Question 1

Journal Entries
1 Capital 40,000.00
2 Lease and Operating Deposit 40,000.00
3 Office Furniture 6,000.00
4 Additional Capital 10,000.00
5 Insurance Payments (12 mos) 1,200.00
6 Deductions from Deposit 35,450.00
Grease Inventory 6,320.00
Supplies Inventory 4,130.00
Eqpt purchase downpayment 25,000.00 25,200.00
7 May rental payment 1,500.00
8 Eqpt payable 49,800.00
9 Bank Deposits 108,600.00
Parking Revenue 3,300.00
Services Revenue 105,300.00
10 Inventory Purchase (Oil and Grease) 8,230.00
11 Employee Payroll 34,560.00
12 Utilities 1,700.00
13 Misc Expenses 6,600.00
14 Lease Expense 26,400.00
15 Eqpt Payments 2,490.00
16 Withdrawals (Knight) 4,500.00
17 Receivable (Parking) 340.00
18 Receivable (Merchants) 730.00
19 Unpaid payroll 2,100.00
20 Unpaid utilities 350.00
21 Remaining Inventory 5,290.00
22 August Parking prepayments 400.00

Question 2
a Capital 50,000.00
b Accumulated Depreciation Annual Semi-annual
Office Furniture 6,000.00 10.00 600.00 300
Equipment 75,000.00 5.00 15,000.00 7500
c Prepaid Assets
Insurance 1,200.00 1.00 1,200.00 600
d Cash Balance
40,000.00 40,000.00
10,000.00 6,000.00
108,600.00 1,200.00
1,500.00
8,230.00
34,560.00
1,700.00
 6,600.00
26,400.00
2,490.00
4,500.00
158,600.00 133,180.00 25,420.00
e Accounts Receivable
Receivable (Parking) 340.00
Receivable (Merchants) 730.00
1,070.00
f Liabilities
Unpaid payroll 2,100.00
Unpaid utilities 350.00
Eqpt payable 49,800.00 5.00 9,960.00 4980
12,410.00

Question 3
a Withdrawals 4,500.00
b Cost fo Sales
Grease Inventory 6,320.00
Inventory Purchase 8,230.00
Total Available 14,550.00
Remaining Inventory 5,290.00
Cost of Sales 9,260.00
c Parking Revenues
Parking Revenue 3,300.00
Receivable (Parking) 340.00
3,640.00
d Lease Expense
Lease Expense 26,400.00
May rental payment 1,500.00
27,900.00
e Total Revenues
Parking Revenue 3,300.00
Services Revenue 105,300.00
Receivable (Parking) 340.00
Receivable (Merchants) 730.00
109,670.00

Question 4 How should Knight account for the $400 August parking checks? Possible bad debts? Family use of the Waltham
The $400 prepaid August parking checks should be included as a cash balance.
Family us of the services should be accounted as cost. This is to keep track of services and inventory used.
A provision should be provided for Possible bad debts. This is to avoid build up of debts that may affect overall re
??

Quarterly Monthly
150 50
3750 1250

300 100
 2490 830

mily use of the Waltham Center’s services?

d inventory used.
that may affect overall records.
Grease Inventory 6,320.00
Inventory Purchase 8,230.00
Total Available 14,550.00
Remaining Inventory 5,290.00
Cost of Sales 9,260.00