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Salaries expense 3,500 4,500
Depreciation expense—Equip. 900
Insurance expense 700 1,100
Black, Capital ______
18,800 5,400
18,800 ______
20,700 5,400
20,700
Present the four adjusting journal entries that were recorded by Black Company.
195. In general journal form, record the December 31 adjusting entries for the following
transactions and events. Assume that December 31 is the end of the annual accounting period.
a. The Prepaid Insurance account shows a debit balance of $2,340, representing the cost of a
three-year fire insurance policy that was purchased on October 1 of the current year.
b. The Office Supplies account has a debit balance of $400; a year-end inventory count
reveals $80 of supplies still on hand.
c. On November 1 of the current year, Rent Earned was credited for $1,500. This amount
represented the rent earned for a three-month period beginning November 1.
d. Estimated depreciation on office equipment is $600.
e. Accrued salaries amount to $400.
(all entries dated December 31)
196. Based on the unadjusted trial balance for Bella’s Beauty Salon and the adjusting
information given below, prepare the adjusting journal entries for Bella's Beauty Salon.
Bella Beauty Salon's unadjusted trial balance for the current year follows:
Bella Beauty Salon
Trial Balance
December 31
Cash…………………………………………………. $ 4,200
Prepaid insurance …………………………………... 1,480
Shop supplies ............................................................. 990
Shop equipment ……………………………………. 3,860
Accumulated depreciation–shop equipment ……….. $ 770
Building……………………………………………... 57,500
Accumulated depreciation–building……………….. 3,840
Land …………………. 55,000
Unearned rent……………………………………….. 1,600
Long-term notes payable……………………………. 50,000
Bella Hanson, Capital ………………………………. 49,860
Rent earned …………………………………………. 2,400
Fees earned …………………………………………. 23,400
Wages expense ……………………………………... 3,200
Utilities expense …………………………………… 690
Property taxes expense ……………………………. 600
Interest expense …………………………………… 4,350 ________
Totals ……………………………………………….. $131,870 $131,870
Additional information:
a. An insurance policy examination showed $1,240 of expired insurance.
b. An inventory count showed $210 of unused shop supplies still available.
c. Depreciation expense on shop equipment, $350.
d. Depreciation expense on the building, $2,220.
e. A beautician is behind on space rental payments, and this $200 of accrued revenues was
unrecorded at the time the trial balance was prepared.
f. $800 of the Unearned Rent account balance was earned by year-end.
g. The one employee, a receptionist, works a five-day workweek at $50 per day. The
employee was paid last week but has worked four days this week for which she has not been
paid.
h. Three months' property taxes, totaling $450, have accrued. This additional amount of
property taxes expense has not been recorded.
i. One month's interest on the note payable, $600, has accrued but is unrecorded.
197. Based on the unadjusted trial balance for Bella’s Beauty Salon and the adjusting
information given below, prepare the adjusting journal entries for Bella's Beauty Salon. After
completing the adjusting entries, prepare the trial balance for Bella’s Beauty Salon.
Bella Beauty Salon's unadjusted trial balance for the current year follows:
Bella Beauty Salon
Trial Balance
December 31
Cash…………………………………………………. $ 4,200
Prepaid insurance …………………………………... 1,480
Shop supplies ............................................................. 990
Shop equipment ……………………………………. 3,860
Accumulated depreciation–shop equipment ……….. $ 770
Building……………………………………………... 57,500
Accumulated depreciation–building……………….. 3,840
Land …………………. 55,000
Unearned rent……………………………………….. 1,600
Long-term notes payable……………………………. 50,000
Bella Hanson, Capital ………………………………. 49,860
Rent earned …………………………………………. 2,400
Fees earned …………………………………………. 23,400
Wages expense ……………………………………... 3,200
Utilities expense …………………………………… 690
Property taxes expense ……………………………. 600
Interest expense …………………………………… 4,350 ________
Totals ……………………………………………….. $131,870 $131,870
Additional information:
a. An insurance policy examination showed $1,240 of expired insurance.
