During March, the following transactions were completed by Bree Inc., a new business started on March 1, 2015.
Question 1:
During March, the following transactions were completed by Bree Inc., a new business started on March 1, 2015.
| March | 1 Sold 10,000 shares of $10 par value stock for $200,000 cash. | |
| 1 | Purchased equipment for $36,000, paying $6,000 cash, charging the balance on account. | |
| 3 | Purchased office supplies for $5,000 on account. | |
| 5 | Paid $1,200 cash for 1-year insurance policy effective March 1. Use the account Prepaid Insurance to record this asset. | |
| 12 | Billed customers $20,000 for professional services. | |
| 18 | Paid $12,000 cash on amount owed on equipment and $700 on amount owed on office supplies. | |
| 20 | Paid $1,500 cash for employee salaries. | |
| 21 | Collected $7,000 cash from customers billed on March 12. | |
| 25 | Billed customers $15,000 for professional services. | |
| 31 | Paid $1,200 for the monthly utilities for the office. | |
| 31 | Paid cash dividend of $.30 per share to shareholders |
| To do: A. Journalize (write journal entries) the previous transactions, omitting explanations. B. What is the ending balance in the cash account? (you might want to use a t account) Question 2: Describe a typical accounting process starting with the entering of transactions listed above and finishing with the post closing trial balance. Describe and explain each step with enough detail that someone unfamiliar with accounting can understand any of the terminology and vocabulary. Question 3: Explain the order for preparing financial statements. That is, what financial statement do you complete first and what ‘value’ do you use from this financial statement to complete the next financial statement. Do not consider the statement of cash flows. You can create a list and use bullet points or create a paragraph. Question 4: Using as few words as possible, explain the terms relevance, reliability, and materiality in terms of accounting and financial reporting. Separately, use at least one sentence for each of the three terms. Question 5: Who are the ‘users’ or stakeholders who may access and read financial statements? Create one sentence or bullet point for each user (stakeholder) and explain why they may have an interest in the financial statements. |
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