Question

Craig's collected $15,000 from customers for games played in july. craig's sold bowling merchandise inventory from its pro shop for $8,000; received $3,000 in cash and customers owed the rest on account. [the cost of goods sold (expense) related to these sales is $6,800.] craig's received $4,000 from customers who purchased merchandise in june on account. the men's and ladies' bowling leagues gave craig's a deposit of $2,500 for the upcoming fall season. craig's paid $800 on the electricity bill for june (recorded as an expense in june). craig's paid $3,500 to employees for work in july. craig's purchased $1,500 in insurance for coverage from july 1 to october 1. (part is an expense for july and part is a prepaid expense to be used in future months.) craig's paid $700 to plumbers for repairing a broken pipe in the restrooms. craig's received the july electricity bill for $900 to be paid in august.

Answer 1

Answer:

cash 15,000 debit

  account receivables 15,000 credit

cash  3,000 debit

A/R    5,000 debit

  service revenue 8,000 credit

COGS  6,800 debit

   Merchandise   6,800 credit

Cash  4,000 debit

 A/R               4,000 credit

Cash   2,500 debit

  *unearned revenue   2,500 credit

**utilties payable   800 debit

       cash                   800 credit

salaries expense 3,500 debit

      cash                      3,500 debit

***prepaid expene        375  debit

prepaid insurance   1,125  debit

     cash                             1,500 credit

repairs expense      700 debit

      cash                           700 credit

utilities expense      900 debit

   utilities payable            900 credit

Explanation:

We will record following the debit = credit rule

* It will be considered unearned revenue as we didn'0t perform the services we have the obligation to do so therefore, it is a liability.

**as the expense was recorded previously a payable was created to recognize the obligation to pay our utilities. Therefore, we write-off the payable

*** 1,500 is the full contract value for 4 months:

1,500 / 4 = 375 per month

one most is declared as expense and the remainder as prepaid.