161
375) Based on the unadjusted trial balance for Highlight Styling and the adjusting information
given below, prepare the adjusting journal entries for Highlight Styling.
Highlight Stylings’ unadjusted trial balance for the current year follows:
Highlight Styling
Trial Balance
December 31
Cash………………………………………………….
$2,200
Prepaid insurance ……………………………………
1,680
Shop supplies …………………………………………………….
790
Shop equipment …………………………………….
3,860
Accumulated depreciation–shop equipment ………..
$770
Building………………………………………………
59,500
Accumulated depreciation–building………………..
3,840
Land ………………….
55,000
Unearned rent………………………………………..
2,600
Long-term notes payable…………………………….
50,000
Common stock ……………………………….
40,000
Retained earnings ……………………………….
8,860
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 $1,040 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, $2,020.
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 still unearned 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.
376) Based on the unadjusted trial balance for Glow Styling and the adjusting information given
below, prepare the adjusting journal entries for Glow Styling. After completing the adjusting
entries, prepare the trial balance for Glow Styling.
Glow Styling unadjusted trial balance for the current year follows:
Glow Styling
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
Common stock ……………………………….
40,000
Retained earnings ……………………………….
9,860
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 Glow Styling.
165
377) Using the information presented below, prepare an income statement from the adjusted trial
balance of Dodson Containers.
DODSON CONTAINERS
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
Common stock ……………………………….
30,000
Retained earnings ……………………………….
10,340
Dividends
21,000
Rent earned ………………………………………….
67,500
Wages expense ………………………………………
29,000
Utilities expense …………………………………….
2,900
Property taxes expense ……………………………..
2,400
Insurance expense……………………………………
5,800
Office supplies expense………………………………
250
Depreciation expense–office equipment……………..
400
Depreciation expense–buildings……………………..
5,570
Interest expense …………………………………….
Totals
3,000
$291,880
________
$291,880
167
378) Using the information presented below, prepare a statement of retained earnings and
balance sheet from the adjusted trial balance of Dodson Containers.
DODSON CONTAINERS
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
Common stock ……………………………….
30,000
Retained earnings ……………………………….
10,340
Dividends
21,000
Rent earned ………………………………………….
67,500
Wages expense ………………………………………
29,000
Utilities expense …………………………………….
2,900
Property taxes expense ……………………………..
2,400
Insurance expense……………………………………
5,800
Office supplies expense………………………………
250
Depreciation expense–office equipment……………..
400
Depreciation expense–buildings……………………..
5,570
Interest expense …………………………………….
3,000
$291,880
Totals ………………………………………………..
$291,880
$291,880
169
379) Using the information given below, prepare an income statement and statement of retained
earnings for Rapid Car Services from the adjusted trial balance.
Rapid Car Services
Adjusted Trial Balance
For the year ended December 31
Cash …………………………………………….
$33,000
Accounts receivable …………………………….
14,200
Office supplies ………………………………….
1,700
Vehicles ………………………………………..
100,000
Accumulated depreciation — Vehicles …………
45,000
Accounts payable ………………………………
11,500
Common stock …………………………..
20,000
Retained earnings …………………………..
51,900
Dividends ……………………
40,000
Fees earned ……………………………………..
155,000
Rent expense ……………………………………
13,000
Office supplies expense …………………………
2,000
Utilities expense ………………………………..
2,500
Depreciation Expense — Vehicles……………..
15,000
Salary expense ………………………………….
50,000
Fuel expense ……………………………………
Totals……………………………………
12,000
$283,400
________
$283,400
380) Using the information given below, prepare a balance sheet for Rapid Car Services from the
adjusted trial balance.
Rapid Car Services
Adjusted Trial Balance
For the year ended December 31
Cash …………………………………………….
$33,000
Accounts receivable …………………………….
14,200
Office supplies ………………………………….
1,700
Vehicles ………………………………………..
100,000
Accumulated depreciation — Vehicles …………
45,000
Accounts payable ………………………………
11,500
Common stock …………………………..
20,000
Retained earnings …………………………..
51,900
Dividends ……………………
40,000
Fees earned ……………………………………..
155,000
Rent expense ……………………………………
13,000
Office supplies expense …………………………
2,000
Utilities expense ………………………………..
2,500
Depreciation Expense — Vehicles……………..
15,000
Salary expense ………………………………….
50,000
Fuel expense ……………………………………
Totals……………………………………
12,000
$283,400
________
$283,400
Accounts receivable…………………….
14,200
Office supplies………………………….
1,700
Vehicles………………………………..
$100,000
Accumulated depreciation — Vehicles
(45,000)
$103,900
Total assets………………………………
Liabilities
Accounts payable……………………….
$11,500
Equity
Common stock………………………….
$20,000
Retained earnings………………….
72,400
Total liabilities and equity ……………..
