Problem: 01
COMPREHENSIVE PROBLEM: CHAPTERS 2 TO 4
Mary Coleman opened Mary’s Maids Cleaning Service on July 1, 2005. During July, the following transactions were completed.
July 01 Invested $14,000 cash in the business.
01 Purchased a used truck for $10,000, paying
$3,000 cash and the balance on account.
03 Purchased cleaning supplies for $ 800 on
account.
05 Paid $2,400 on a one-year insurance policy,
effective July 1.
12 Billed customers $3,800 for cleaning
services.
18 Paid $1,000 of amount owed on truck, $400 of
owed on cleaning supplies.
20 Paid $1,600 for employee salaries.
21 Collected $1,400 from customers billed on
July 12.
25 Billed customers $2,500 for cleaning
services.
31 Paid gas and oil for the month on truck,
$400.
31 Withdrew $ 600 cash for personal use.
Instructions
(1) Earned but unbilled fees at July 31 were $1,300.
(2) Depreciation on equipment for the month was $200.
(3) On-twelfth of the insurance expired.
(4) An inventory count shows $300 of cleaning supplies on
hand at July 31.
(5) Accrued but unpaid employee salaries were $500.
Solution on the Problem:
Mary’s Maids Cleaning Services
On July 01, 2005
General Journal
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
|
July 01,2005
July 03,2005
July 05,2005
July 12,2005
July 18,2005
July 20,2005
July 21,2005
July 25,2005
July 31,2005
July 31,2005 |
Cash —– Dr. Truck —– Dr.
Supplies —– Dr.
Prepaid insurance —– Dr.
Accounts receivable —– Dr.
Accounts payable —– Dr.
Salaries expenses —– Dr.
Cash —– Dr.
Accounts receivable —– Dr.
Gas & oil expenses —– Dr.
Drawing —– Dr. |
$14,000.00
$10,000.00
$800.00
$2,400.00
$3,800.00
$1,400.00
$1,600.00
$1,400.00
$2,500.00
$400.00
$600.00 |
$7,000.00 $3,000.00
$800.00
$2,400.00
$3,800.00
$1,400.00
$1,600.00
$1,400.00
$2,500.00
$400.00
$600.00 |
General Ledger
Cash Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
|
July 01 |
Capital Prepaid insurance |
$14,000.00
|
$3,000.00 $2,400.00 $1,400.00 $1,600.00
|
Debit |
Credit |
|
|
$14,000.00 $11,000.00 $8,600.00 $6,000.00 |
||||||
Capital Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
|
July 01 |
Cash |
$14,000.00 |
Debit |
Credit |
||
|
$14,000.00 |
||||||
Truck Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
|
July 01 |
Cash |
$3,000.00 |
Debit |
Credit |
||
|
$3,000.00 |
||||||
Accounts Payable Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
|
July 01 |
Truck |
$1,400.00 |
$7,000.00 |
Debit |
Credit |
|
|
$7,000.00 |
||||||
Accounts Receivable Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
|
July 12 |
Supplies |
$3,800.00
$2,500.00 |
$1,400.00 |
Debit |
Credit |
|
|
$3,800.00 |
||||||
Service Revenue Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
|
July 12 |
Accounts receivable |
$3,800.00 |
Debit |
Credit |
||
|
$3,800.00 |
||||||
Supplies Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
|
July 03 |
Accounts payable |
$800.00 |
Debit |
Credit |
||
|
$800.00 |
||||||
Prepaid Insurance Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
|
July 05 |
Cash |
$2,400.00 |
Debit |
Credit |
||
|
$2,400.00 |
||||||
Salaries Expenses Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
|
July 20 |
Cash |
$1,600.00 |
Debit |
Credit |
||
|
$1,600.00 |
||||||
Gas & Oil Expenses Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
|
July 31 |
Cash |
