BRIEF EXERCISES
BE3-1 (L02) Transactions for Mehta Company for the month of May are presented below. Prepare journal entries for each of these transactions. (You may omit explanations.)
May 1 B.D. Mehta invests $4,000 cash in exchange for common stock in a small welding corporation.
3 Buys equipment on account for $1,100.
13 Pays $400 to landlord for May rent.
21 Bills Noble Corp. $500 for welding work done.
BE3-2 (L02) Agazzi Repair Shop had the following transactions during the first month of business as a proprietorship. Journalize the transactions. (Omit explanations.)
Aug. 2 Invested $12,000 cash and $2,500 of equipment in the business.
7 Purchased supplies on account for $500. (Debit asset account.)
12 Performed services for clients, for which $1,300 was collected in cash and $670 was billed to the clients.
15 Paid August rent $600.
19 Counted supplies and determined that only $270 of the supplies purchased on August 7 are still on hand.
BE3-3 (L02,3) On July 1, 2017, Crowe Co. pays $15,000 to Zubin Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending December 31. For Crowe Co., journalize the entry on July 1 and the adjusting entry on December 31.
BE3-4 (L02,3) Using the data in BE3-3, journalize the entry on July 1 and the adjusting entry on December 31 for Zubin Insurance Co. Zubin uses the accounts Unearned Service Revenue and Service Revenue.
BE3-5 (L02,3) Assume that on February 1, Procter & Gamble (P&G) paid $720,000 in advance for 2 years’ insurance coverage.
Prepare P&G’s February 1 journal entry and the annual adjusting entry on June 30.
BE3-6 (L02,3) LaBouche Corporation owns a warehouse. On November 1, it rented storage space to a lessee (tenant) for 3 months for a total cash payment of $2,400 received in advance. Prepare LaBouche’s November 1 journal entry and the December 31 annual adjusting entry.
BE3-7 (L02,3) Dresser Company’s weekly payroll, paid on Fridays, totals $8,000. Employees work a 5-day week. Prepare Dresser’s adjusting entry on Wednesday, December 31, and the journal entry to record the $8,000 cash payment on Friday, January 2.
BE3-8 (L03) Included in Gonzalez Company’s December 31 trial balance is a note receivable of $12,000. The note is a 4-month, 10% note dated October 1. Prepare Gonzalez’s December 31 adjusting entry to record $300 of accrued interest, and the February 1 journal entry to record receipt of $12,400 from the borrower.
BE3-9 (L03) Prepare the following adjusting entries at August 31 for Walgreens.
(a) Interest on notes payable of $300 is accrued.
(b) Services performed but unbilled total $1,400.
(c) Salaries and wages earned by employees of $700 have not been recorded.
(d) Bad debt expense for year is $900.
Use the following account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries and Wages Expense, Salaries and Wages Payable, Allowance for Doubtful Accounts, and Bad Debt Expense.
BE3-10 (L03) At the end of its first year of operations, the trial balance of Alonzo Company shows Equipment $30,000 and zero balances in Accumulated Depreciation—Equipment and Depreciation Expense. Depreciation for the year is estimated to be $2,000. Prepare the adjusting entry for depreciation at December 31, and indicate the balance sheet presentation for the equipment at December 31.
BE3-11 (L04) Side Kicks has year-end account balances of Sales Revenue $808,900, Interest Revenue $13,500, Cost of Goods Sold $556,200, Administrative Expenses $189,000, Income Tax Expense $35,100, and Dividends $18,900. Prepare the year-end closing entries.
BE3-12 (L07) Kelly Company had cash receipts from customers in 2017 of $142,000. Cash payments for operating expenses were $97,000. Kelly has determined that at January 1, accounts receivable was $13,000, and prepaid expenses were $17,500. At December 31, accounts receivable was $18,600, and prepaid expenses were $23,200. Compute (a) service revenue and (b) operating expenses.
BE3-13 (L08) Assume that Best Buy made a December 31 adjusting entry to debit Salaries and Wages Expense and credit Salaries and Wages Payable for $4,200 for one of its departments. On January 2, Best Buy paid the weekly payroll of $7,000. Prepare Best Buy’s (a) January 1 reversing entry; (b) January 2 entry (assuming the reversing entry was prepared); and (c) January 2 entry (assuming the reversing entry was not prepared).
