Joe’s Snow Plowing Company has the following transactions for the year: December
ID: 2415043 • Letter: J
Question
Joe’s Snow Plowing Company has the following transactions for the year:
December 1 – Issued 10,000 shares of capital stock for $100,000 to start a snow plowing business.
December 1 - Paid a one year insurance premium costing $7,200.
December 1 - Purchased a snow plow costing $42,000. Paid cash of $22,000 and signed a 3 year, 6% note for the balance. Interest is to be paid annually. The balance of the note will be paid at the end of its term. It is estimated that the snow plow last 4 years and will have a $6,000 value after 4 years.
December 3 – Purchased $8,000 of supplies on credit. Picked up the supplies on the same day.
December 10 - Paid gas expense of $2,000.
December 12 - Purchased supplies costing $1,800 on credit. Picked up the supplies on the same day.
December 18 – Plowed 18 driveways totaling $32,000 and billed customers.
December 23 – Plowed 3 driveways and billed customers $1,800.
December 28 - Received $22,000 from customers for driveways plowed in #7..
December 28 – Ordered supplies costing $8,000 to be delivered in January.
December 31 - Paid for supplies purchased in #6.
Paid employees $6,000 wages.
December 31 - Received $5,000 for a snow plowing job to be done in January next year.
December 31 - Paid a $0.25 per share dividend.
Required:
1. Prepare journal entries for the above transactions.
2. Post the above transactions to the ledger (use T Accounts).
3. Prepare a Trial Balance.
4. Prepare adjusting entries in journal format and post to the ledger (T Accounts). Following additional information is provided:
Supplies on Hand December 31 was $4,000.
Wages owed but not paid on December 31 was $2,000.
Hint: Plus adjusting entries for depreciation, insurance and interest.
5. Prepare an Adjusted Trial Balance.
6. Prepare an Income Statement, Statement of Retained Earnings and a Balance Sheet.
7. Prepare closing entries in journal format and post to the ledger (T Accounts).
8. Prepare a Post-Closing Trial Balance.
Explanation / Answer
1. Journal entries:
3. Trial Balance as of December 31:
4. Adjusting journal entries:
5. Adjusted Trial Balance as of December 31:
6. In come Statement for the month ended December 31:
Statement of Retained Earnings:
Balance Sheet as of December 31:
Date Account Title Debit Credit $ $ December 1 Cash 100,000 Capital stock 100,000 December 1 Prepaid insurance 7,200 Cash 7,200 December 1 Equipment 42,000 Cash 22,000 Note payable 20,000 December 3 Supplies 8,000 Accounts payable 8,000 December 10 Utilities expense 2,000 Cash 2,000 December 12 Supplies 1,800 Accounts payable 1,800 December 18 Accounts receivable 32,000 Service revenue 32,000 December 23 Accounts revenue 1,800 Service revenue 1,800 December 28 Cash 22,000 Accounts receivable 22,000 December 28 No entry required December 31 Accounts payable 1,800 Cash 1,800 December 31 Wages expense 6,000 Cash 6,000 December 31 Cash 5,000 Unearned revenue 5,000 December 31 Dividend 2,500 Cash 2,500Related Questions
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