AC1220 ACCOUNTING I Lab 2.1

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AC1220 ACCOUNTING ILab2.11AC1220 ACCOUNTING I Lab 2.1For the AC1220 Lab 2.1 assignment, consider the following accounting scenarios based on transactions at Jake’s Computer RepairService. Jones must journalize these transactions, make the necessary adjustments, and prepare financial statements for February 20x1.In your response, ensure you address each of the following:1.Journalize the transactions for the month of February 20x1, as described in Requirement 1.2.Make the adjustment entries for February 20x1 based on the information provided in Requirement 2.3.Complete the accounting worksheet in Requirement 3 by calculating the adjusted balances for each account and identifying theadjustments (i)-(l).4.Prepare an income statement, a statement of owner’s equity, and a balance sheet for Jake’s Computer Repair Service as ofFebruary 28, 20x1, using the adjusted trial balance from Requirement 3.5.Identify the basis of accounting Jones is applying (cash basis or accrual basis) in Requirement 5, explaining your choice.6.Explain the accounting principle or concept Jones is applying when adjusting revenues and expenses for February 20x1 inRequirement 6.7.Determine whether the statement regarding adjustment entries affecting the cash account is true or false in Requirement 7.8.Discuss the effect on the income statement if Jones had failed to accrue interest on the note payable in Requirement 8.9.Answer whether the cash basis of accounting is required under GAAP for financial statement preparation, as outlined inRequirement 9.Your answer should be detailed, clear, and organized. Be sure to include all necessary calculations and explanations for eachrequirement.Word Count Requirement: 800–1,200 words

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AC1220 ACCOUNTING ILab2.12AC1220 Lab 2.1IntroductionJake’s Computer Repair Service earned a small profit for the month ended January 20x1. Jones expects the business to continueoperating into the foreseeablefuture. In fact, he expects the business to grow so long as it continues to provide customers with excellent service.The following transactions take place in February 20x1:a.Feb.1, 20x1. Jones pays off the accounts payable balance of $410 in cash.b.Feb.2, 20x1. Jones contacts a local advertising agency, Hype! Inc. The agency offers to providesix monthsof customized advertising andpromotional services for a fee of $1,200. Jones agrees and mails a check to Hype! Inc. for the full amount.Hint: Record a prepaid expense.c.Feb.24, 20x1. Jones receives a utility bill for the month of February, $490. This amount is due on March 6, 20x1, and is still payable at month end.d.Feb.28, 20x1. Service revenues for the month total $5,300: $3,900 cash and $1,400 on account.e.Feb.28, 20x1. A customer brings in a laptop for repair and a software upgrade. The customer writes a check for $120 to cover theservice. Jonesbegins work on the laptop on March 2, 20x1.f.Feb.28, 20x1. Jones pays rent of $500 in cash.g.Feb.28, 20x1. Jones withdraws $1,000 in cash.h.Feb.28, 20x1. Wages are paid during the month, amounting to $900 in cash.Requirement 1Make the necessary entries to journalize these transactions for the month of February.DATEREFDEBITCREDIT2/1/x1Accounts Payablea410Casha410To record payment to creditors

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AC1220 ACCOUNTING ILab2.13DATEREF2/2/x1Prepaid advertisementb1200Cashb1200DATEREFDEBITCREDITTo record payment to advertisement agencyDATEREF2/24/x1Utility expensec490To accounts payablesc490To record unpaid utility billDATEREF2/28/x1Cashd3900Accounts receivablesd1400Service revenued5300To record revenueDATEREF2/28/x1Cashe120Unearned service revenuee120To record unearned revenueDATEREF2/28/x1Rentf500Cashf500To record payment of rentDATEREF2/28/x1Drawingsf1000Cashf1000To record drawingsDATEREF2/28/x1Wagesf900cashf900To record payment of wagesOn February 28, Jones takes the following facts into account:i.Feb. 28, 20x1. The supplies account had a balance of $910 on Feb. 1, 20x1. Some supplies were used during the month. Jones determines that theoriginal cost of the remaining supplies is $260.

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