18,000 Dyanna Crny operates Craig Ridwg Academy. The academy\'s primary sources

Question

18,000 Dyanna Crny operates Craig Ridwg Academy. The academy's primary sources of revenue are riding fees and lesson fees, which are paid on a cash basis. Dyanne also boards horses for owners, who are billed monthly for bouding fees. In a few cases bourdes pay in advance of expected use. For its revenue transactions, the academy maintains the following accounts. Cash, Accounts Receivable, and Service Revenue The academy owns 10 horses, a stable, a riding conal riding equipment, and office equiparent. These assets are accounted for in these accounts Horses, Buildings, and Tiquipment , The academy also maintains the following accounts: Supplies, Prepaid losorance, Accounts Payable, Salaries and Wages Expense, Advertising Expense, Utilities Expertise, and Maintenance and Repairs Expense Dynams makes periode withdrawals of cash dividends to stockholders. To record stockholders' equity in the basiness and dividends three accounts are maintained Common Stock, Retained Earnings, and Dividends. During the first month of operations, an inexperienced bookkeeper was employed Dyanna Craip asks you to review the following eight entries of the 50 entries made during the month. In each case, the explanation for the entry is correct May 1 Cash 18,000 Common Stock (Lovested $18,000 cash in exchange for stock) Cash Service Revenue (Received $250 cash for lessons provided) Cash Service Revenue (Received $300 for boarding of horses beginning June 1) 14 | Equipment Cash (Purchased desk and other office equipment for $800 cash) 15 Salaries and Wapes Expense (Issue dividend checks to stockholders) 20 Cash Service Revente (Received $184 cash for riding fees) May 30 Maintenance and Repairs Expense Account Pavable (Received bill of 575 from carpenter for pair services performed 31 Supplies (Purchased an estimated 2 months supply of feed and hav for $1,700 on account Instructions With the class davided into groups, answer the following incorrect, prepare the entry that should have been made by the bookkeeper (a) Identify each journal entry that is correct. For each journal entry that Cash (b) Which of the incorrect entries would prevent the trial balance from balancing ons occurred in the items listed above (c) What was the correttet mome for May, assuming the bookkeeper reported met income of $4,500 ter postmg all 50 eutrie! ning the bookkeeper reported a balance of $12.475 after posting all 50 entries and the only (d) What was the correct cash balance at May 31, 64 0

Explanation / Answer

(a)

(b)

Entries made on May 14 and May 20 will prevent the trial balance from matching.

(c) Correct net income for May = $4,600

Working:

(d) Correct cash balance $12,511

  Working:

May.1 Entry is correct. May.5 Entry is correct. May.7 Entry is incorrect. The correct entry will be Date Account Title Debit Credit May.7 Cash 300 Unearned Revenue 300 May.14 Entry is incorrect. The correct entry will be Date Account Title Debit Credit May.14 Equipment 800 Cash 800 May.15 Entry is incorrect. The correct entry will be Date Account Title Debit Credit May.15 Dividend 400 Cash 400 May.20 Entry is incorrect. The correct entry will be Date Account Title Debit Credit May.15 Cash 184 Service Revenue 184 May.30 Entry is correct. May.31 Entry is correct.

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.