The financial statements of Procter & Gamble Company available athttp://www.pg.com/en_US/index.shtml .
Refer to P&G’s financial statements and the accompanying notes to answer the following questions:
- Using the notes to the consolidated financial statements, determine P&G’s revenue recognition policies. Discuss the impact of trade promotions on P&G’s financial statements.
- Give two examples of where historical cost information is reported in P&G’s financial statements and related notes. Give two examples of the use of fair value information reported in either the financial statements or related notes.
- How can we determine that the accounting principles used by P&G are prepared on a basis consistent with those of last year?
- What is P&G’s accounting policy related to advertising? What accounting principle does P&G follow regarding accounting for advertising? Where are advertising expenses reported in the financial statements?
Week 2
Critical Thinking: Trial Balance (50 points)
Listed below are the transactions for Hunter Marketing. Inc. for the month of July:
July 1 Hunter begins his marketing company and invests $50,000 cash.
July 5 Purchases computers and office equipment on account from OfficeMax for $10,250.
July 6 Pays rent for office space $800 for the month.
July 6 Employs a secretary, Mary Jones.
July 8 Purchases office supplies for cash $960.
July 9 Receives $2,430 from customer for services performed.
July 11 Pays miscellaneous office expenses $375.
July 13 Bills customers $4,900 for serviced performed.
July 15 Pays Office Max $3,500 on account.
July 18 Withdraws $2,000 from business for personal use.
July 20 Receives $1,900 from customers on account.
July 23 Bills customers $6,320 for services performed.
July 30 Pays the following expenses in cash: office salaries $2,300 and utilities $400.
- Enter the transactions shown above in appropriate general ledger accounts (use T-accounts). Use the following ledger accounts: Cash, Accounts Receivable, Supplies on Hand, Office Equipment, Accumulated Depreciation, Accounts Payable, Hunter-Capital, Service Revenue, Rent Expense, Miscellaneous Office Expense, Office Salaries Expense, Supplies Expense, Utilities Expense, Depreciation Expense and Income Summary.
- Prepare an unadjusted trial balance.
- Record depreciation using a 5-year life on the office equipment, the straight-line method, and no salvage value. Round to whole numbers. Also, record an adjustment for office supplies used in the amount of $510.
- Prepare an adjusted trial balance.
- Prepare an income statement, a statement of retained earnings, and an unclassified balance sheet.
- Close the ledger.
- Prepare a post-closing trial balance.
ScholarMatic: Explanation & Answer
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