Question

The following transactions are July activities of Bennett's Bowling, Incorporated, which operates several bowling centers, offering customers lanes for games, snack bar service, and merchandise for sale from the pro shop. e. Bennett's purchased $580 in food supplies for the snack bar, paid $490 in cash and owed the rest on account with the supplier. f. Bennett's paid $1,400 on the electricity bill for June (recorded as an expense in June). g. Bennett's paid $4,400 to employees for work in July, h. Bennett's purchased $1,590 in insurance for coverage from August 1 to November 1. i. Bennett's paid $1,300 to plumbers for repairing a broken pipe in the restrooms. J. Bennett's received the July electricity bill for $2,100 to be paid in August.

Answer 1

The transactions should be recorded based on their nature; purchase on credit affects inventory and accounts payable, paying past bills affects cash and accounts payable, employee wages and repairs are current expenses, while insurance and utilities are prepaid expenses or accrued expenses respectively.

Step-by-step explanation:

The student question revolves around the proper documentation and categorization of various business transactions for Bennett's Bowling, Incorporated. These transactions pertain to the acquisition of supplies, handling of expenses, payroll, and repairs, among others. From the given information and based on standard accounting principles, each transaction would be recorded differently in the company's financial statements. For example, the purchase of food supplies with part cash and part credit would involve debiting the inventory and crediting cash and accounts payable.

Paying off a previous month's electricity bill would simply involve a debit to accounts payable and a credit to cash, since the expense was already accounted for in June. The payment to employees for work in July would be accounted for as an expense for the current period, whereas the insurance purchase would be pre-paid in July and expensed over its coverage period. Repair payment due to a broken pipe is an expense in the current period. Lastly, receiving the bill for July's electricity, to be paid in August, would result in recording an expense for July and an increase in accounts payable.