Review Problem

Topics: Accounts receivable, Balance sheet, Expense Pages: 3 (627 words) Published: April 16, 2013
Review Problem

The following are the balances in the accounts for Joan Miller Advertising Agency as of January 31, 2001:

Debit Credit
Cash $ 1,720
Accounts Receivable 3,000
Art Supplies 1,300
Office Supplies 600
Prepaid Rent 400
Prepaid Insurance 440
Art Equipment 4,200
Accumulated Depreciation, Art eq.$ 70
Office Equipment 3,000
Accumulated Depreciation –Office Eq. 50 Accounts Payable 3,170
Unearned Art Fees 600
Wages Payable 180
Joan Miller, Capital 10,590
Totals $14,660 14,660

During the month of February, the agency engaged in the following transactions:

Feb. 1 Received an additional investment of cash from Joan Miller, $6,000 Feb. 2 Purchased additional office equipment with cash, $800. Feb. 5 Received art equipment transferred to the business from Joan Miller, $1,400. Feb. 6 Purchased additional office supplies with cash, $80

Feb. 7 Purchased additional art supplies on credit from Taylor Supply Company, $500. Feb. 8 Completed the series of advertisements for Marsh Tire Company that began on January 31, and billed Marsh Tire Company for the total services performed, including the accrued revenues that had been recognized in January of $200 (see accounts receivable). The total bill is $800. Feb. 9 Paid the secretary for two weeks’ wages, $600.

Feb. 12 Paid the amount due to Morgan Equipment for the office equipment purchased last month $1,500 Feb. 13 Accepted an advance fee in cash for artwork to be done for another agency, $1,800. Feb. 14 Purchased a copier from Morgan Equipment for $2,100 paying $250 in cash and agreeing to pay he rest in equal payments over the next five months. Feb. 15 Performed advertising services and accepted a cash fee, $1,050. Feb. 16 Received payment on account from Ward Department Stores for...
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