SOLUTION: Thomas Jefferson University Scuttlebutt Publishers Corporation Accounting Exercise Worksheet

MIDTERM
You can use the excel template contained in the unit to complete the items below.
The template may require minor modifications along the way, it is just a template.
Scuttlebutt Publishers Corporation was incorporated on June 1, 2020. The company
had the following transactions during June:
Part A
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
Issued common stock for $10,000 cash
Purchased equipment for $6,000 on credit
Purchased $750 of supplies on credit. These are expected to last three
months (record as unused supplies)
Paid two months of newspaper advertising for $500 (record as prepaid
advertising expense)
Collected $12,000 of three‐month subscription revenue for its ONLINE
REVIEW magazine, effective June 1 (record as unearned subscription
revenue)
Paid the following expenses in cash: telephone, $350; rent for
June, $500
Collected $5,000 revenue in cash from advertisers for the June edition of
ONLINE REVIEW magazine
Paid half of the equipment purchased June 1
Paid $2,000 for supplies purchased
Paid the following expenses in cash: telephone, $250; salaries,
$3,000
Received a $200 bill for electricity used during the month
(recorded as Utilities Expense).
Required:
1. Create general ledger T‐accounts for the following: Cash, Prepaid Advertising,
Unused Supplies, Equipment, Accounts Payable, Unearned Subscriptions
Revenue, Common Stock, Other Revenue, Rent Expense, Salaries Expense,
Supplies Expense, Telephone Expense, and Utilities Expense. General ledger
account numbers are not needed. (These are created on the template already.)
2. Prepare journal entries to record the June transactions. Descriptions are not
needed.
3. Post the entries to general ledger T‐accounts and calculate balances at June 30,
2020.
Part B
At June 30, the following additional information is available.
l.
m.
n.
o.
The June portion of advertising paid in transaction (c) has expired.
One month of the subscriptions revenue collected June 5 has been earned.
A physical count indicates that $100 of supplies is still on hand.
$200 of commission expense is owed on the June portion of the subscriptions
revenue.
p. Two days of salary for June 29 and 30 are unpaid, amounting to $600.
q. The equipment purchased in transaction (b) has an estimated useful life of 5
years.
r. Income taxes payable at June 30 amount to $50.
Required:
4. Open additional general ledger T‐accounts for the following: Accumulated
Depreciation – Equipment, Salaries Payable, Income Taxes Payable,
Subscription Revenue, Advertising Expense, Commissions Expense,
Depreciation Expense – Equipment, and Income Taxes Expense. (These are
already setup on the template.)
5. Prepare all necessary adjusting entries at June 30, 2020. General ledger
account numbers and descriptions are not necessary, but show depreciation
calculations.
6. Post the entries to the general ledger T‐accounts and calculate balances.
7. Prepare an adjusted trial balance at June 30.
8. Assume that the company’s year‐end is June 30. Prepare an income statement,
statement of changes in equity, and balance sheet.
9. Prepare closing entries.
10. Prepare a post-closing trial balance.
Cash
Use these T-accounts for recording all entries t
LEDGER
Prepaid Advertising
Unused Supplies
Accounts Payable
Unearned Subscription
Revenue
Common Stock
Rent Expense
Salaries Expense
Supplies Expense
Utilities Expense
Accumulated
Depreciation Equipment
Salaries Payable
Subscription Revenue
Advertising Expense
Commissions Expense
Income Taxes
Expense
or recording all entries throughout the problem.
Equipment
Other Revenue
Telephone Expense
Income Taxes
Payable
Depreciation Expense
– Equipment
GENERAL JOURNAL ENTRIES
Account
#A
#B
#C
#D
#E
#F
#G
#H
#I
#J
#K
Debit
Credit
UNADJUSTED TRIAL BALANCE
Debit
Use this to ensure your balances tie after step 3.
Credit
Req 4
ADJUSTING ENTRIES
Account
Debit
#L
#M
#N
#O
#P
#Q
#R
Credit
ADJUSTED TRIAL BALANCE
Debit
Cash
Prepaid advertising
Unused supplies
Equipment
Accumulated depreciation—equipment
Accounts payable
Salaries payable
Income taxes payable
Unearned subscription revenue
Common stock
Subscription revenue
Other revenue
Advertising expense
Commissions expense
Depreciation expense—equipment
Rent expense
Salaries expense
Supplies expense
Telephone expense
Utilities expense
Income taxes expense
Credit
Assets
Current Assets:
Balance Sheet
As of December 31, 200X
Liabilities
Current Liabilities:
Total Current Assets
0
Total Current Liabilities
0
Total Liabilities
Total Long Term Assets
Total Equity
Total Assets
Total Liabilities & Equity
Income Statement
For the Year Ending Dec 31, 200X
Revenue:
Subscriptions
Other
Expenses:
Advertising
Commissions
Depreciation –
Equipment
Rent
Salaries
Supplies
Telephone
Utilities
Income taxes
Total Expense
Net Income
Statement of Retained Earnings
For the Year Ending Dec 31, 200X
Beginning Ret. Earnings
0
0
Minus Dividends
Plus Net Income
Ending Ret. Earnings
** You may need to add lines or remove lines accordingly,
double check formulas are working correctly, this is
a basic template.
Account
CLOSING ENTRIES
Debit
Credit
** You may need to add lines or remove line
double check formulas are working correct
a basic template.
dd lines or remove lines accordingly,
POST CLOSING TRIAL BALANCE
Debit
Cash
Prepaid advertising
Unused Supplies
Equipment
Accumulated Depreciation – equipment
Accounts Receivable
Accounts Payable
Salaries Payable
Income Taxes Payable
Unearned Subscription revenue
Common Stock
Retained Earnings
Credit

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