ACCT 301 Connect Homework Chapter 2 solutions complete answers

ACCT 301 Connect Homework Chapter 2 solutions complete answers 

 

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Question 1

 

The Marchetti Soup Company entered into the following transactions during the month of June: (1) purchased inventory on account for $155,000 (assume Marchetti uses a perpetual inventory system); (2) paid $42,000 in salaries to employees for work performed during the month; (3) sold merchandise that cost $124,000 to credit customers for $210,000; (4) collected $190,000 in cash from credit customers; and (5) paid suppliers of inventory $135,000.

 

Analyze each transaction and show the effect of each on the accounting equation for a corporation. (Amounts to be deducted should be indicated by a minus sign. Enter the net change on the accounting equation.)

 

Question 2

 

A company has a fiscal year-end of December 31: (1) on October 1, $22,000 was paid for a one-year fire insurance policy; (2) on June 30 the company advanced its chief financial officer $20,000; principal and interest at 6% on the note are due in one year; and (3) equipment costing $70,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $14,000 per year.

 

Prepare the necessary adjusting entries at December 31 for each of the above items. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

 

Question 3

 

A company has a fiscal year-end of December 31: (1) on October 1, $28,000 was paid for a one-year fire insurance policy; (2) on June 30 the company advanced its chief financial officer $26,000; principal and interest at 8% on the note are due in one year; and (3) equipment costing $76,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $15,200 per year.

 

If the adjusting entries were not recorded, would net income be higher or lower and by how much?

 

Question 4

 

The following transactions occurred during the month of June 2021 for the Stridewell Corporation. The company owns and operates a retail shoe store.

 

Issued 65,000 shares of common stock in exchange for $325,000 cash.

 

Purchased office equipment at a cost of $61,250. $24,500 was paid in cash and a note payable was signed for the balance owed.

 

Purchased inventory on account at a cost of $130,000. The company uses the perpetual inventory  system.

 

Credit sales for the month totaled $221,000. The cost of the goods sold was $110,500.

 

Paid $2,750 in rent on the store building for the month of June.

 

Paid $1,560 to an insurance company for fire and liability insurance for a one-year period beginning  June 1, 2021.

 

Paid $93,925 on account for the merchandise purchased in 3.

 

Collected $44,200 from customers on account.

 

Paid shareholders a cash dividend of $3,250.

 

Recorded depreciation expense of $1,225 for the month on the office equipment.

 

Recorded the amount of prepaid insurance that expired for the month.

 

Prepare journal entries to record each of the transactions and events listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

 

Question 5

 

The following transactions occurred during December 31, 2021, for the Falwell Company.

 

A three-year fire insurance policy was purchased on July 1, 2021, for $14,760. The company debited insurance expense for the entire amount.

 

Depreciation on equipment totaled $14,000 for the year.

 

Employee salaries of $20,500 for the month of December will be paid in early January 2022.

 

On November 1, 2021, the company borrowed $270,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2022.

 

On December 1, 2021, the company received $8,100 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to deferred rent revenue.

 

On December 1, 2021, the company received $8,100 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to rent revenue rather than deferred rent revenue for $8,100 on December 1, 2021.

 

Prepare the necessary adjusting entries for each of the above situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

 

Question 6

 

The Righter Shoe Store Company prepares monthly financial statements for its bank. The November 30 and December 31, 2021, trial balances contained the following account information:

 

The following information also is known:

 

The December income statement reported $2,500 in supplies expense.

 

No insurance payments were made in December.

 

$12,500 was paid to employees during December for salaries.

 

On November 1, 2021, a tenant paid Righter $4,500 in advance rent for the period November through January. Deferred rent revenue was credited.

 

1. Using the above information for December, complete the T-accounts below. The beginning balances should be the balances as of November 30.

 

2. Using the above information, prepare the adjusting entries Righter recorded for the month of December.

 

Question 7

 

The following is the post-closing trial balance for the Whitlow Manufacturing Corporation as of December 31, 2020.

 

The following transactions occurred during January 2021:

 

1   Sold merchandise for cash, $4,200. The cost of the merchandise was $2,700. The company uses the perpetual inventory system.

 

2   Purchased equipment on account for $6,200 from the Strong Company.

 

4   Received a $200 invoice from the local newspaper requesting payment for an advertisement that Whitlow placed in the paper on January 2.

 

8   Sold merchandise on account for $5,700. The cost of the merchandise was $3,500.

 

10   Purchased merchandise on account for $9,850.

 

13   Purchased equipment for cash, $900.

 

16   Paid the entire amount due to the Strong Company.

 

18   Received $5,400 from customers on account.

 

20   Paid $900 to the owner of the building for January’s rent.

 

30   Paid employees $3,700 for salaries for the month of January.

 

31   Paid a cash dividend of $900 to shareholders.

 

2. Prepare general journal entries to record each transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

 

Question 8

 

1. & 3. Enter the beginning balances as of January 1, 2021 and post the entries to T-accounts. (Enter the date of the transaction in the column next to the amount.)

 

Question 9

 

4. Prepare an unadjusted trial balance as of January 31, 2021.

 

Question 10

 

Pastina Company sells various types of pasta to grocery chains as private label brands. The company’s reporting year-end is December 31. The unadjusted trial balance as of December 31, 2021, appears below.

 

Information necessary to prepare the year-end adjusting entries appears below.

 

Depreciation on the office equipment for the year is $11,100.

 

Employee salaries are paid twice a month, on the 22nd for salaries earned from the 1st through the 15th, and on the 7th of the following month for salaries earned from the 16th through the end of the month. Salaries earned from December 16 through December 31, 2021, were $1,400.

 

On October 1, 2021, Pastina borrowed $52,200 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.

 

On March 1, 2021, the company lent a supplier $22,200 and a note was signed requiring principal and interest at 9% to be paid on February 28, 2022.

 

On April 1, 2021, the company paid an insurance company $7,100 for a two-year fire insurance policy. The entire $7,100 was debited to prepaid insurance.

 

$900 of supplies remained on hand at December 31, 2021.

 

A customer paid Pastina $1,900 in December for 1,566 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.

 

On December 1, 2021, $2,400 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022, at $1,200 per month. The entire amount was debited to prepaid rent.

 

Prepare the necessary December 31, 2021, adjusting journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)