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Earlier Segments of This Problem Have Described How Mary Graham

Mary Graham created Echo Systems on October 1, 2014. The accounting system is being modified to set up separate accounts for each customer to accommodate growth. Additional accounts were also added to allow the company to begin selling computer software and merchandise. The problem provides a series of transactions from January to March 2015 and requires journal entries to be recorded, accounts to be posted to the general ledger, and interim financial statements to be prepared.

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137 views2 pages

Earlier Segments of This Problem Have Described How Mary Graham

Mary Graham created Echo Systems on October 1, 2014. The accounting system is being modified to set up separate accounts for each customer to accommodate growth. Additional accounts were also added to allow the company to begin selling computer software and merchandise. The problem provides a series of transactions from January to March 2015 and requires journal entries to be recorded, accounts to be posted to the general ledger, and interim financial statements to be prepared.

Uploaded by

Taimur Technologist
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Earlier segments of this problem have described how Mary

Graham #4353
Earlier segments of this problem have described how Mary Graham created Echo Systems on
October 1, 2014. The company has been successful, and its list of customers has started to
grow. To accommodate the growth, the accounting system is ready to be modified to set up
separate accounts for each customer. The following list of customers includes the account
number used for each account and any balance as of the end of 2014. Graham decided to add
a fourth digit with a decimal point to the 106 account number that had been used for the single
Accounts Receivable account. This modification allows the existing chart of accounts to
continue being used. The list also shows the balances that two customers owed as of
December 31, 2014:In response to frequent requests from customers, Graham has decided to
begin selling computer software. The company will extend credit terms of 1/10, n/30 to
customers who purchase merchandise. No cash discount will be available on consulting fees.
The following additional accounts were added to the General Ledger to allow the system to
account for the company's new merchandising activities:Because the accounting system does
not use reversing entries, all revenue and expense accounts have zero balances as of January
1, 2015.Required1. Prepare journal entries to record each of the following transactions for Echo
Systems, assuming either a perpetual system or a periodic system.2015Jan. 4 Paid Carly Smith
for five days at the rate of $200 per day, including one dayin addition to the four unpaid days
from the prior year. 5 Mary Graham invested an additional $48,000 cash in the business. 7
Purchased $11,200 of merchandise from Shephard Corp. with terms of 1/10, n/30, FOB
shipping point. 9 Received $3,000 from Fostek Co. as final payment on its account. 11
Completed five-day project for Alamo Engineering Co. and billed them $9,000, which is the total
price of $12,000 less the advance payment of $3,000.13 Sold merchandise with a retail value of
$8,400 and a cost of $6,720 to Elite Corporation with terms of 1/10, n/30, FOB shipping point.15
Paid $1,400 for freight charges on the merchandise purchased on January 7.16 Received
$6,000 cash from Grandview Co. for computer servicesI7 Paid Shephard Corp. for the purchase
on January 720 Elite Corporation returned $800 of defective merchandise from its purchase on
January 1 3. The returned merchandise, which had a cost of $640, was scrapped.22 Received
the balance due from Elite Corporation.24 Returned defective merchandise to Shephard Corp.
and accepted credit against future purchases. Its cost, net of the discount, was $792. 26
Purchased $16,000 of merchandise from Shephard Corp. with terms of 1 /10, n/30, FOB
destination. 26 Sold merchandise with a cost of $9,280 for $11,600 on credit to Hacienda, Inc29
Received a $792 credit memo from Shephard Corp. concerning the merchandise returned on
January 24.31 Paid Carly Smith for 10 days' work at $200 per day. Feb. 1 Paid $6,750 to the
Lakeshore Mall for another three months' rent in advance. 3 Paid Shephard Corp. for the
balance due5 Paid $1,600 to the local newspaper for advertising.11 Received the balance due
from Alamo Engineering Co. for fees billed on January 11.15 Mary Graham withdrew $9,600
cash for personal use.23 Sold merchandise with a cost of $5,120 for $6,400 on credit to
Grandview Co.; terms 1/10, n/3026 Paid Carly Smith for eight days' work at $200 per day27
Reimbursed Mary Graham's business automobile expenses for 600 kilometers at $1.00 per
kilometerMar. 8 Purchased $4,800 of computer supplies from Abbott Office Products on credit.9
Received the balance due from Grandview Co. for merchandise sold on February 23.11
Repaired the company's computer paying cash of $1,720.16 Received $8,520 cash from
Images, Inc. for computing services19 Paid the full amount due to Abbott Office Products,
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including amounts created on December 1 7 and March 8.24 Billed Capital Leasing for $11,800
of computing services25 Sold merchandise with a cost of $2,004 for $3,600 on credit to
Buckman Services30 Sold merchandise with a cost of $2,200 for $4,440 on credit to Decker
Company31 Reimbursed Mary Graham's business automobile expenses for 400 kilometers at
$1.00 per kilometer2. Post the journal entries to the accounts in the company's General Ledger.
(Use asset, liability, and equity accounts that start with balances as of December 31, 2014.)3.
Prepare a partial work sheet consisting of the first six columns showing the unadjusted trial
balance, the March 31 adjustments described in (a) through (g) below, and the adjusted trial
balance, Do not prepare closing entries and do not journalize the adjusting entries or post them
to the ledger.a. The March 31 computer supplies on hand is $4,230.b. Three more months have
passed since the company purchased the annual insurance policy at the cost of $4,320.c. Carly
Smith has not been paid for seven days of work.d. Three months have passed since any
prepaid rent cost has been transferred to expense. The monthly rent is $2,250.e. Depreciation
on the computer for January through March is $2,250.f. Depreciation on the office equipment for
January through March is $1,500.g. The March 31 inventory of merchandise is $1,960.4.
Prepare an interim single-step income statement for the three months ended March 31, 2015.
List all expenses without differentiating between selling expenses and general and
administrative expenses5. Prepare an interim statement of changes in equity for the three
months ended March 31, 2015.6. Prepare an interim classified balance sheet as of March 31,
2015.View Solution:
Earlier segments of this problem have described how Mary Graham

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