Case Study 1 1
(Learning Objectives 4, 5, 6: Analyze the impact of business transactions on accounts; record (journalize and post) transactions in the books; construct and use a trial balance) During the first month of operations, Johnson Plumbing, Inc., completed the following transactions:
Johnson received $35,000 cash and issued common stock to the stockholders.
Purchased supplies, $200, and equipment, $3,200, on account.
Performed services for a client and received cash, $1,400.
Paid cash to acquire land, $24,000.
Performed services for a customer and billed the customer, $800. Johnson expects to collect within one month.
Paid for the equipment purchased March 3 on account.
Paid the telephone bill, $150.
Received partial payment from customer on account, $400.
Paid the water and electricity bills, $170.
Received $1,500 cash for repairing the pipes of a customer.
Paid employee salary, $1,800.
Declared and paid dividends of $2,100.
▸Requirements (60 points)
1. Record each transaction in the journal. Key each transaction by date. Explanations are not required.
2. Post the transactions to the T-accounts, using transaction dates as posting references.
3. Prepare the trial balance of Johnson Plumbing, Inc., at March 31 of the current year.
4. The manager asks you how much in total resources the business has to work with, how much it owes, and whether March was profitable (and by how much).
Case Study 1 (Part B)
(Learning Objectives 3, 4: Adjust the accounts; construct the financial statements) Consider the unadjusted trial balance of Princess, Inc., at August 31, 2012, and the related month-end adjustment data.
Adjustment data at August 31, 2012, include the following:
a. Accrued advertising revenue at August 31, $2,100.
b. Prepaid rent expired during the month. The unadjusted prepaid balance of $2,100 relates to the period August 2012 through October 2012.
c. Supplies used during August,