Answer:
Vanishing Games Corporation (VGC)
1. Analysis of the effect of transactions on the accounting equation:
Assets = Liabilities + Equity
Assets (Cash) increases +$52,500 and Assets (Accounts Receivable) decreases -$52,500 = Liabilities + Equity.
b. Assets (Cash) increases +$235,000 = Liabilities + Equity (Retained Earnings) increase + $235,000.
c. Assets (Equipment) increases +41,900; Cash decreases -$12,000 = Liabilities (Notes Payable) increase +$29,900 + Equity.
d. Assets (Cash) decreases -$15,600 = Liabilities + Equity (Retained Earnings) decrease - $15,600.
e. Assets (Cash) increases + $50,500 and (Accounts Receivable) increases + $50,500 = Liabilities + Equity (Retained Earnings) increase + $101,000.
f. Assets = Liabilities (Accounts Payable) increase +$5,900 + Equity (Retained Earnings) decrease -$5,900.
g. Assets (Cash) decreases - $310,000 = Liabilities + Equity (Retained Earnings) decreases - $310,000.
h. Assets (Supplies) increase + $5,100 = Liabilities (Accounts Payable) increase +$5,100 + Equity.
i. Assets (Cash) decreases - $5,100 = Liabilities (Accounts Payable) decrease - $5,100 + Equity.
2. Journal Entries:
a. Debit Cash Account $52,500
Credit Accounts Receivable $52,500
To record cash from customers.
b. Debit Cash Account $235,000
Credit Service Revenue $235,000
To record cash for service revenue.
c. Debit Equipment $41,900
Credit Cash Account $12,000
Credit Notes Payable $29,900
To record purchase of 10 new computer services
d. Debit Advertising Expense $15,600
Credit Cash Account $15,600
To record payment for advertising.
e. Debit Cash Account $50,500
Debit Accounts Receivable $50,500
Credit Service Revenue $101,000
To record subscriptions for services sold.
f. Debit Utilities Expense $5,900
Credit Utilities Payable $5,900
To record utilities expense.
g. Debit Wages & Salaries Expense $310,000
Credit Cash Account $310,000
To record wages paid.
h. Debit Supplies Account $5,100
Credit Accounts Payable $5,100
To record purchase of supplies on account.
i. Debit Accounts Payable $5,100
Credit Cash Account $5,100
To record payment on account.
3. T-Accounts:
Cash Account
Beginning Balance $2,360,000 c. Equipment 12,000
a. Accounts Receivable 52,250 d. Advertising Expense 15,600
b. Electronic Arts, Inc. 235,000 g. Wages & Salaries 310,000
e. Service Revenue 50,500 i. Accounts Payable 5,100
<u> </u> Balance c/d <u> 2,355,050</u>
<u>2,697,750</u> <u>2,697,750</u>
Balance b/d 2,355,050
Accounts Receivable
Beginning Balance 152,000 a. Cash 52,250
e. Service Revenue <u>50,500</u> Balance c/d <u>150,250</u>
<u>202,500</u> <u>202,500</u>
Balance b/d 150,250
Supplies
Beginning Balance 19,100 Balance c/d 24,200
Accounts Payable <u> 5,100</u> <u> </u>
<u>24,200</u> <u>24,200</u>
Balance b/d 24,200
Equipment
Beginning Balance 948,000 Balance c/d 989,900
c. Cash 12,000
c. Notes Payable <u>29,900</u> <u> </u>
<u>989,900</u> <u>989,900</u>
Balance b/d 989,900
Land
Beginning Balance 1,920,000
Building
Beginning Balance 506,000
Accounts Payable
i. Cash 5,100 Beginning Balance 109,000
Balance c/d <u>109,000</u> h. Supplies <u> 5,100</u>
<u>114,100</u> <u>114,100</u>
Balance b/d 109,000
Unearned Revenue
Beginning Balance 152,000
Advertising Expense
d. Cash 15,600
Utilities Expense
f. Utilities Payable 5,900
Utilities Payable
f. Utilities Expense 5,900
Wages & Salaries Expense
g. Cash 310,000
Service Revenue
b. Cash 235,000
Balance c/d 336,000 e. Cash 50,500
<u> </u> e. Accounts Receivable <u> 50,500</u>
<u>336,000</u> <u>336,000</u>
Balance b/d 336,000
Notes Payable (due 2018)
Balance c/d 109,900 Beginning Balance 80,000
<u> </u> c. Equipment <u>29,900</u>
<u>109,900</u> <u>109,900</u>
Balance b/d 101,000
Common Stock
Beginning Balance 2,200,000
Retained Earnings
Beginning Balance 3,364,100
4. Trial Balance as at January 31:
Debit Credit
Cash $2,355,050
Accounts Receivable 150,250
Supplies 24,200
Equipment 989,900
Land 1,920,000
Building 506,000
Advertising expense 15,600
Utilities Expense 5,900
Utilities Payable $5,900
Wages & Salaries 310,000
Service Revenue 336,000
Notes Payable 109,900
Accounts Payable 109,000
Unearned Revenue 152,000
Common Stock 2,200,000
Retained Earnings <u> </u> <u>3,364,100</u>
Total <u>$6,276,900 </u> <u>$6,276,900</u>
Explanation:
a) Note: the adjustment of the Utilities could have been eliminated to produce the same result, with totals reduced by $5,900.
= New Forecast
= Previous period's forecast.
= Smoothing Constant
= Previous period's Actual Demand.