$400.00 |
Debit |
Credit |
||
|
$400.00 |
||||||
Drawing Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
|
July 31 |
Cash |
$600.00 |
Debit |
Credit |
||
|
$600.00 |
||||||
Mary’s Maids Cleaning Services
On July 01, 2005
Trail Balance
|
S.L. |
Explanation |
Ref. no. |
Debit |
Credit |
|
Cash Capital Accounts payable Accounts receivable Supplies Service revenue Truck Prepaid insurance Salaries expenses Gas & Oil expenses Drawing |
$6,000.00
$4,900.00 $800.00
$10,000.00 $2,400.00 $1,600.00 $400.00 $600.00 |
$14,000.00 $6,400.00
$6,300.00 |
||
|
$26,700.00 |
$26,700.00 |
|||
Mary’s Maids Cleaning Services
On July 01, 2005
Work Sheet
|
Accounts Title |
Trial Balance |
Adjustment |
Adjusted Trial Balance |
Income Statement |
Balance Sheet |
|||||
|
Dr. |
Cr. |
Dr. |
Cr. |
Dr. |
Cr. |
Dr. |
Cr. |
Dr. |
Cr. |
|
|
Cash |
$6000 |
$6000 |
$6000 |
|||||||
|
A/c receivable |
|
|
(a)$300 |
|
|
|
|
|||
|
A/c payable |
$4900 |
$6400 |
$6200 |
$6400 |
$6200 |
$6400 |
||||
|
Capital |
$14000 |
$14000 |
$14000 |
|||||||
|
Service revenue |
$6300 |
(a)$1300 |
$7600 |
$7600 |
||||||
|
Supplies |
$800 |
(d)$500 |
$300 |
$300 |
||||||
|
Truck |
$10000 |
$10000 |
$10000 |
|||||||
|
Prepaid insurance |
$2400 |
(c)$200 |
$2200 |
$2200 |
||||||
|
Salaries expenses |
$1600 |
(e)$500 |
$2100 |
$2100 |
||||||
|
Gas & Oil expenses |
$400 |
$400 |
$400 |
|||||||
|
Drawing
Depreciation expenses |
$600 |
(b)$200 |
$600
$200 |
$200 |
$600 |
|||||
|
$26700 |
$26700 |
|||||||||
|
Accumulated Depreciation expenses |
(b)$200 |
$200 |
$200 |
|||||||
|
Insurance expenses |
(c)$200 |
$200 |
$200 |
|||||||
|
Supplies expenses |
(d)$500 |
$500 |
$500 |
|||||||
|
Salaries payable Total Net income Total |
(e)$500 |
$500 |
$4200 |
$500
$4200 |
||||||
|
$2700 |
$2700 |
$28700 |
$28700 |
|||||||
|
$7600 |
$7600 |
$25300 |
$25300 |
|||||||
Mary’s Maids Cleaning Services
On July 31, 2005
General Journal
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
|
July 31, 2005
July 31, 2005
July 31, 2005
July 31, 2005 |
Closing entries (1) Service revenue —– Dr. Income summery —– Cr. (To close service revenue)
(2) Income summery —– Dr. Salaries expenses —– Cr. Gas & Oil expenses —– Cr. Depreciation expenses —– Cr. Insurance expenses —– Cr. Supply expenses —– Cr. (To close expenses account)
(3) Income summery —– Dr. Mary’s capital —– Cr. (To close net income to capital)
(4) Mary’s capital —– Dr. Mary’s drawing —– Cr. (To Mary’s capital) |
$7,600.00
$3,400.00
$4,200.00
$600.00 |
$7,600.00
$2,100.00 $400.00 $200.00 $200.00 $500.00
$4,200.00
$600.00 |
Mary’s Maids Cleaning Services
On July 31, 2005
General Ledger
Income Summary Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 31, 2005 |
Service revenue All kind of expenses Mary’s capital |
$3,400.00 $4,200.00 |
$7,600.00 |
$7,600.0 $4,200.00 $00.00 |
Capital Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 01, 2005 July 31, 2005 July 31, 2005 |
Previous balance Closing entry Closing entry |
$600.00 |
$14,000.00 $4,200.00 |
$14,000.00 $18,200.00 $17,600.0 |
Drawing Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 31, 2005 |
Cash Closing entry |
$600.00 |
$600.00 |
$600.00 $00.00 |
Salaries Expenses Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 20, 2005 |
Cash Adjustment entry Closing entry |
$1,600.00 $500.00 |
$2,100.00 |
