Vanishing Games Corporation (VGC) operates a massively multiplayer online game,
ID: 2420128 • Letter: V
Question
Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $12. At the start of January 2015, VGC’s income statement accounts had zero balances and its balance sheet account balances were as follows:
In addition to the above accounts, VGC’s chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense.
Analyze the effect of the January transactions (shown below) on the accounting equation, and indicate the account, amount, and direction of the effect (+ for increase and for decrease) of each transaction.(Enter any decreases to account balances with a minus sign.)
Received $215,000 cash from Electronic Arts, Inc. for service revenue earned in January.
Purchased 10 new computer servers for $34,600; paid $14,400 cash and signed a three-year note for the remainder owed.
Sold 19,200 monthly subscriptions at $12 each for services provided during January. Half was collected in cash and half was sold on account.
Received an electric and gas utility bill for $5,250 for January utility services. The bill will be paid in February.
Paid $3,300 cash to the supplier in (h).
Prepare journal entries for the January transactions listed in part 1, using the letter of each transaction as a reference. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Create T-accounts, enter the beginning balances shown above, post the journal entries to the T-accounts, and show the unadjusted ending balances in the T-accounts.
Prepare an unadjusted trial balance as of January 31, 2015.
Prepare an Income Statement for the month ended January 31, 2015, using unadjusted balances from part 4
Calculate net profit margin, expressed as a percent
Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $12. At the start of January 2015, VGC’s income statement accounts had zero balances and its balance sheet account balances were as follows:
Explanation / Answer
1 Journal Entries:
unadjusted trial balance as of January 31, 2015:
Income Statement for the month ended January 31, 2015:
Service Revenues $295650
Less: Expenses:
Wages 420000
Advertisement 12600
Utility expense 5250 437850
Net Income (Loss) ($142200)
January Income Statement is showing loss of 48.1%.
Date Accounts Title and Explanation Debit $ Credit $ a Cash 65250 Service Revenue 65250 b Cash 215000 Accounts Receivable 215000 c Office Equipment (computers) 34600 Cash 14400 Note Payable 20200 d Advertisement expense 12600 Cash 12600 e Cash 115200 Accounts Receivable 115200 Service Revenue 230400 f Utility expenses 5250 Accounts Payable 5250 g Wages 420000 Cash 420000 h Supplies 3300 Accounts Payable 3300 i Accounts Payable 3300 Cash 3300Related Questions
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