How to prepare a balance sheet

COMPREHENSIVE PROBLEM 1: THE ACCOUNTING CYCLE

Bob Night opened, “The General’s Favorite Fishing Hole.”  The fishing camp is open from April through September and attracts many famous college basketball coaches during the off-season.  Guests typically register for one week, arriving on Sunday afternoon and returning home the following Saturday afternoon.  The registration fee includes room and board, the use of fishing boats, and professional instruction in fishing techniques.  The chart of accounts for the camping operations is provided below.

The General’s Favorite Fishing Hole: Chart of Accounts

 

Assets		Revenues
101	Cash	401	Registration Fees
142	Office Supplies
144	Food Supplies	Expenses
145	Prepaid Insurance	511	Wages Expense
181	Fishing Boats	521	Rent Expense
181.1	Accum. Depr.–Fishing Boats	523	Office Supplies Expense
		524	Food Supplies Expense
Liabilities		525	Telephone Expense
202	Accounts Payable	533	Utilities Expense
219	Wages Payable	535	Insurance Expense
		536	Postage Expense
Owner’s Equity		542	Depr. Exp.–Fishing Boats
311	Bob Night, Capital
312	Bob Night, Drawing
313	Income Summary

 

The following transactions took place during April 2015

Day Trans# Desc

1 1101 Night invested cash in business, $90,000.

1 1102 Paid insurance premium for six-month camping season, $9,000.

2 1103 Paid rent for lodge and campgrounds for the month of April, $40,000.

2 1104 Deposited registration fees, $35,000.

2 1105 Purchase ten fishing boats on account for $60,000. The boats have estimated useful lives of five years, at which time they will be donated to a local day camp. Arrangements were made to pay for the boats in July.

3 1106 Purchase food supplies from Acme Super Market on account, $7,000.

5 1107 Purchase office supplies from Gordon Office Supplies on account, $500.

7 1108 Deposited registration fee, $38,600.

10 1109 Purchased food supplies from Acme Super Market on account, $8,200

10 1110 Paid wages to fishing guides, $10,000

14 1111 Deposited registration fees, $30,500

16 1112 Purchased food supplies from Acme Super Market on account, $9,000

17 1113 Paid wages to fishing guides, $10,000

18 1114 Paid postage, $150.

21 1115 Deposited registration fees, $35,600

24 1116 Purchased food supplies from Acme Super Market on account, $8,500

24 1117 Paid wages to fishing guides, $10,000

28 1118 Deposited registration fees, $32,000.

29 1119 Paid wages to fishing guides, $10,000

30 1120 Purchased food supplies from Acme Super Market on account, $6,000.

30 1121 Paid Acme Super market on account, $32,700.

30 1122 Paid utilities bill, $2,000.

30 1123 Paid telephone bill, $1,200.

30 1124 Bob Night withdrew cash for personal use, $6,000.

 

 

 

Adjustment information for the end of April is provided below.

 

Office supplies remaining on hand, $100.

Food supplies remaining on hand, $8,000.

Insurance expired during the month of April, $1,500.

Depreciation on the fishing boats for the month of April, $1,000.

Wages earned, but not yet paid, at the end of April, $500.

 

Required:

Enter the transactions in a general journal. Enter transactions from April 1-5 on pages 1, April 7-18 on page 2, April 21-29 and the first two entries for April 30 on page 3, and the remaining entries for April 30 on page 4.

Post the entries to the general ledger.(if you are not using the working papers that accompany this text, you will need to enter the account titles and account numbers in the general leger accounts).

Prepare a trial balance on a work sheet.

Complete the work sheet.

Journalize the adjusting entries (page 5)

Post the adjusting entries to the general ledger.

Prepare the income statement.

Prepare the statement of owner’s equity

Prepare the balance sheet.

Journalize the closing entries (page 5 and 6)

Post the closing entries to the general ledger.

Prepare a post-closing trial balance.