$1,600.00 $2,100.00 $00.00 |
Gas & Oil Expenses Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 31, 2005 |
Cash Closing entry |
$400.00 |
$400.00 |
$400.00 $00.00 |
Depreciation Expenses Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 31, 2005 |
Cash Closing entry |
$200.00 |
$200.00 |
$200.00 $00.00 |
Insurance Expenses Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 31. 2005 |
Cash Closing entry |
$200.00 |
$200.00 |
$200.00 $00.00 |
Supplies Expenses Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 31, 2005 |
Cash Closing entry |
$500.00 |
$500.00 |
$500.00 $500.00 |
Accounts Receivable Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 31, 2005 |
Adjusting entry |
$6,200.00 |
$6,200.00 |
Service Revenue Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 31, 2005 |
Account receivable Adjustment entry |
$7,600.00 |
$7,600.00 |
$7,600.00 $00.00 |
Prepaid Insurance Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 05, 2005 |
Cash Adjustment entry |
$2,400.00 |
$200.00 |
$2,400.00 $2,200.00 |
Truck Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 01, 2005 |
Adjustment entry |
$10,000.00 |
$10,000.00 |
Accounts Payable Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 31, 2005 |
Adjustment entry |
$6,400.00 |
$6,400.00 |
Supplies Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 31, 2005 |
Adjustment entry |
$300.00 |
$300.00 |
Accumulated Deprecation Statement
|
Date |
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
July 31, 2005 |
Adjustment entry |
$200.00 |
$200.00 |
Salaries Payable Statement
|
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
|
July31,2005 |
Adjustment entry |
$500.00 |
$500.00 |
Cash statement
|
Explanation |
Ref. no. |
Debit |
Credit |
Balance |
|
|
July31,2005 |
Adjustment entry |
$6,000.00 |
$6,000.00 |
Mary’s Maids Cleaning Services
On July 31, 2005
Post closing trail balance
|
S.L. |
Explanation |
Ref. no. |
Debit |
Credit |
|
01. 02. 03. 04. 05. 06. 07. 08. 09. |
Cash Capital Accounts receivable Accounts payable Accumulated depreciation on equipment Salaries payable Prepaid insurance Truck Supplies |
$6,000.00
$6,200.00
$2,200.00 $10,000.00 $300.00 |
$17,600.00
$6,400.00 $200.00 $500.00 |
|
|
$24,700.00 |
$24,700.00 |
|||
|
|
Mary’s Maids Cleaning Services
On July 31, 2005
Balance Sheet
|
Assets |
Amount($) |
Liabilities |
Amount ($) |
|
Current assets Cash $6,000.00 A/C receivable $6,200.00
Others assets Prepaid insurance $2,200.00 Supplies $300.00
Property, Plant & Equipment |
$12,200.00
$2,500.00
$10,000.00 |
Current liabilities Salaries payable $500.00 A/C payable $6,400.00
Others liabilities Accumulated depreciation on equipment
Owners equity Mary’s Maids capital |
$6,900.00
$200.00
$17,600.00 |
|
$24,700.00 |
$24,700.00 |
||
|
|
Problem: 02
Financial Reporting Problem: PepsiCo
Instructions:
Answer the following questions using the Consolidated Balance Sheet and the Notes to Consolidated Financial Statements section.
a. What were PepsiCo’s total current assets at December 28, 2002 and
December 29, 2001?
b. Are assets that PepsiCo included under current assets listed in
proper order? Explain.
c. How are PepsiCo’s assets classified?
d. What are “cash equivalents”?
e. What were PepsiCo’s total current liabilities at December 28, 2002
and December 29, 2001?
