | Written in 18-Jul-2015

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