COMPREHENSIVE PROBLEM 1, PERIOD 2: THE ACCOUNTING CYCLE

During the month of May 2015, The General’s Favorite Fishing Hold engaged in the following transactions.  These transactions required an expansion of the chart of accounts as showing below

 

The General’s Favorite Fishing Hole

 

Assets		Revenues
101	Cash	401	Registration Fees
122	Accounts Receivable	404	Vending Revenue
142	Office Supplies
144	Food Supplies	Expenses
145	Prepaid Insurance	511	Wages Expense
146	Prepaid Subscriptions	512	Advertising Expense
161	Land	521	Rent Expense
171	Building	523	Office Supplies Expense
171.1	Accum. Depr.–Buildings	524	Food Supplies Expense
181	Fishing Boats	525	Telephone Expense
181.1	Accum. Depr.–Fishing Boats	533	Utilities Expense
182	Surround Sound System	535	Insurance Expense
182.1	Accum. Depr.–Surround Sound Sys.	536	Postage Expense
183	Big Screen TV	537	Repair Expense
183.1	Accum. Depr.–Big Screen TV	540	Depr. Exp.–Buildings
		541	Depr. Exp.–Surround Sound Sys.
Liabilities		542	Depr. Exp.–Fishing Boats
202	Accounts Payable	543	Depr. Exp.–Big Screen TV
219	Wages Payable	546	Satellite Programming. Exp.
		548	Subscriptions Expense
Owner’s Equity
311	Bob Night, Capital
312	Bob Night, Drawing
313	Income Summary

 

The following transactions took place during May 2015

Day Trans# Desc

1 2101 In order to provide snacks for guests on a 24 hour basis, Night signed a contract with Snack Attack.  Snack Attack will install vending machines with food and drinks and pay a 10% commission on all sales.  Estimated payments are made at the beginning of each month.  Night received a check for $200, the estimated commission on sales for May.

2 2102 Night purchased a surround sound system and big screen TV with a Digital Satellite System for the guest lounge.  The surround sound system cost $3,600 and has an estimated useful life of 5 years, and no salvage value.  The TV cost $8,000 and has an estimated useful life of 8 years, and a salvage value of $800.  Night paid cash for both items.

2 2103 Paid for May’s programming on the new Digital Satellite System, $125.

3 2104 Night’s office manager returned $100 worth of office supplies to Gordon Office Supply.  Night received a $100 reduction in our account with Gordon.

3 2105 Deposited registration fees, $52,700

3 2106 Paid rent for lodge and campgrounds for the month of May, $40,000.

3 2107 In preparation for the purchase of a nearby campground, Night invested an additional $600,000.

4 2108 Paid Gordon Office Supply on account, $400.

4 2109 Purchased the assets of a competing business and paid cash for the following: land $100,000, lodge $530,000 and fishing boats $9,000.  The lodge has a remaining useful life of 50 years and a $50,000 salvage value.  The boats have remaining lives of 5 years and zero salvage value.

5 2110 Paid May’s insurance premium for the new camp, $1,000

5 2111 Purchased food supplies from Acme Super Market on account, $22,950.

5 2112 Purchased office supplies from Gordon Office Supplies on account, $1,200.

7 2113 Night paid $40 each for one-year subscriptions to Fishing Illustrated, Fishing Unlimited, and Fish Master.  The magazines are published monthly.

10 2114 Deposited registration fees, $62,750

13 2115 Paid wages to fishing guides, $30,000.  (Don’t forget wages payable.)

14 2116 A guest because ill and was unable to stay for the entire week.  A refund was issued in the amount of $1,000.

17 2117 Deposited registration fees, $63,000.

19 2118 Purchased food supplies from Acme Super Market on account, $18,400.

21 2119 Deposited registration fees, $63,400

23 2120 Paid $2,500 for advertising spots on National Sports Talk Radio

25 2121 Paid repair fee for damaged boat, $ 850.

27 2122 Paid wages to fishing guides, $30,000.

28 2123 Paid $1,800 for advertising spots on billboards.

29 2124 Purchased food supplies from Acme Super Market on account, $14,325.

30 2125 Paid utilities bill, $3,300

30 2126 Paid telephone bill, $1,800.

30 2127 Paid Acme Super Market on account, $47,350.

31 2128 Bob Night withdrew cash for personal use, $7,500.