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    Problem 2-2: J.L. Gregory Company

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    KAPIL MBA 2021-23 (Delhi)
    The document provides a balance sheet for the J.L. Gregory Company as of June 30 and data about the company's accounts. It then lists transactions during January for the Marvin Company and asks to describe the impact on the balance sheet and prepare a new balance sheet as of January 31. The assistant provides the impact of each January transaction, and prepares the required new balance sheet showing increases and decreases to assets, liabilities, and equity accounts based on the transactions.

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    Problem 2-2: J.L. Gregory Company

    Uploaded by

    KAPIL MBA 2021-23 (Delhi)
    625 views5 pages
    The document provides a balance sheet for the J.L. Gregory Company as of June 30 and data about the company's accounts. It then lists transactions during January for the Marvin Company and asks to describe the impact on the balance sheet and prepare a new balance sheet as of January 31. The assistant provides the impact of each January transaction, and prepares the required new balance sheet showing increases and decreases to assets, liabilities, and equity accounts based on the transactions.

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    Castro_W2_excel_Problems_.xlsx

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    The document provides a balance sheet for the J.L. Gregory Company as of June 30 and data about the company's accounts. It then lists transactions during January for the Marvin Company and asks to describe the impact on the balance sheet and prepare a new balance sheet as of January 31. The assistant provides the impact of each January transaction, and prepares the required new balance sheet showing increases and decreases to assets, liabilities, and equity accounts based on the transactions.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    625 views5 pages

    Problem 2-2: J.L. Gregory Company

    Uploaded by

    KAPIL MBA 2021-23 (Delhi)
    The document provides a balance sheet for the J.L. Gregory Company as of June 30 and data about the company's accounts. It then lists transactions during January for the Marvin Company and asks to describe the impact on the balance sheet and prepare a new balance sheet as of January 31. The assistant provides the impact of each January transaction, and prepares the required new balance sheet showing increases and decreases to assets, liabilities, and equity accounts based on the transactions.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
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    At a glance
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    The passage discusses preparing adjusting entries for a sole proprietorship and how various transactions impact the balance sheet accounts.

    Each transaction is recorded by increasing or decreasing specific balance sheet accounts like cash, inventory, accounts receivable etc. based on whether items are received or paid out. This ensures the balance sheet accurately reflects the company's financial position.

    Adjusting entries are prepared at the end of an accounting period to allocate revenues and expenses between accounting periods so that the financial statements report the results of operations for the specific period only.

    Problem 2-2

    Prepare a balance sheet as of June 30, for the J.L. Gregory Company, using the following data:

    Accounts payable $241,000 Cash $89,000


    Accounts receivable 505,000 Equipment (at cost) 761,000
    Accrued expenses 107,000 Estimate tax liability 125,000
    Accumulated depreciation on
    buildings 538,000 Inventories 513,000
    Accumulated depreciation on Investment in the
    equipment 386,000 Peerless Company 320,000
    Bonds payable 700,000 Land (at cost) 230,000
    Buildings (at cost) 1,120,000 Marketable securities 379,000
    Capital Stock 1,000,000 Notes payable 200,000
    Retained earnings ?

    J.L. GREGORY COMPANY


    Balance Sheet
    As of June 30
    Assets Liabilities and Owners' Equity
    Current assets: Current liabilities
    Cash $89,000 Accounts payable $241,000
    Marketable Securities $379,000 Tax Payable $125,000
    Accounts Receivable $505,000 Accured expenses $107,000
    Inventories $513,000

    Total current assets $1,486,000 Total current liabilities

    Property, plant and equipment Long-term debt


    Land $230,000 Notes Payable
    Building & Equipment at cost $1,881,000 Bonds Payable
    Less: Accumulated
    depreciation on buildings &
    equipment $924,000 $957,000

    Net property, plant and equipment Total Liabilities

    Other assets Owners' Equity


    Investment $320,000 Captital Stock $1,000,000
    Retained Earnings $620,000
    Total Owners Equity

    Total Assets $2,993,000 Total liabilities and owners' equity


    $473,000

    $200,000
    $700,000

    $1,373,000
    $1,620,000

    $2,993,000
    Problem 2-5

    The January 1 balance sheet of the Marvin Company, an unincorporated business, is as follows:

    MARVIN COMPANY
    Balance Sheet
    As of January 1
    Assets Liabilities and Owners' Equity
    Cash $25,000 Notes Payable $20,000
    Inventory 50,000 Capital 55,000
    Total $75,000 Total $75,000

    The following transactions took place in January:


    Jan. 4 Merchandise was sold for $12,000 cash that had cost $7,000.
    6 To increase inventory, Marvin placed an order with Star Company for merchandise that would cost $7,000.
    8 Marvin received the merchandise ordered from Star and agreed to pay the $7,000 in 30 days.
    11 Merchandise costing $1,500 was sold for $2,500 in cash.
    16 Merchandise costing $2,000 was sold for $3,4000 on 30-day open account.
    26 Marvin paid employees for the month $4,200 in cash.
    29 Purchased land for $20,000 in cash.
    31 Marvin purchased a two-year insurance policy for $2,800 in cash.

    Required:

    Describe the impact of each transaction on the balance sheet, and prepare a new balance sheet as of
    January 31.

    Jan. 4 Increase cash $12,000; Decrease inventory $7,000; Increase Retained Earnings $5,000
    6 No effect
    8 Increase inventory $7,000; Increase Notes Payable 7,000
    11 Increase cash $2,500; Decrease inventory $1,500; Increase Reatined Earnings 1,000
    16 Decrease inventory $2,000; Increase Accounts Receivable $3,400; Increase Retained Earnings $1,400
    26 Decrease cash and Retained Earnings $4,200 [does not included in liabilities because it has already been paid out] **(Morah, 2018)
    29 Decrease Cash $20,000; Increase Land $20,000
    31 Decrease cash $2,800; Increase prepaid insurance $2,800

    MARVIN COMPANY
    Balance Sheet
    As of January 1
    Assets Liabilities and Owners' Equity
    Current assets: Current liabilities:
    Cash $12,500 Accounts Payable $7,000
    Inventory $46,500
    Accounts Receivable $3,400
    Prepaid Expenses $2,800

    Total current assets $65,200 Total current liabilities $7,000

    Property, plant and equipment Long-term debt


    Land $20,000 Notes Payable $20,000

    Net property, plant and equipment $20,000 Total liabilites $27,000

    Owners' Equity
    Capital $55,000
    Retained Earnings $3,200
    Total owners' equity $58,200

    Total Assets $85,200.00 Total liabilites and owners' equity $85,200

    References
    Morah, C. (2018, June 15). Which transactions affect retained earnings? Retrieved November 4, 2018, from
    https://www.investopedia.com/ask/answers/10/retained-earnings-statement.asp

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