Accounting study problem

ACCOUNTING 231

MID-TERM STUDY PROBLEM

YEAR 1

JHJ Rental Car Company was stated in Year 1 and had the following transactions:

1. The owners invested $200,000 to start the company

2. Purchased supplies on account in the amount of $15,000

3. Purchased autos for $400,000 paying $100,000 down and signing note for the balance

4. Cash car rental revenue received $400,000

5. Salary expenses paid $150,000

6. Rental expenses paid $25,000

7. Corporate sales on account $50,000

8. Payment on note principal of $30,000 plus interest of $10,000

9. Paid dividends of $10,000

10. Ending supplies on hand, $5,000

11. Accrued wages at end of year were $15,000

12. Collection of account receivables $40,000

Required:

1. Journalize each entry indicating journal entry type

2. Set up required T-accounts and post to the ledger

3. Prepare trial balance

4. Prepare income statement

5. Prepare statement of retained earnings

6. Prepare balance sheet

7. Prepare and post closing entries

YEAR II

JHJ Rental Car Company had the following transactions in year II:

13. Paid accrued salaries from the prior year

14. Purchased supplies on account in the amount of $25,000

15. Recorded depreciation expense of $75,000 on autos

16. Cash car rental revenue received $200,000

17. Salary expenses paid $150,000

18. Rental expenses paid $25,000

19. Corporate sales on account $60,000

20. Payment on note principal of $30,000 plus interest of $10,000

21. Paid dividends of $20,000

22. Ending supplies on hand, $5,000

23. Accrued wages at end of year were $25,000

24. Collection of account receivables $45,000

25. Paid on account payable 35,000

Required:

8. Set up required T-account and insert balances from year 1

9. Journalize each entry indicating journal entry type

10. Post to the ledger

11. Prepare trial balance

12. Prepare income statement

13. Prepare statement of retained earnings

14. Prepare balance sheet

15. Prepare and post-closing entries