101
250) Prepare adjusting journal entries, as needed, for the following items.
(a) The Supplies account shows a balance of $500, but a count of supplies reveals only $200 on
hand at year-end.
(b) The company initially records the payments of all insurance premiums as prepaid insurance.
The unadjusted trial balance at year-end shows a balance of $500 in Prepaid Insurance. A review
of insurance policies reveals that $100 of insurance is unexpired.
(c) Employees work Monday through Friday, and salaries of $2,500 per week are paid each
Friday. The company’s year-end falls on Tuesday.
(d) At year-end, the company received a utility bill for December’s electricity usage of $200 that
will be paid in early January.
251) A company reports the following amounts: Assets = $6,000; Liabilities = $2,000;
Stockholders’ equity = $4,000; Dividends = $500; Revenues = $5,000; and Expenses = $3,000.
What amount is reported for net income?
102
252) For each of the following accounts, indicate whether the account is shown in the income
statement or the balance sheet:
Accounts
Financial
Statement
1.
Rent Expense
2.
Accounts Payable
3.
Service Revenue
4.
Common Stock
5.
Accounts Receivable
6.
Retained Earnings
1.
Rent Expense
Income Statement
2.
Accounts Payable
Balance Sheet
3.
Service Revenue
Income Statement
4.
Common Stock
Balance Sheet
5.
Accounts Receivable
Balance Sheet
6.
Retained Earnings
Balance Sheet
103
253) For each of the following accounts, indicate whether the account is shown in the income
statement or the balance sheet:
Accounts
Financial
Statement
1.
Service Revenue
2.
Common Stock
3.
Salaries Expense
4.
Deferred Revenue
5.
Accounts Payable
6.
Cash
Service Revenue
Income Statement
Common Stock
Balance Sheet
Salaries Expense
Income Statement
Deferred Revenue
Balance Sheet
Accounts Payable
Balance Sheet
Cash
Balance Sheet
254) The adjusted trial balance for Tom’s Wiring at December 31, 2021, is presented below:
Debit
Credit
Cash
$ 62,000
Supplies
45,000
Accounts Payable
$ 2,000
Salaries Payable
4,000
Common Stock
40,000
Retained Earnings
32,000
Service Revenue
210,000
Salaries Expense
140,000
Advertising Expense
23,000
Rent Expense
18,000
_______
Totals
$288,000
$288,000
Prepare an income statement for Tom’s Wiring for the year ended December 31, 2021:
Service revenue
Salaries Expense
Advertising Expense
Rent Expense
Total Expenses
Net income
105
255) The adjusted trial balance for Tom’s Wiring at December 31, 2021, is presented below:
Debit
Credit
Cash
$ 62,000
Supplies
45,000
Accounts Payable
$ 2,000
Salaries Payable
4,000
Common Stock
40,000
Retained Earnings
32,000
Service Revenue
210,000
Salaries Expense
140,000
Advertising Expense
23,000
Rent Expense
18,000
_______
Totals
$288,000
$288,000
Prepare a classified balance sheet for Tom’s Wiring as of December 31, 2021:
Current assets:
Cash
Supplies
45,000
Total assets
$107,000
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable
2,000
Salaries payable
4,000
Total liabilities
6,000
Stockholders’ equity:
Common stock
40,000
Retained earnings (1)
61,000
Total stockholders’ equity
101,000
equity
$107,000
106
256) The adjusted trial balance for China Tea Company at December 31, 2021, is presented
below:
Debit
Credit
Cash
$11,000
Accounts Receivable
150,000
Prepaid Rent
5,000
Supplies
25,000
Equipment
300,000
Accumulated
Depreciation
$135,000
Accounts Payable
20,000
Salaries Payable
4,000
Interest Payable
1,000
Notes Payable (due in
two years)
30,000
Common Stock
200,000
Retained Earnings
50,000
Dividends
20,000
Service Revenue
400,000
Salaries Expense
180,000
Advertising Expense
70,000
Rent Expense
