Identify the three main advantages of a computerized accounting ...

[captainjonesify]

Identify the three main advantages of a computerized accounting system over a manual accounting system.

Question 2

(Transaction analysis, journal entries, and adjusting journal entries)
 
  Lillian Rose opened a facility to provide day care for children. The following transactions occurred during the month of July 2013, the first month of business.
 
  a. Lillian Rose invested 10,000 of her personal funds in a business, to be known as LilyRose Day Care.
  b. To provide additional funds for her business, she borrowed 20,000 from a bank. The loan must be repaid at the end of year with interest at 8 per annum.
  c. She rented a large house for one year. She paid rent of 5,000 in advance for the months of July and August.
  d. She bought furniture at a cost of 6,000, receiving an invoice that had to be paid in 10 days. She expected the equipment to last five years.
  e. She paid 1,000 cash for food, toys and other operating supplies. (Because these items are likely to be consumed in a few months, treat them as Operating Expenses.)
   f. She paid the invoice for 6,000, received in transaction d.
   g. She paid her helper at the rate of 400 a week, a total of 1,600 for the month.
   h. She billed her clients 11,500 for day care services provided during the month.
   i. She received checks totaling 11,000 against the bills sent out in transaction h.
   j. She received a bill for utilities in the amount of 300.
 
  Lillian wanted to prepare financial statements at the end of the month, so she made adjusting journal entries for the following items.
 
   k. To record interest for one month on the amount borrowed from the bank in transaction b.
   l. To recognize the expiration of rent for the month of July (transaction c).
   m. To recognize one month's depreciation on the equipment purchased in transaction d.
   n. To recognize salary of 240 owed to her helper for the last three days in July.
 
  Required:
   a. Analyze the above transactions on a work sheet. The work sheet should show columns for individual accounts classified as assets, liabilities, and equity. (Note to instructor: You may wish to provide students with the four columns for cash, other assets, liabilities, and equity suggested in the answer.)
  b. Prepare journal entries to record the above transactions.

[Eunice618]

Answer to Question 1

1 . Simplification of the recording process by recording transactions electronicallyand posting to both the general and subsidiary ledgers at the same time.

2 . Generally more accurate than manual systems.

3 . Provides management with current balance information to support decisionmaking since account balances are updated as transactions are entered.

Answer to Question 2

Assets
Other
Cash + Assets = Liabilities + Equity

a. Investment + 10,000 + 10,000
b. Borrowing + 20,000 + 20,000
c. Paid rent - 5,000 + 5,000
d. Bought furn. + 6,000 + 6,000
e. Bought food - 1,000 - 1,000
f. Paid for furn. - 6,000 - 6,000
g. Paid salaries - 1,600 - 1,600
h. Billed clients + 11,500 + 11,500
i. Rec'd payment + 11,000 - 11,000
j. Utility. bill + 300 - 300
k. Accrue int. + 133 - 133
l. Rent expires - 2,500 - 2,500
m. Depreciation - 100 - 100
n. Accrue salary + 240 - 240
+ 27,400 + 8,900 + 20,673 + 15,627
= 36,300 = 36,300

Answer (part b)
a. Cash 10,000
Lillian Rose, Capital 10,000

b. Cash 20,000
Notes payable 20,000

c. Prepaid rent 5,000
Cash 5,000

d. Furniture and equipment 6,000
Accounts payable 6,000

e. Operating expenses 1,000
Cash 1,000

f. Accounts payable 6,000
Cash 6,000

g. Salaries expense 1,600
Cash 1,600

h. Accounts receivable 11,500
Revenues 11,500

i. Cash 11,000
Accounts receivable 11,000

j. Utilities expense 300
Accounts payable 300

k. Interest expense 133
Interest payable 133

l. Rent expense 2,500
Prepaid rent 2,500

m. Depreciation expense 100
Accumulated depreciation 100

n. Salary expense 240
Salaries payable 240