Department of Accounting ahu Bu Page 1 ACCOUNTING 1101-COMPREHENSIVE PROBLEM To
ID: 2580030 • Letter: D
Question
Department of Accounting ahu Bu Page 1 ACCOUNTING 1101-COMPREHENSIVE PROBLEM To be completed after Chapter 4) The Heights Fitness Club opened for business on January 1,202. Members can attend the chu for a monthly fee of 90]or a yeartyfee of [S900|The monthly fee must be paid ind The yearly fee can be paid in cash (members receive a 10% discount if they paythe full fee in advance or members can siem a yearly contract but pay monthly is also a one-day pass available for a fee of cash $75 $ 15 For all fees received, the Unearned Membership Fees account is initially credited and adjusted at the end of each month. When a member signs an annual contract, but wants to pay monthly, the club debits the Cash account fo r the initial amount received (the amount for the first month) and debits the Accounts Recevable account for the balance. Lockers can also be rented for long-term use. The monthly fee is All locker fees must be paid in cash. When the club receives locker fees, it initially credits the Unearned Locker Fees account, Adjustments for fees earned occur at the end of each month. Additional information: 1) The club prepares financial statements monthly; all adjustments are made monthly. 2) A one year liability Insurance policy was purchased on October 1, 20x5; the premium paid was 4,500 a) The building was purchased on January 1, 20x2. Original cost b) The health club equipment was purchased on September 1, 20x5. Original cost: $108.0 c) The office equipment was purchased on April 1, 20x4. Original cost 3) All assets are being depreciated on a straight-line basis. 324,000 20 Estimated useful life (in years): Estimated useful life (in years): Estimated useful life (in years): 27,000 4 There is an outstanding one-year note payable, dated November 1, 20x5; principal and interest will be due on November 1, 20x6. Principal amount of the note: Interest rate on the note (per year) Interest expense accrued and recorded at the end of November, 20x5: 100,000 12% $ 1,000 5) A complete chart of accounts used by the Heights Fitness Club appears on page 2 The trial balance dated November 30, 20x5 (on page 3) represents the at that date (i.e, this is the trial balance after all adjustments recorded and posted for the month of November, 20x5.) and closing entries have beenExplanation / Answer
Date Description Post Ref Debit Credit 2005 Dec 3 Cash account Dr 2,700 To Unearned Membership Fees 2,700 (To record 30 monthly membership enrolments @$90 each) 3 Cash account Dr 8,100 To Unearned Membership Fees 8,100 (To record 10 yearly membership enrolments @$810 ($900 less 10% discount) each) 3 Cash account Dr 3,000 Acounts Receivable Dr 33,000 To Unearned Membership Fees 36,000 (To record 40 yearly membership enrolments @$75per month each) 4 Health club supplies Dr 625 To Accounts Payable 625 (To record health club supplies purchased on credit) 5 Advertisement expense Dr 350 To Cash account 350 (To record payment made to local newspaper for an advertisement) 6 Cash account Dr 30,000 To Accounts Receivable 30,000 (To record payments received from members on account) 7 Cash account Dr 50,000 To J, Kern, Capital 50,000 (To record cash infused by owner) 10 Accounts Payable Dr 3,800 To Cash account 3,800 (To record payment made to vendors on account) 11 Cash account Dr 150 To Unearned Membership Fee 150 (To record daily membership fee received) 12 Health club supplies Dr 485 To Cash 485 (To record health club supplies purchased for cash) 13 Cash account Dr 15,000 To Accounts Receivable 15,000 (To record payments received from members on account) 14 Wages account Dr 20,000 To Cash account 20,000 (To record payment of daily wages) 17 Cash account Dr 600 To Unearned locker rent 600 (To record locker rent received) 18 Maintenance expense Dr 1,850 To Cash account 1,850 (To record payment made to an outside contrator for equipment maintenance) 19 Cash account Dr 225 To Unearned Membership Fee 225 (To record daily membership fee received) 20 Office supplies Dr 800 To Accounts Payable 800 (To record additional office supplies purchased on account) 21 Utilities expense Dr 460 To Accounts Payable 460 (To record telephone expense for the month) 24 no entry 