Question Details

ACCT 105 CHAPTER 2 THE RECORDING PROCESS CE-1 TO CE-3  PART 14

CHALLENGE EXERCISES

CE 1

Presented below is information related to Pickett Real Estate Agency.

Oct. 1 Jeff Pickett begins business as a real estate agent with a cash investment of $30,000 in exchange for common stock.

	2 	Hires an administrative assistant.

	3 	Purchases office equipment for $3,500, by paying $500 cash with the balance on account.

	6 	Sells a house and lot for N. Foster, earning a fee of $6,900 with $900 collected in cash and the balance billed to N. Foster.

	27	 Pays $1,000 on the balance related to the transaction of October 3.

	30	 Pays the administrative assistant $2,300 in salary for October.

	31 	Collects $1,500 of the balance owed by N. Foster.

Instructions

1. 	Journalize the transactions. (You may omit explanations.)

2. What balance would Pickett Real Estate Agency report for Accounts Payable in its October 31 financial statements? In which category of which financial statements would it be found?

3. What balance would Pickett Real Estate Agency report for Accounts Receivable in its October 31 financial statements? In which category of which financial statements would it be found?
 
CE 2

Selected transactions for Garver Company during its first month in business are presented below.

Sept. 	1 Invested $25,000 cash in the business in exchange for common stock.

	5 Purchased equipment for $27,000 paying $6,000 in cash and the balance on account.

11 Performed $3,900 of services for clients, collecting $1,000 cash and billing them for the remainder.

	25 Paid $7,000 cash on balance owed for equipment.

	30 Declared and paid a $600 cash dividend.

	30 Collected $1,200 from the clients from the September 11 transactions.

The Chart of accounts shows: No. 101 Cash, No. 112 Accounts Receivable, No. 157 Equipment, No. 201 Accounts Payable, No. 311 Common Stock, No. 332 Dividends, and No. 400 Service Revenue.

Instructions

(a) Journalize the transactions on page 1 of the journal (Omit explanations).
(b) Post the transactions using the standard account form.
(c) Based only on these transactions, what amount would Garver Company report as total assets in the October 31 balance sheet?
(d) Based only on these transactions, what amount would Garver Company report as total liabilities in the October 31 balance sheet.

CE 3
The accounts in the ledger of Ace Delivery Service contain ithe following balances on July 31, 2015.  	Accounts Receivable	$10,000  	Accounts Payable	  7,900 	Cash	? 	Common Stock	35,000 	Equipment	45,000
	Dividends	900  	Gasoline Expense	800  	Utilities Expense	600  	Maintenance and Repair Expense	1,100  	Retained Earnings	5,000  	Service Revenue	13,000  	Salaries and Wages Expense	?
	Salaries and Wages Payable	1,000
	Supplies	3,000
	Unearned Service Revenue	2,500
	Notes Payable	22,000
	Prepaid Insurance	2,000
 
Instructions

Prepare a trial balance with the accounts arranged as illustrated in the chapter and fill in the missing amounts for Cash and Salaries and Wages Expense. Assume net income for the period is $3,500.