216.
The following account balances appear in the 2018 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, 2018.
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217.
The following is selected financial information for Osmond Dental Laboratories for 2018
and 2019:
2018
2019
$53,000
?
37,000
42,000
15,000
18,000
70,000
?
Osmond issued 2,000 shares of additional capital stock in 2019 for $20,000. There were
no other capital transactions. Prepare a statement of stockholders’ equity for the year
ended December 31, 2019.
Net income
Less:
Dividends
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218.
The adjusted trial balance for Yondel Company at December 31, 2018 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, 2018.
219.
The adjusted trial balance for China Tea Company at December 31, 2018 is presented
below:
Debit
Credit
(a)
Service Revenue
Retained Earnings
(b)
Retained Earnings
Salaries Expense
Rent Expense
Utilities Expense
(c)
Retained Earnings
Dividends
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,
2018.
(a)
Service Revenue
400,000
Retained Earnings
400,000
(b)
Retained Earnings
329,000
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220.
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.
221.
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 advertising 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.
6. Pay dividends to stockholders,
$200.
7. Pay for supplies previously
purchased on account, $400.
Accounts payable
Common stock
Retained earnings
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8. Pay for insurance one year in
advance, $3,600.
9. Receive cash from customers
for services performed in the
current period, $1,800.
10. Provide services to customers
on account, $2,100.
Required:
For each transaction, determine the amount of revenue or expense, if any, that is
recorded under accrual-basis accounting and under cash-basis accounting.
incurred but not yet paid, $800.
2. Pay advertising for the current
month, $700.
4. Receive cash from customers in
advance, $1,500.
6. Pay dividends to stockholders,
8. Pay for insurance one year in
advance, $3,600.
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222.
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 2018, 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
Net cash flows
$13,000
You are able to determine the following information:
January 1,
2018
December 31,
2018
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, 2018, by calculating
accrual-basis revenues and expenses.
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223.
The information necessary for preparing the 2018 year–end adjusting entries for Winter
Storage appears below. Winter’s fiscal year-end is December 31.
a. Depreciation on the equipment for the year is $7,000.
b. Salaries earned (but not paid) from December 16 through December 31, 2018, are
$3,400.
c. On March 1, 2018, Winter lends an employee $12,000 and a note is signed requiring
principal and interest at 6% to be paid on February 28, 2019.
d. On April 1, 2018, Winter pays an insurance company $15,000 for a one-year fire
insurance policy. The entire $15,000 is debited to prepaid insurance at the time of the
purchase.
e. $1,500 of supplies are used in 2018.
f. A customer pays Winter $4,200 on October 31, 2018, for six months of storage to begin
November 1, 2018. Winter credits deferred revenue at the time of cash receipt.
g. On December 1, 2018, $4,000 advertising is paid to a local newspaper. The payment
represents advertising for December 2018 through March 2019, at $1,000 per month.
Prepaid advertising is debited at the time of the payment.
Required:
Record the necessary adjusting entries at December 31, 2018. No prior adjustments have
been made during 2018.
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224.
David’s Services provides general home maintenance to customers. The company’s fiscal
year-end is December 31. The December 31, 2018, trial balance (before any adjusting
entries) appears below.
Accounts
Debits
Credits
Cash
$18,100
Accounts Receivable
16,200
Supplies
20,400
Prepaid Insurance
15,000
Equipment
95,000
Accumulated Depreciation
$27,200
Accounts Payable
10,500
Salaries Payable
-0-
Utilities Payable
-0-
Interest Payable
-0-
Notes Payable
40,000
Common Stock
24,000
Retained Earnings
10,500
Dividends
2,500
Service Revenue
224,900
Salaries Expense
158,500
Depreciation Expense
-0-
Insurance Expense
-0-
Supplies Expense
-0-
Utilities Expense
11,400
Interest Expense
-0-
________
Totals
$337,100
$337,100
Information necessary to prepare the year-end adjusting entries appears below.
a. Depreciation on the equipment for the year is $13,600.
b. Employees’ salaries are paid every two weeks. The last pay period ended on December
23. Salaries earned from December 24 through December 31, 2018, are $4,200.
c. On August 1, 2018, David’s borrows $40,000 from a local bank and signs a note. The
note requires interest to be paid annually on August 31 at 12%. The principal is due in four
years.
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d. On April 1, 2018, the company purchases insurance for $15,000 for a one-year policy to
cover possible injury to workers. The entire $15,000 was debited to Prepaid Insurance at
the time of the purchase.
e. $3,000 of supplies remains on hand at December 31, 2018.
f. On December 30, Mike’s receives a utility bill of $1,900 for the month. The bill will not
be paid until early January, 2019, and no entry was recorded when the bill was received.
Required:
Prepare the necessary adjusting entries on December 31, 2018.
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225.
The general ledger of the Advanced Health at January 1, 2018, includes the following
account balances:
Accounts
Debits
Credits
Cash
$4,500
Accounts Receivable
8,300
Supplies
3,700
Equipment
26,400
Accumulated Depreciation
$5,800
Accounts Payable
4,200
Utilities Payable
5,500
Deferred Revenue
-0-
Common Stock
19,000
Retained Earnings
8,400
Totals
$42,900
$42,900
The following is a summary of the transactions for the year:
a. Provide health services for cash, $18,000, and on account, $62,000.
b. Collect on accounts receivable, $45,000.
c. Issue shares of common stock in exchange for $12,000 cash.
d. Pay salaries for the current year, $36,000.
e. Pay for utilities expense, $13,000, of which $5,500 represents costs for 2017.
f. Receive cash in advance from customers, $7,000.
g. Pay $3,000 cash dividends to stockholders.
Required:
1. Set up the necessary T-accounts and enter the beginning balances from the trial
balance. In addition to the accounts shown, the company has accounts for Dividends,
Service Revenue, Salaries Expense, Utilities Expense, Supplies Expense, and Depreciation
Expense.
2. Record each of the summary transactions listed above.
3. Post the transactions to the accounts.
4. Prepare an unadjusted trial balance.
5. Record adjusting entries. Depreciation for the year on the machinery is $2,900. Medical
supplies remaining on hand at the end of the year equal $1,200. Of the $7,000 paid in
advance by customers, $4,000 of the work has been completed by the end of the year.
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6. Post adjusting entries.
7. Prepare an adjusted trial balance.
8. Prepare an income statement for 2018 and a classified balance sheet as of December
31, 2018.
9. Record closing entries.
10. Post closing entries
11. Prepare a post-closing trial balance.
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