25 Prepaid Insurance Dr 780 To Cash account 780 (To record annual insurance premium paid for a new policy starting on Jan 6) 26 Office supplies Dr 410 To Cash Account 410 (To record additional office supplies purchased for cash) 27 Advertisement expense Dr 350 To Cash account 350 (To record payment made to a sign maker for advertising year end special at the club) 28 Wages account Dr 20,000 To Cash account 20,000 (To record payment of daily wages) 31 Office equipment 2,700 To Cash account 700 To Accounts Payable 2,000 (To record office equipment purchased, down payment on the purchase and intalments payable) 31 Cash account Dr 300 To Unearned Membership Fee 300 (To record daily membership fee received) 31 J, Kern, Withdrawal 7,500 To Cash account 7,500 (To record Owner drawings) Adjustments entered in the General journal 31 Depreciation - Building 1,350 Depreciation - Health club equipment 2,250 Depreciation - Office equipment 450 To A/D Building 1,350 =324000/20/12 To A/D Health club equipment 2,250 =108000/4/12 To A/D Office equipment 450 =27000/5/12 (To record depreciaiton for the month 31 Health club supplies expense Account Dr 3,510 To Health club supplies account 3,510 (To adjust health club supplies consumed during the month) 31 Office supplies expense Account Dr 1,830 To Office club supplies account 1,830 (To adjust Office supplies consumed during the month) 31 Insurance expense a/c dr 375 To Prepaid Insurance 375 (To adjust insurance expense for the month) 31 Interest expense a/c Dr 1,000 =100000*12%/12 To Interest payable 1,000 (To record interest expense payable for the month) 31 Unearned membership fee Dr 80,050 To Membership fee income 80,050 (To record membership fee revenue for the month 31 Unearned locker fee Dr 3,200 To Locker fee income 3,200 (To record locker fee revenue for the month 31 Wages expense 4,286 To Wages Payable 4,286 (To record wages payable for 3 days (20,000/14*3)) Closing entries 31 Membership fee revenue 80,050 Locker fees revenue 3,200 To Profit & Loss account 83,250 (Closed revenue accounts) 31 Profit & Loss Accounts 58,061 To Wages 44,286 To Health club supplies expenses 3,510 To Office supplies expenses 1,830 To Maintenance expenses 1,850 To Depreciation - Building 1,350 To Depreciation - health club equipment 2,250 To Depreciation - Office equipment 450 To Interest expense 1,000 To Insurance expenses 375 To Advertising expense 700 To Utilities 460 (Closed expenses accounts) 31 J, Kern Capital account 7,500 To J, Kern, Withdrawals 7,500 (To close drawings account) 31 Profit & Loss 25,189 To J, Kern, Capital 25,189 (To close drawings account) Cash account Acct # 111 Post Ref Balance Date Item Debit Credit Debit Credit Dec, 2005 1 To balance b/f 80,000 80,000 3 To Unearned Membership Fees 2,700 82,700 3 To Unearned Membership Fees 8,100 90,800 3 To Unearned Membership Fees 3,000 93,800 5 By Advertising expense 350 93,450 6 To Accounts Receivable 30,000 123,450 7 To J, Kern, Capital 50,000 173,450 10 By Accounts Payable 3,800 169,650 11 To Unearned Membership Fee 150 169,800 12 By Health Club Supplies 485 169,315 13 To Accounts Receivable 15,000 184,315 14 By Wages 20,000 164,315 17 To Unearned locker rent 600 164,915 18 By Maintenance expense 1,850 163,065 19 To Unearned Membership Fee 225 163,290 26 By Prepaid Insurance 780 162,510 26 By Office supplies 410 162,100 27 By Advertising expense 350 161,750 28 By Wages 20,000 141,750 31 By Office equipment 700 141,050 31 To Unearned Membership Fee 300 141,350 31 By J, Kern, Drawings 7,500 133,850 31 By Balance c/f 133,850 Accounts Payable Acct # 211 Post Ref Balance Date Item Debit Credit Debit Credit Dec, 2005 1 By balance b/f 24,800 24,800 4 By Health club supplies 625 25,425 10 To Cash 3,800 21,625 20 By Office supplies 800 22,425 21 By Telephone 460 22,885 31 By Office equipment 2,000 24,885 31 To Balance c/f 24,885 Unearned membership Fees Acct # 214 Post Ref Balance Date Item Debit Credit Debit Credit Dec, 2005 1 By balance b/f 491,000 491,000 3 By Cash 2,700 493,700 3 By Cash 8,100 501,800 3 By Cash 3,000 504,800 3 By Accounts Receivable 33,000 537,800 11 By Cash 150 537,950 19 By Cash 225 538,175 31 By Cash 300 538,475 31 To Membership fees Revenue 80,050 458,425 31 To Balance c/f 458,425
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