Lakegreat Corporation's balance sheet at 12/31/06 is presented below.
Balance Sheet
12/31/2006
Cash
$ 24,300
Accounts payable
$ 12,370
Accounts receivable
22,400
Common stock
85,000
Allowance for doubtful accounts
(1,200)
Retained earnings
23,130
Land
20,000
Building
70,000
Accumulated depreciation - building
(15,000)
$ 120,500
$120,500

During the first quarter of 2007, the following transactions occurred:

1. Lakegreat performed services during the first quarter for $140,000 on account.

2. On 2/1/07, Lakegreat collected fees of $12,000 in advance for $1,000 of services to be
performed each month from 2/1/07 to 1/30/08.

3. On 2/1/07, Lakegreat purchased equipment for $10,000 plus sales taxes of $600.
$3,000 cash was paid with the rest on account. All equipment is being depreciated on a straight-line basis over 5 years. Check #455 was used.

4. Lakegreat collected $133,000 on 3/5/07 from customers on account.

5. Lakegreat paid $16,370 on accounts payable. Check #456 was used.

6. Paid other operating expenses of $97,500. Check #457 was used.

7. Acquired a patent with a 10-year life for $9,600 cash on 3/1/07. Check #458 was used.

8. Wrote off a customer receivable of $200 who went bankrupt.

9. On 3/31/07, Lakegreat sold for $1,620 equipment which originally cost $2,120. The equipment was purchased on 2/1/07. Record depreciation on the equipment sold (its salvage value was estimated at $170), then record the sale. All equipment is being depreciated on a straight-line basis over 5 years.

10. AJE: Record revenue earned from item 2 above.


11. AJE: $26,000 of accounts receivable at 3/31/07 are not due yet. The bad debt percentage for these is 4%. The balance of A/R are past due. The bad debt percentage for these is 23.75%. Record bad debt expense. HINT: You will need to compute the balance in accounts receivable before calculating this.

12. AJE: Depreciation is recorded on the equipment still owned at 3/31/07. It has a salvage value of $680.

13. AJE: Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $10,000.

14. AJE: Amortization is recorded on the patent.

15. The company reconciles its bank statement every quarter. Information from the 12/31/06 Bank Reconciliation is: Deposit in transit: 12/30/06 $5,000 Outstanding Checks #440 3,444 #452 333 #453 865 #454 5,845 The Bank statement received for the quarter ended 3/31/07 is as follows: Beginning balance per bank $ 29,787 Deposits: 1/2/07 $5,000, 2/2/07 $12,000, 3/6/07 $133,000 150,000 Checks: #452 $333, #453 $865, #456 $16,370, #457 $97,500 (115,068) Debit memo: Bank service charge (Record as operating expense) ( 100) Ending bank balance $ 64,619

16. AJE: The income tax rate is 30%. This amount will be paid when the tax return is due in April. Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.



a. Enter the transactions 1-9 in the general journal provided on the following pages.
b. Enter the 12/31/06 balances in ledger accounts. Use the ledger account running balance format accounts provided on the following pages.
c. Post the journal entries to the ledger accounts for items 1 – 9.

So what are your questions? Do you really want someone to do the whole thing for you?

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I wasn't asking for all of the answers, I posted it and attempted to do it.

My questions are am I doing this correctly?

1. Dr. Accounts Receivable 140,000
Cr. Sales 140,000

2. Dr. Accounts Receivable 12,000
Cr. Unearned Revenue 12,000

3. Dr. Equipment 10,600
Cr. Cash 3000
Cr. Accounts Payable 7600

4. Dr. Accounts Receivable 133,000
Cr. Unearned Revenue 133,000

5. Dr. Cash 16,370
Cr. Accounts Payable 16,370

6. Dr. Cash 97.500
Cr. Operating expense 97,500

7. Dr. Patents 9600
Cr. Cash 9600

8. Dr. Allowance for Doubtful Account 200
Cr. Accounts Receivable 200

9. I am completely confused on

10-12 still doing

MY ANSWER IS AT THE END, AM I CORRECT/ON THE RIGHT TRACK.

Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:

- Sales are budgeted at $330,000 for November, $300,000 for December, and $320,000 for January.
- Collections are expected to be 85% in the month of sale, 14% in the month following the sale, and 1% uncollectible.