b. An inventory count showed $210 of unused shop supplies still available.
c. Depreciation expense on shop equipment, $350.
d. Depreciation expense on the building, $2,220.
e. A beautician is behind on space rental payments, and this $200 of accrued revenues was
unrecorded at the time the trial balance was prepared.
f. $800 of the Unearned Rent account balance was earned by year-end.
g. The one employee, a receptionist, works a five-day workweek at $50 per day. The
employee was paid last week but has worked four days this week for which she has not been
paid.
h. Three months' property taxes, totaling $450, have accrued. This additional amount of
property taxes expense has not been recorded.
i. One month's interest on the note payable, $600, has accrued but is unrecorded.
Use the above information to prepare the adjusted trial balance for Bella's Beauty Salon.
198. Using the information presented below, prepare an income statement from the adjusted
trial balance of Hanson Storage.
HANSON STORAGE
Adjusted Trial Balance
December 31
Cash…………………………………………………. ......... $ 3,050 ........
Accounts receivable………………………………… ............ 400 ........
Prepaid insurance …………………………………... ............ 830 ........
Office supplies ............................................................. .......... 80 ........
Office equipment ……………………………………. .......... 4,200 ........
Accumulated depreciation–office equipment ……….. ....... ....................... $ 1,100
Buildings……………………………………………... .......... 98,000 ........
Accumulated depreciation–buildings……………….............. ....................... 28,000
Land ........................................................................................ …………………. 115,000
Wages Payable……………………………………… ............ ....................... 880
Property taxes payable……………………………… ............ ....................... 1,400
Interest payable……………………………………... ............ ....................... 2,200
Unearned rent……………………………………….. ............ ....................... 460
Long-term notes payable……………………………............. ....................... 150,000
Mary Hanson, Capital ………………………………. ........... ....................... 40,340
Mary Hanson, Withdrawals .................................................... 21,000 ............
Rent earned …………………………………………. ........... ....................... 57,500
Wages expense ……………………………………... ............ 25,000 ..........
Utilities expense ……………………………………. ............ 1,900 ....
Property taxes expense …………………………….. ............. 2,400 ............
Insurance expense…………………………………... ............ 800 ...........
Office supplies expense……………………………… .......... 250 ...........
Depreciation expense–office equipment…………….. ........... 400 .................
Depreciation expense–buildings…………………….. ........... 5,570 ..............
Interest expense ……………………………………. 3,000
$281,880 .......................................... ________
$281,880
Totals ……………………………………………….............. .......................
199. Using the information presented below, prepare a statement of owner’s equity and
balance sheet from the adjusted trial balance of Hanson Storage. Ms. Hanson's capital account
balance of $40,340 consists of a $30,340 beginning-year balance plus a $10,000 investment
during the current year.
HANSON STORAGE
Adjusted Trial Balance
December 31
Cash…………………………………………………. ......... $ 3,050 ........
Accounts receivable………………………………… ............ 400 ........
Prepaid insurance …………………………………... ............ 830 ........
Office supplies ............................................................. .......... 80 ........
Office equipment ……………………………………. .......... 4,200 ........
Accumulated depreciation–office equipment ……….. ....... ....................... $ 1,100
Buildings……………………………………………... .......... 98,000 ........
Accumulated depreciation–buildings……………….............. ....................... 28,000
Land ........................................................................................ …………………. 115,000
Wages Payable……………………………………… ............ ....................... 880
Property taxes payable……………………………… ............ ....................... 1,400
Interest payable……………………………………... ............ ....................... 2,200
Unearned rent……………………………………….. ............ ....................... 460
Long-term notes payable……………………………............. ....................... 150,000
Mary Hanson, Capital ………………………………. ........... ....................... 40,340
Mary Hanson, Withdrawals .................................................... 21,000 ............
Rent earned …………………………………………. ........... ....................... 57,500
Wages expense ……………………………………... ............ 25,000 ..........
Utilities expense ……………………………………. ............ 1,900 ....
