acct3220 group exercise 1 parts 1 2 3 accounting principle green fields miniature go 495962

PART I

Select the assumption, principle, or constraint that most appropriately justifies these procedures and practices. (Do not use qualitative characteristics.)

(a) Fair value changes are not recognized in the accounting records.

(b) Lower of cost or market is used to value inventories.

(c) Financial information is presented so that investors will not be misled.

(d) Intangible assets are capitalized and amortized over periods benefited.

(e) Repair tools are expensed when purchased.

(f) Agricultural companies use fair value for purposes of valuing crops.

(g) Each enterprise is kept as a unit distinct from its owner or owners.

(h) All significant post-balance sheet events are reported.

(i) Revenue is recorded at point of sale.

(j) All important aspects of bond liabilities are presented in financial statements.

(k) Rationale for (example of) accrual accounting.

(l) The use of consolidated statements is justified.

(m) Reporting must be done at defined time intervals.

(n) An allowance for doubtful accounts is established.

(o) All payments out of petty cash are charged to Miscellaneous Expense.

(p) Goodwill is recorded only at time of purchase of substantially another company

(q) No profits are anticipated and all possible losses are recognized.

(r) A company charges its sales commission costs to expense.

PART II

Green Fields Miniature Golf and Driving Range Inc. was opened on March 1 by Mickey Fields. The following selected events and transactions occurred during March.

Mar. 1 Invested $60,000 cash in the business in exchange for common stock.

3 Purchased Melissa Wie’s Golf Land for $38,000 cash. The price consists of land $10,000; building $22,000; and equipment $6,000. (Make one compound entry.)

5 Advertised the opening of the driving range and miniature golf course, paying advertising expenses of $1,600.

6 Paid cash $1,480 for a one-year insurance policy.

10 Purchased golf equipment for $2,500 from Young Company, payable in 30 days.

18 Received golf fees of $1,200 in cash.

25 Declared and paid a $1,000 cash dividend.

30 Paid wages of $900.

30 Paid Young Company in full.

31 Received $750 of fees in cash.

Instructions: Journalize the March transactions.

PART III

Presented below are the trial balance and the other information related to Amy Boer, a consulting engineer.

AMY BOER, CONSULTING ENGINEER

TRIAL BALANCE

DECEMBER 31, 2014

Debit Credit

Cash $ 29,500

Accounts Receivable 49,600

Allowance for Doubtful Accounts $ 750

Engineering Supplies Inventory 1,960

Prepaid Insurance 1,100

Furniture and Equipment 25,000

Accumulated Depreciation Furniture and Equipment 6,250

Notes Payable 7,200

Amy Boer, Capital 35,010

Service Revenue 100,000

Rent Expense 9,750

Office Salaries Expense 30,500

Heat, Light, and Water Expense 1,080

Miscellaneous Office Expense 720

$149,210 $149,210

1. Fees received in advance from clients $6,000.

2. Services performed for clients that were not recorded by December 31, $4,900.

3. Bad debt expense for the year is $1,430.

4. Insurance expired during the year $480.

5. Furniture and equipment is being depreciated at 10% per year.

6. Amy Boer gave the bank a 90-day, 10% note for $7,200 on December 1, 2014.

7. Rent of the building is $750 per month. The rent for 2014 has been paid, as has that for January 2015.

8. Office salaries earned but unpaid December 31, 2014, $2,510.

Instructions:

(a) From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2014. (Omit explanations.)

(b) Prepare an income statement for 2014 and a classified balance sheet.