15,000
Depreciation Expense
30,000
Interest Expense
2,000
Utilities Expense
32,000
_______
Totals
$840,000
$840,000
Prepare an income statement for China Tea Company for the year ended December 31, 2021:
107
108
257) The adjusted trial balance for China Tea Company at December 31, 2021, is presented
below:
Debit
Credit
Cash
$11,000
Accounts Receivable
150,000
Prepaid Rent
5,000
Supplies
25,000
Equipment
300,000
Accumulated Depreciation
$135,000
Accounts Payable
20,000
Salaries Payable
4,000
Interest Payable
1,000
Notes Payable (due in two years)
30,000
Common Stock
200,000
Retained Earnings
50,000
Dividends
20,000
Service Revenue
400,000
Salaries Expense
180,000
Advertising Expense
70,000
Rent Expense
15,000
Depreciation Expense
30,000
Interest Expense
2,000
Utilities Expense
32,000
_______
Totals
$840,000
$840,000
Prepare a classified balance sheet for China Tea Company as of December 31, 2021:
110
258) The December 31, 2021, post-closing trial balance for Strong Corporation is presented
below:
Debits
Credits
Cash
$18,500
Accounts Receivable
26,500
Prepaid Insurance
4,500
Supplies
100,000
Long-Term Investments
55,000
Land
45,000
Buildings
277,500
Accumulated Depreciation
80,000
Accounts Payable
37,500
Notes Payable, due 2022
65,000
Interest Payable
10,000
Notes Payable, due 2031
120,000
Common Stock
150,000
Retained Earnings
64,500
Totals
$527,000
$527,000
Prepare a classified balance sheet for Strong Corporation at December 31, 2021.
112
259) The following account balances appear in the 2021 adjusted trial balance of Diamond
Corporation: Common Stock, $21,000; Retained Earnings, $8,000; Dividends, $2,000; Service
Revenue, $30,000; Salaries Expense, $13,000; and Utilities Expense, $7,000. No common stock
was issued during the year. Prepare the statement of stockholders’ equity for the year ended
December 31, 2021.
113
260) The following is selected financial information for Osmond Dental Laboratories for 2021
and 2022:
2021
2022
Retained earnings, January 1
$53,000
?
Net income
37,000
42,000
Dividends
15,000
18,000
Common stock
70,000
?
Osmond issued 2,000 shares of additional common stock in 2022 for $20,000. There were no
other stock transactions. Prepare a statement of stockholders’ equity for the year ended December
31, 2022.
Balance, January 1, 2022
stock
Net income for 2022
Less: Dividends
(18,000)
2021
114
261) The adjusted trial balance for Yondel Company at December 31, 2021 is presented below:
Debit
Credit
Cash
$8,000
Prepaid Rent
18,000
Land
415,000
Accounts Payable
$10,000
Salaries Payable
14,000
Common Stock
250,000
Retained Earnings
64,000
Dividends
10,000
Service Revenue
350,000
Salaries Expense
190,000
Rent Expense
21,000
Utilities Expense
26,000
_______
Totals
$688,000
$688,000
Prepare the closing entries for Yondel Company for the year ended December 31, 2021.
(a)
Service Revenue
(b)
Retained Earnings
(c)
Retained Earnings
115
262) The adjusted trial balance for China Tea Company at December 31, 2021 is presented
below:
Debit
Credit
Cash
$11,000
Accounts Receivable
150,000
Prepaid Rent
5,000
Supplies
25,000
Equipment
300,000
Accumulated Depreciation
$135,000
Accounts Payable
20,000
Salaries Payable
4,000
Interest Payable
1,000
Notes Payable — due in two
years
30,000
Common Stock
200,000
Retained Earnings
50,000
Dividends
20,000
Service Revenue
400,000
Salaries Expense
180,000
Advertising Expense
70,000
Rent Expense
15,000
Depreciation Expense
30,000
Interest Expense
2,000
Utilities Expense
32,000
_______
Totals
$840,000
$840,000
Prepare the closing entries for China Tea Company for the year ended December 31, 2021.
