University:
Michigan State University
Course:
ACC 300 | Intermediate Financial Accounting I
Academic year:

2021
Views:

264

Pages:

3
Author:

ilikemyicons0y5

PROBLEM 3.6B CLOWN AROUND, INC. 50 Minutes, Strong a. General Journal 2011 Feb. 2 6 Accounts Payable Cash Paid $750 in partial settlement of outstanding accounts payable. 750 Cash 900 750 Accounts Receivable Collected $900 in full settlement of outstanding accounts receivable. 18 26 900 Accounts Receivable Part y Revenue Billed Sunflower Child Care for clown services. The entire amount is due March 15. 175 Cash 480 175 Part y Revenue Billed and collected cash for performing at several birthday parties. 28 28 28 480 Salaries Expense Cash Paid clown salaries for work performed in February. 260 Travel Expense Cash Paid travel expenses incurred in February. 40 260 40 Dividends Cash Declared and distributed dividend to Ralph Jaschob. 100 100 P3.6B PROBLEM 3.6B CLOWN AROUND, INC. (continued) b. Feb. 1 Bal. Feb. 6 Feb. 26 Cash 2,850 Feb. 2 900 Feb. 28 480 Feb. 28 Feb. 28 Feb. 28 Bal. 3,080 Feb. 2 Accounts Pay able 750 Feb. 1 Bal. Retained Earnings Feb. 1 Bal. Feb. 28 Bal. Party Revenue Feb. 1 Bal. Feb. 18 Feb. 26 Feb. 28 Bal. Feb. 28 Bal. Party Food Expense 240 240 Feb. 1 Bal. Feb. 18 Feb. 28 Bal. Feb. 28 Bal. Feb. 1 Bal. 750 260 40 100 Accounts Receivable 900 Feb. 6 175 175 Ca pital Stock Feb. 1 Bal. 800 50 750 750 Feb. 28 Bal. Feb. 1 Bal. Feb. 28 Feb. 28 Bal. Dividends 0 100 100 1,350 175 480 Feb. 1 Bal. Feb. 28 Salaries Ex pense 830 260 2,005 Feb. 28 Bal. 1,090 Feb. 1 Bal. Feb. 28 Travel Expense 80 40 Feb. 28 Bal. 120 P3.6B(p.2) 900 2,000 2,000 PROBLEM 3.6B CLOWN AROUND, INC. (concluded) c. CLOWN AROUND, INC. Trial Balance February 28, 2011 $ Cash Accounts receivable 3,080 175 Accounts payable Capital stock $ Retained earnings Dividends Party revenue 750 100 2,005 Salaries expense Party food expense 1,090 240 Travel expense $ d. 50 2,000 120 4,805 $ 4,805 Dividends are not an expense. Thus, they are not deducted from revenue in the determination of net income reported in the income statement. The reason dividends are not viewed as expenses is that these payments do not serve to generate revenue. Rather, they are a distribution of profits to the owners of the business. P3.6B(p.3)