Property taxes expense …………………………….. ............. 2,400 ............
Insurance expense…………………………………... ............ 800 ...........
Office supplies expense……………………………… .......... 250 ...........
Depreciation expense–office equipment…………….. ........... 400 .................
Depreciation expense–buildings…………………….. ........... 5,570 ..............
Interest expense ……………………………………. 3,000
$281,880 .......................................... ________
$281,880
Totals ……………………………………………….............. .......................
200. Using the information given below, prepare an income statement and owner’s equity
statement for Martin Sky Taxi Services from the adjusted trial balance. Helena Martin did not
make any additional investments in the company during the year.
Martin Sky Taxi Services
Adjusted Trial Balance
For the year ended December 31
Cash ……………………………………………. $ 28,000
Accounts receivable ……………………………. ........... 14,200 .........
Office supplies …………………………………. ........... 1,700 ...........
Airplanes ……………………………………….. ........... 100,000 .......
Accumulated depreciation – Airplanes ………… ........... .................... 45,000
Accounts payable ……………………………… ............ .................... 11,500
Helena Martin, Capital ………………………….. .......... .................... 71,900
Helena Martin, Withdrawals …………………... ............ 40,000 .........
Fees earned …………………………………….............. .................... 150,000
Rent expense …………………………………... ............ 13,000 .........
Office supplies expense ………………………... ........... 2,000 ...........
Utilities expense ……………………………….. ............ 2,500 ...........
Depreciation Expense – Airplanes ................................... …………….. 15,000
Salary expense …………………………………. ........... 50,000 .........
Fuel expense …………………………………… 12,000
$278,400 ............................................ ________
$278,400
Totals ……………………………………………........... ....................
201. Using the information given below, prepare a balance sheet for Martin Sky Taxi Services
from the adjusted trial balance. Helena Martin did not make any additional investments in the
company during the year.
Martin Sky Taxi Services
Adjusted Trial Balance
For the year ended December 31
Cash ……………………………………………. $ 28,000
Accounts receivable ……………………………. ........... 14,200 .........
Office supplies …………………………………. ........... 1,700 ...........
Airplanes ……………………………………….. ........... 100,000 .......
Accumulated depreciation – Airplanes ………… ........... .................... 45,000
Accounts payable ……………………………… ............ .................... 11,500
Helena Martin, Capital ………………………….. .......... .................... 71,900
Helena Martin, Withdrawals …………………... ............ 40,000 .........
Fees earned …………………………………….............. .................... 150,000
Rent expense …………………………………... ............ 13,000 .........
Office supplies expense ………………………... ........... 2,000 ...........
Utilities expense ……………………………….. ............ 2,500 ...........
Depreciation Expense – Airplanes ................................... …………….. 15,000
Salary expense …………………………………. ........... 50,000 .........
Fuel expense …………………………………… 12,000
$278,400 ............................................ ________
$278,400
Totals ……………………………………………........... ....................
202. Manning, Co. collected 6-months' rent in advance from a tenant on November 1 of the
current year. When it collected the cash, it recorded the following entry:
Nov. 01 Cash ……………………………………….. 15,000
Rent Revenue Earned ……………... 15,000
Prepare the required adjusting entry at December 31 of the current year.
203. On October 1 of the current year, Morton Company paid $9,600 cash for a one-year
insurance policy that took effect on that day. On the date of the payment, Morton recorded the
following entry:
Oct. 01 Insurance Expense..……………………….. 9,600
Cash………………….……………... 9,600
Prepare the required adjusting entry at December 31 of the current year.
204. Harrow Co. is a multi-million business. The business results for the year have been
seriously impacted by a slowing economy. The company wants to improve its net income. It
has incurred $2,500,000 in unpaid salaries at the end of the year and wants to leave those
amounts unrecorded at the end of the year. (a) How would this omission affect the financial
statements of Harrow? (b) Which accrual basis of accounting principles does this omission
violate? (c) Would this be considered an ethical problem?