- The cost of goods sold is 60% of sales.

- The company purchases 80% of its merchandise in the month prior to the month of sale and 20% in the month of sale. Payment for merchandise is made in the month following the purchase.

- Other monthly expenses to be paid in cash are $21,200.

- Monthly depreciation is $21,000.
- Ignore taxes.

CASH... 22,000
Account Receivable... 83000
Inventory... 158400
Property, plant and equipment (net of 594000 accumulated depreciation)... 1004000
Total asset... 1267400

Account payable... 196000
Common Stock... 620000
Retained earnings... 451400
Total liabilities and stockholders equity... 1267400

a. Prepare a Schedule of Expected Cash Collections for November and December.
November December
Sales 330,000 300,000
Acct Rec'd 83000
Nov sales 280500 Dec sales 255000
Total cash 363500 301.200




b. Prepare a Merchandise Purchases Budget for November and December.



c. Prepare Cash Budgets for November and December.





d. Prepare Budgeted Income Statements for November and December.





e. Prepare a Budgeted Balance Sheet for the end of December.

We cannot and will not help with homework!

I wasn't asking for all of the answers, I posted it and attempted to do it.

When you've attempted to do it, always post those attempts. Otherwise it really does look like you are just asking for answers if you don't give yours to be checked or don't ask something specific. (And a lot of people really do come here expecting us to do their work, so we can't assume.)


1. Dr. Accounts Receivable 140,000
Cr. Sales 140,000

Concept is right. But since it says "services" then the revenue account isn't Sales. That is only if you are selling merchandise. So it should be Fees Earned or Service Revenue or something like that.


2. Dr. Accounts Receivable 12,000
Cr. Unearned Revenue 12,000

It says they "collected" the $12,000. Accounts Receivable is what a customer owes to you. If you collected it, do they owe you? What did you actually collect?


3. Dr. Equipment 10,600
Cr. Cash 3000
Cr. Accounts Payable 7600

Correct


4. Dr. Accounts Receivable 133,000
Cr. Unearned Revenue 133,000

Try this again and read carefully. Again, what did they collect? And when they collect "on account," it's referring to something that was put into A/R prior to this date. i.e. at an earlier date they billed their customers, put it into A/R, and are now collecting on it. Thre is no mention of the customers paying for revenue that is not yet earned.


5. Dr. Cash 16,370
Cr. Accounts Payable 16,370

Backwards. You're paying the cash, not collecting it. And if you're paying on the payable, the payable goes down.


6. Dr. Cash 97.500
Cr. Operating expense 97,500

Backwards. Expenses are always debits. And again, you're paying the cash, not receiving it. This may perhaps be a lack of understanding for the debit/credit rules, rather than interpretation of the transaction. You may want to ask specific questions about why these are messing you up. (Knowing why you did what you did can help figure out where the thinking is off.)


7. Dr. Patents 9600
Cr. Cash 9600

Correct.


8. Dr. Allowance for Doubtful Account 200
Cr. Accounts Receivable 200

Correct, assuming the allowance method is being used.


9. I am completely confused on

I don't blame you. This takes a bit of figuring. But I have a question - can you check those dates? It doesn't make sense to buy something and sell it only two months later. But what you'll have to do is record the depreciation to date, which is done the same way you'd do depreciation as an adjusting entry -- except it won't be for a full year. That way you get your book value caught up to date. Check the dates, and see if maybe you can get this far first.

Natalia, it's very confusing to have a completely different problem in the same thread with someone else's problem. And you've done very little of the problem. This is pretty long and complicated, and a difficult one to work on if you're pretty well lost cause there's just so many pieces and so much to keep track of. You have to read very carefully, make yourself some columns for each month, take one piece at a time and plug it in, and think very, very carefully about what you are doing.

The 280,500 and 255,000 are the only things correct, but that isn't the "sales." That's the amount of that month's sales that they collect that month (the 85%), so call it what it is. Sales itself hasn't changed. Read the rest of the sentence they give about this carefully and decide where the rest of the collections are.

Give some of the rest of it a shot, because it's going to be exceedingly difficult to lead someone through this entire problem.

And I personally would appreciate having it posted to your own thread and not mixed up with someone else's stuff.