1
Beginning Inventory $ 6,320
Purchases 8,230
Total Available $14,550
Ending Inventory 5,290
Cost of Sales $9,260
2
($6,000/ 10 years) x .25 = $150
3
($75,000/ 5 years) x .25 = $3,750
4
$1200 x .25 = $300
A) Capital
Knight has made two capital contributions ($40,000 and $10,000.) The total is $50,000.
B) Accumulated depreciation
The accumulated depreciation account is the sum of two amounts ($150 and $3,750.) The
balance is $3,900.
C) Prepaid Asset
The only prepaid asset is prepaid insurance. The balance is $900 ($1200 - $300.) One-quarter
of the insurance coverage benefit has expired ($1200 x .25.)
D) Cash balance
E) Accounts Receivable
Waltham Center is owed $340 by overnight parkers and $730 by local merchants. The accounts
receivable balance is $1070.
F) Liabilities
There are three liabilities at the end of the three month operating period. Two are the current
liabilities accrued payroll $2,100 and accrued utilities $350. The third is the longer term obligation for
the equipment ($47,310.) The liability account balance is $49,760.
Question 2
a) Withdrawals
$4,500 withdrawal
b) Cost of Sales
See note to cost of sales journal entry.
c) Parking revenues
d) Lease Expenses
The total amount is $27,900 (May $1500 prepaid flat rental plus $3,000 June – July flat rental
paid plus $23,400 per car $10 payments.)
e) Total Revenues
Total revenues is the sum of parking revenues ($3,640) cash service revenues ($105,300) and
credit service sales ($730.) The amount is $109,670.