Question

LO 2, 4 Problem 3-27A Recording events in a statements The following Asset Source Transactions 1. Began oper CHECK FIGURE b. Total debits: $39,125 model and T-accounts and preparing a trial balance accounting events apply to Parks Co. for the year 2011 ations when the business acquired $20,000 cash from the issue of common stock 2. Performed services and collected cash of $1,000. . Collected $4,500 of cash in advance for services to be provided over the next 12 months 4. Provided $12,000 of services on account 5. Purchased supplies of $420 on account. Asset Exchange Transactions 6. Purchased $4,000 of land for cash 7. Collected $8,500 of cash from accounts receivable 8. Purchased $500 of supplies with cash. 9. Paid $3,600 in advance for one year's rent. Asset Use Transactions 10. Paid $3,000 cash for salaries of employees 11. Paid a cash dividend of $2,000 to the stockholders 12. Paid $420 for supplies that had been purchased on account Claims Exchange Transactions 13. Placed an advertisement in the local newspaper for S150 and agreed to pay for the ad later 14. Incurred utilities expense of S125 on account. Adjusting Entries 15. Recognized $3,000 of revenue for performing services. The collection of cash for these 16. Recorded $900 of accrued salary expense at the end of 2011. 17. Recorded supplies expense. Had $120 of supplies on hand at the end of the accounting 18. Recognized that three months of prepaid rent had been used up during the accounting services occurred in a prior transaction. (See Event 3.) period period. 19. Recognized $450 of accrued interest revenue. Required a. Record each of the preceding transactions in T-accounts and determine the balance of each b. account. Prepare a before-closing trial balance. Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. Indicate whether the event increases (+), decreases (), or does not affect (NA) each element of the financial statements. Also, in the Cash Flow c. column, use the letters OA to designate operating activity, IA for investing activity, and FA for financing activity. The first event is recorded as an example Assets Liab. + Equity Rev. - Exp. Net Inc,51Cash Flow +NA NA NA NA +FA

Answer 1

A.)

CASH

Particulars	$	Particulars	$
To Common Stock	20000	By land	4000
To Service Revenue	1000	By Supplies	500
To Advance Recd	4500	By Advance Rent	3600
To Customer ( Accounts Receivable)	8500	By Salaries	3000
		By Dividend	2000
		By Supplier	420
		By Balance	20480

                                                            Common Stock

Particulars	$	Particulars	$
To Balance	20000	By Cash	20000

                                                                  Service Revenue

Particulars	$	Particulars	$
		By Cash	1000
		By Customer	12000
		By Advance Revenue	3000
		Balance	16000

                                                             Advance Revenue

Particulars	$	Particulars	$
To Service Revenue	3000	By Cash	4500
To Balance	1500

                                                                   Customer( Accounts Receivable)

Particulars	$	Particulars	$
To Service Revenue	12000	By Cash	8500
		By Balance	3500

                                                                                 Supplies( Purchase)

Particulars	$	Particulars	$
To Supplier	420	By Unused ( Closing Supplies)	120
To Cash	500
BALANCE	800

                                                                        Supplier

Particulars	$	Particulars	$
To Cash	420	By Supplies ( Purchase)	420

                                                                

Land

Particulars	$	Particulars	$
To Cash	4000	By Balance	4000

                                                                 Advance Rent

Particulars	$	Particulars	$
To Cash	3600	By Rent	900
		By Balance	2700

                                                                      Salaries

Particulars	$	Particulars	$
To Cash	3000
To Accrued Salaries	900
Balance	3900

Dividend

Particulars	$	Particulars	$
To Cash	2000
Balance	2000

                                                                          Advertisement

Particulars	$	Particulars	$
To Outstanding Dues	150
Balance	150

                                                 Utilities

Particulars	$	Particulars	$
To Outstanding Dues	125
To Balance	125
utilities Bill outstanding
Particulars	$	Particulars	$
To Balance	275	By Advertisement	150
		By Utilities	125

Accrued Salaries

Particulars	$	Particulars	$
To Balance	900	By Salaries	900

Closing Supplies

Particulars	$	Particulars	$
To Supplies	120	By balance	120

Rent

Particulars	$	Particulars	$
To Advance Rent	900
BALANCE	900

Interest

Particulars	$	Particulars	$
		By Accrued Interest	450
		BALANCE	450

Accrued Interest

Particulars	$	Particulars	$
To Interest	450	By Balance	450

b.)

Trial balance

Particulars	$ Dr	$ Cr
Cash	20480
Common Stock		20000
Service Revenue		16000
Advance Revenue		1500
Accounts Receivable	3500
Supplies	800
Land	4000
Advance rent	2700
Salaries	3900
Dividend	2000
Advertisement	150
Utilities	125
Outstanding Bills		275
Accrued Salaries		900
Closing Supplies	120
Rent	900
Interest		450
Accrued Int	450
TOTAL	39125	39125

C.

Assets= Liab + Equity	Revenue – Expenditure = Income	Cash Flow
+                            +		FA
+	+	OA
+              +		OA
+	+	OA
	+	OA
	NA	IA
	NA	OA
		OA
		OA
-	+	OA
-	+	FA
-              -		OA
+	+	OA
+	+	OA
-	+	OA
+	+	OA
+	-	OA
-	+	OA
+	+	OA