$103,900
381) Abdulla, Co. collected 6-months’ rent in advance from a tenant on October 1 of the current
year. When it collected the cash, it recorded the following entry:
Oct. 01 Cash ………………………………………..15,000
Rent Revenue Earned ……………… 15,000
Assuming Abdulla only prepares adjustments at year-end, prepare the required adjusting entry at
December 31 of the current year.
382) On November 1 of the current year, Salinger Company paid $9,600 cash for a one-year
insurance policy that took effect on that day. On the date of the payment, Salinger recorded the
following entry:
Nov. 01 Insurance Expense..……………………… 9,600
Cash………………….……………… 9,600
Assuming Salinger only prepares adjustments at year-end, prepare the required adjusting entry at
December 31 of the current year.
383) Carroll Co. is a multi-million dollar business. The business results for the year have been
impacted significantly by a slowing economy. The company wants to increase its net income. It
has incurred $2,900,000 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 Carroll? (b) Which accrual basis of accounting principles does this omission
violate? (c) Would this be considered an ethical problem?
384) The following information is available for Hatter Co.
2017
2016
2015
Net income
2,500
1,700
1,900
Net sales
37,000
35,000
32,000
Total assets
420,000
395,000
375,000
From the information provided, calculate Hatter’s profit margin ratio for each of the three years.
In 2016, economic conditions and a slowing economy impacted the results of operations.
Comment on the results, assuming that the industry average for the profit margin ratio is 7% for
each of the three years.
_2017_
_2016
_2015_
$ 2,500
$ 1,700
$ 1,900
Profit margin =
Sales
$37,000
$35,000
$32,000
6.8%
4.9%
5.9%
175
385) The unadjusted trial balance and the adjustment data for Porter Business Institute are given
below along with adjusting entry information. What is the impact on net income if these
adjustments are not recorded? Show the calculation for net income without the adjustments and
net income with the adjustments. Which one gives the most accurate net income? Which
accounting principles are being violated if the adjustments are not made?
Porter Business Institute
Unadjusted Trial Balance
December 31
(in millions)
Cash………………………………………………….
$ 58,000
Accounts receivable…………..………………
59,000
Prepaid insurance ……………………………
12,000
Equipment …………………………………….
8,000
Accumulated depreciation–equipment ………..
$ 2,000
Buildings…………………………………………
57,500
Accumulated depreciation–buildings…………..
17,500
Land………………………………….
55,000
Unearned rent…………………………………..
16,000
Long-term notes payable……………………….
50,000
Common stock……………………….
50,000
Retained earnings ……………………………….
65,600
Tuition fees earned ……………………….
74,000
Training fees earned ………………………….
23,400
Wages expense ………………………………………
32,000
Utilities expense …………………………….
8,000
Property taxes expense …………………………
5,000
Interest expense …………………………………….
4,000
________
Totals ………………………………………..
$ 298,500
$298,500
Additional information items:
a. The Prepaid Insurance account consists of a payment for a 1 year policy. An analysis of the
insurance invoice indicates that one half of the policy has expired by the end of the December 31
year-end.
b. A cash payment for space sublet for 8 months was received on July 1 and was credited to
Unearned Rent.
c. Accrued interest expense on the note payable of $1,000 has been incurred but not paid.
177
386) The unadjusted trial balance and the adjustment data for Porter Business Institute are shown
below along with adjusting entry information. What is the impact of the adjusting entries on the
balance sheet? Show the calculation for total assets, total liabilities, and equity without the
adjustments; show the calculation for total assets, total liabilities, and equity with the
adjustments. Which one provides the most accurate presentation of the balance sheet?
Porter Business Institute
Unadjusted Trial Balance
December 31
(in millions)
Cash………………………………………….
$ 58,000
Accounts receivable…………..………………
59,000
Prepaid insurance ……………………………
12,000
Equipment …………………………………….
8,000
Accumulated depreciation–equipment ………..
$ 2,000
Buildings……………………………………….
57,500
Accumulated depreciation–buildings…………..
17,500
Land………………………………….
55,000
Unearned rent…………………………………..
16,000
Long-term notes payable……………………….
50,000
Common stock……………………….
50,000
Retained earnings ……………………………….
65,600
Tuition fees earned ……………………….
74,000
Training fees earned …………………….
23,400
Wages expense ……………………………
32,000
Utilities expense ………………………….
8,000
Property taxes expense ……………………
5,000
Interest expense ……………………………
4,000
________
Totals ………………………………………..
$ 298,500
$298,500
Additional information items:
a. The Prepaid Insurance account consists of a payment for a 1 year policy. An analysis of the
insurance invoice indicates that one half of the policy has expired by the end of the December 31
year-end.
b. A cash payment for space sublet for 8 months was received on July 1 and was credited to
Unearned Rent.
c. Accrued interest expense on the note payable of $1,000 has been incurred but not paid.