116
263) The year-end adjusted trial balance included the following account balances: Cash, $5,000;
Equipment, $25,000; Accounts payable, $7,000; Common stock, $15,000; Retained earnings,
$6,000; Dividends, $1,000; Service revenue, $18,000; Salaries expense, $9,000; and Utilities
expense, $6,000. Prepare the post-closing trial balance, assuming closing entries have been
posted to the respective accounts.
117
264) Consider the following transactions.
Accrual-Basis Cash-Basis
Transaction
Revenue
Expense
Revenue
Expense
1. Record employees’ salaries
incurred but not yet paid, $800.
2. Pay rent for the current month,
$700.
3. Pay utilities for the previous
month, $750.
4. Receive cash from customers
in advance, $1,500.
5. Purchase office supplies on
account, $400.
Required:
For each transaction, determine the amount of revenue or expense, if any, which is recorded
under accrual-basis accounting and under cash-basis accounting.
Transaction
Revenue
Expense
Revenue
Expense
1. Record employees’ salaries
incurred but not yet paid, $800.
2. Pay rent for the current month,
$700.
3. Pay utilities for the previous
month, $750.
4. Receive cash from customers
in advance, $1,500.
5. Purchase office supplies on
account, $400.
118
265) Consider the following transactions.
Accrual-Basis Cash-Basis
Transaction
Revenue
Expense
Revenue
Expense
1. Pay dividends to stockholders,
$200.
2. Pay for supplies previously
purchased on account, $400.
3. Pay for insurance one year in
advance, $3,600.
4. Receive cash from customers
for services performed in the
current period, $1,800.
5. Provide services to customers
on account, $2,100.
Required:
For each transaction, determine the amount of revenue or expense, if any, which is recorded
under accrual-basis accounting and under cash-basis accounting.
Transaction
Revenue
Expense
Revenue
Expense
$200.
2. Pay for supplies previously
purchased on account, $400.
3. Pay for insurance one year in
advance, $3,600.
4. Receive cash from customers
for services performed in the
current period, $1,800.
5. Provide services to customers
on account, $2,100.
266) Brink’s International maintains its books using cash-basis accounting. However, the
company plans to issue stock and must provide annual financial statements prepared using
accrual-basis accounting. During 2021, the following cash flows were recorded:
Cash collected from customers
$480,000
Cash paid for:
Salaries
$290,000
Rent
24,000
Supplies
108,000
422,000
Cash-basis profit
$58,000
You are able to determine the following information:
January 1, 2021
December 31, 2021
Accounts receivable
$15,000
$8,000
Supplies
21,400
27,800
Salaries payable
9,600
12,500
Required:
Prepare an accrual-basis income statement for December 31, 2021, by calculating accrual-basis
revenues and expenses.
Service revenue
Expenses:
Salaries
Rent
Supplies
Total expenses
Net income
120
267) Follette’s Accessories maintains its books using cash-basis accounting. However, the
company recently borrowed $50,000 from a local bank and the bank requires Follette’s to
provide annual financial statements prepared using accrual-basis accounting as part of the credit
worthiness verification. During 2021, the following cash flows were recorded:
Cash collected from customers
$60,000
Cash paid for:
Salaries
$25,000
Supplies
6,000
Maintenance
5,000
Insurance
7,000
Advertising
4,000
47,000
Cash-basis profit
$13,000
You are able to determine the following information:
January 1,
2021
December 31,
2021
Accounts receivable
$15,000
$18,000
Prepaid insurance
1,800
4,100
Supplies
800
-0-
Salaries payable
2,200
2,000
Required:
Prepare an accrual-basis income statement for December 31, 2021, by calculating accrual-basis
revenues and expenses.