PepsiCo’s Current Assets
At December 29, 2001 & December 28, 2002
(A)
|
Date |
Explanation |
Amount |
Total amount |
|
December
December |
Current assets Cash & cash equivalent Short term investment Inventories Accounts & notes receivable Prepaid expenses & other current assets
Current assets Cash & cash equivalent Short term investment Inventories Accounts & notes receivable Prepaid expenses & other current assets |
$683.00 $960.00 $1310.00 $2142.00 $752.00 |
$5,853.00
$6,413.00 |
|
$1,683.00 $207.00 $1,342.00 $2,531.00 $695.00 |
|||
|
|
|||
|
$12,266.00 |
|||
(B)
This is a proper order of classified balance sheet
|
Assets |
Amount($) |
Liabilities |
Amount ($) |
|
Current assets Cash A/C receivable Short term investments Others assets Prepaid insurance Supplies Inventories Prepaid expenses & current assets
Property, Plant & Equipment |
*** *** *** *** *** *** *** *** |
Current liabilities Salaries payable A/C payable
Others liabilities Accumulated depreciation on equipment
Owners equity Mary’s Maids capital |
*** *** *** *** *** *** *** *** |
|
*** |
*** |
||
|
|
PepsiCo’s Balance Sheet
December 29, 2001
|
Assets |
Amount($) |
Liabilities |
Amount ($) |
|
Current assets Cash A/C receivable Short term investments Others assets Prepaid insurance Supplies Inventories Prepaid expenses & current assets
Property, Plant & Equipment |
*** *** *** *** *** *** *** *** |
Current liabilities Salaries payable A/C payable
Others liabilities Accumulated depreciation on equipment
Owners equity Mary’s Maids capital |
*** *** *** *** *** *** *** *** |
|
*** |
*** |
||
|
|
Now we can explained this PepsiCo’s balance sheet classified in proper order.
(C)
This is a proper order assets classification
|
Assets |
Amount($) |
|
Current assets Cash Short term investments Others assets Prepaid insurance Supplies A/C receivable , notes payable Inventories Prepaid expenses & current assets
Property, Plant & Equipment |
*** *** *** *** *** *** *** *** |
|
*** |
PepsiCo’s assets classification
|
Assets |
Amount($) |
|
Current assets Cash Short term investments Others assets Prepaid insurance Supplies A/C receivable , notes payable Inventories Prepaid expenses & current assets
Property, Plant & Equipment |
*** *** *** *** *** *** *** *** |
|
*** |
** Now we see that PepsiCo’s assets classifications in proper order is equal or
same. This assets classifications maintain right order classification.
(D)
PepsiCo’s Cash Equivalents
December 29, 2001 & December 28, 2002
|
Date |
Explanation |
Amount |
Total amount |
|
December 29, 2001
December 28, 2002 |
Cash & cash equivalents
Cash & cash equivalents |
$683.00
$1,638.00 |
|
|
$2,321.00 |
|||
|
|
(E)
PepsiCo’s Current Liabilities
At December 29, 2001 & December 28, 2002
|
Date |
Explanation |
Ref. no. |
Total amount |
Net amount |
|
|
|
At December 29, 2001 (Total current liabilities) Short-term obligations A/c payable and others liabilities Income taxes payable
At December 28, 2002 (Total current liabilities) Short-term obligations A/c payable and others liabilities Income taxes payable |
|
$354.00 $4,461.00 $183.00 |
$4,998.00
$6,052.00 |
|
|
$562.00 $4,998.00 $492.00 |
|
||||
|
|
|
||||
|
$11,050.00 |
|
||||
|
|
|
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