173. Hakik Enterprises offers rug cleaning services to business clients. Below are the adjustments data for the
year ended July 31, 2010. REQUIRED: Using this information along with the spreadsheet below, record the
adjusting entries in proper general journal form.
Adjustments:
a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly
over its useful life. Please record one month’s depreciation.
b) Accrued Wages $2.
c) Unused supplies on hand $8.
d) Of the unearned revenue, 75% has been earned.
e) Unexpired insurance remaining at the end of the month, $9.
174. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.
Debit
Credit
Cash
$ 1,500
Accounts receivable
2,000
Interest receivable
100
Prepaid insurance
1,600
Notes receivable (long-term)
2,800
Equipment
15,000
Accumulated depreciation
$3,000
Accounts payable
2,400
Accrued expenses payable
3,920
Income taxes payable
2,700
Unearned rent fees
500
Bob Evans, Capital
7,700
Bob Evans, Drawing
2,000
Rent fees earned
37,000
Furniture rental revenue
1,200
Interest revenue
100
Wages expense
19,000
Depreciation expense
1,800
Utilities expense
320
Insurance expense
700
Maintenance expense
9,000
Income tax expense
2,700
Total
$ 58,520
$ 58,520
Prepare the entry required to close the revenue accounts at the end of the period.
Dec. 31
Rent fees earned
37,000
Furniture rental revenue
1,200
Interest revenue
100
Income Summary
38,300
Service Revenue
15
(e)
Insurance Expense
3
Prepaid Insurance
3
175. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.
Debit
Credit
Cash
$ 1,500
Accounts receivable
2,000
Interest receivable
100
Prepaid insurance
1,600
Notes receivable (long-term)
2,800
Equipment
15,000
Accumulated depreciation
$3,000
Accounts payable
2,400
Accrued expenses payable
3,920
Income taxes payable
2,700
Unearned rent fees
500
Bob Evans, Capital
7,700
Bob Evans, Drawing
2,000
Rent fees earned
37,000
Furniture rental revenue
1,200
Interest revenue
100
Wages expense
19,000
Depreciation expense
1,800
Utilities expense
320
Insurance expense
700
Maintenance expense
9,000
Income tax expense
2,700
$ 58,520
$ 58,520
Prepare the entry required to close the expense accounts at the end of the period.
Dec 31
Income Summary
33,520
Wages expense
19,000
Depreciation expense
1,800
Utilities expense
320
Insurance expense
700
Maintenance expense
9,000
Income tax expense
2,700
176. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.
Debit
Credit
Cash
$ 1,500
Accounts receivable
2,000
Interest receivable
100
Prepaid insurance
1,600
Notes receivable (long-term)
2,800
Equipment
15,000
Accumulated depreciation
$3,000
Accounts payable
2,400
Accrued expenses payable
3,920
Income taxes payable
2,700
Unearned rent fees
500
Bob Evans, Capital
7,700
Bob Evans, Drawing
2,000
Rent fees earned
37,000
Furniture rental revenue
1,200
Interest revenue
100
Wages expense
19,000
Depreciation expense
1,800
Utilities expense
320
Insurance expense
700
Maintenance expense
9,000
Income tax expense
2,700
$ 58,520
$ 58,520
Prepare the closing entry required to transfer the income or loss at the end of the period.
Dec 31
Income Summary
4,780
Bob Evans, Capital
4,780
177. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.
Debit
Credit
Cash
$ 1,500
Accounts receivable
2,000
Interest receivable
100
Prepaid insurance
1,600
Notes receivable (long-term)
2,800
Equipment
15,000
Accumulated depreciation
$3,000
Accounts payable
2,400
Accrued expenses payable
3,920
Income taxes payable
2,700
Unearned rent fees
500
Bob Evans, Capital
7,700
Bob Evans, Drawing
2,000
Rent fees earned
41,000
Furniture rental revenue
1,200
Interest revenue
100
Wages expense
19,000
Depreciation expense
1,800
Utilities expense
320
Insurance expense
700
Maintenance expense
9,000
Income tax expense
2,700
$ 58,520
$ 58,520
Prepare the entry required to close the Drawing account at the end of the period.
Dec 31
Bob Evans, Capital
2,000
Bob Evans, Drawing
2,000
178. Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted,
will overstate or understate assets, liabilities, owner’s equity, revenues, expenses, or net income. Indicate the
amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the
transaction was omitted. Place your results in the table following the transactions and use (+) for overstate, (–)
for understate, and (NE) for no effect.
1. Morrison purchased supplies on December 1 for $900. On December 31, $350 of supplies were on hand.
2. Prepaid insurance had a debit balance of $5,400 on December 1, which represented a prepayment for 2 years
of insurance.
3. The unearned rent revenue account has a credit balance of $390 on December 1, which represents 3 months
rent.
Transaction
Assets
Liabilities
Owner’s Equity
Revenues
Expenses
Net Income
1.
2.
3.
179. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet
columns with a debit total of $614,210 and a credit total of $630,430. This is before the amount for net
income or net loss has been included. In preparing the income statement from work sheet, what is the amount
of net income or net loss?
Transaction
Assets
Liabilities
Owner’s Equity
Revenues
Expenses
Net Income
1.
+550
+550
-550
+550
2.
+225
+225
-225
+225
3.
+130
-130
-130
-130
180. Identify which of the following accounts should be closed with a debit or a credit to Income Summary at
the end of the fiscal year. If it is not closed to Income Summary, mark as n/a.
1. Utilities Payable
2. Utilities Expense
3. Supplies
4. Supplies Expense
5. Fees Earned
6. Unearned Fees
7. Accounts Receivable
8. Jason Hill, Drawing
9. Jason Hill, Capital
10. Accumulated Depreciation – Equipment
11. Depreciation Expense – Equipment
12. Equipment
13. Prepaid Insurance
14. Insurance Expense
181. The balances for the accounts listed below appeared in the Adjusted Trial Balance columns of the work
sheet. Indicate whether each balance should be extended to (a) the Income Statement columns or (b) the
Balance Sheet columns.
(1)
Salaries Payable
(7)
Felipe Ramos, Drawing
(2)
Fees Earned
(8)
Equipment
(3)
Accounts Payable
(9)
Accounts Receivable
(4)
Felipe Ramos, Capital
(10)
Accumulated Depreciation
(5)
Supplies Expense
(11)
Salary Expense
(6)
Unearned Rent
(12)
Depreciation Expense
182. Indicate whether each of the following would be reported in the financial statements as a(n) (a) current
asset, (b) current liability, (c) revenue, or (d) expense:
(1)
Supplies
(5)
Supplies Expense
(2)
Unearned Fees
(6)
Prepaid Insurance
(3)
Prepaid Advertising
(7)
Accounts Payable
(4)
Advertising Expense
(8)
Fees Earned
(1)
current asset
(2)
current liability
(3)
current asset
(4)
expense
(5)
expense
(6)
current asset
(7)
current liability
(8)
revenue
(a)
Income statement: 2, 5, 11, 12
(b)
Balance sheet: 1, 3, 4, 6, 7, 8, 9, 10
183. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for April
30, 2010 for Finnegan Co.:
Accumulated Depreciation
$ 32,000
Fees Earned
78,000
Depreciation Expense
7,250
Rent Expense
34,000
Prepaid Insurance
6,000
Supplies
400
Supplies Expense
1,800
Prepare an income statement.
184. The following revenue and expense account balances were taken from the Income Statement columns of
the work sheet for Fraser Services Co. for December 31, 2010:
Depreciation Expense
$ 4,950
Insurance Expense
2,900
Miscellaneous Expense
1,200
Rent Expense
24,000
Service Revenue
92,500
Supplies Expense
3,150
Utilities Expense
5,000
Wages Expense
63,750
Prepare an income statement.
Service revenue
$ 92,500
Operating expenses:
Wages expense
$63,750
Rent expense
24,000
Utilities expense
5,000
Depreciation expense
4,950
Supplies expense
3,150
Insurance expense
2,900
Miscellaneous expense
1,200
Total operating expenses
104,950
Fees earned
$78,000
Expenses:
Rent expense
$34,000
Depreciation expense
7,250
Supplies expense
1,800
Total expenses
43,050
Net income
$34,950
185. The following data were taken from the Balance Sheet columns of the work sheet for April 30, 2010 for
Mackenzie Company:
Accumulated Depreciation-Trucks
$42,400
Prepaid Rent
6,800
Supplies
850
Unearned Fees
7,310
Trucks
49,300
Cash
3,400
Mackenzie, Capital
?
Prepare a classified balance sheet.
Assets
Liabilities
Current assets:
Cash
$ 3,400
Current liabilities:
Supplies
Unearned fees
$ 7,310
Prepaid rent
6,800
Total current assets
$ 11,050
Owner’s Equity
Property, plant, and equipment:
Mackenzie, Capital
10,640
Less accum.
depreciation
42,400
Total property, plant
and equipment
6,900
Total assets
$17,950
186. Indicate whether each of the following would be reported in the section of financial statements identified
as (a) current asset, (b) property, plant, and equipment, (c) current liability, (d) revenue, or (e) expense:
(1)
Automobile
(2)
Accumulated depreciation
(3)
Rent expense
(4)
Fees earned
(5)
Salaries payable
(6)
Prepaid rent
(7)
Store supplies
(8)
Advertising expense
(9)
Unearned rent
(1)
property, plant, and equipment
(2)
property, plant, and equipment
(3)
expense
(4)
revenue
(5)
current liability
(6)
current asset
(7)
current asset
(8)
expense
(9)
current liability
187. The following balance sheet contains errors.
Brock Morton Services Co.
Balance Sheet
For the Year Ended December 31, 2010
Assets
Liabilities
Current assets:
Current liabilities:
Cash
$ 7,170
Accounts receivable
$ 10,000
Accounts payable
7,500
Accum. depr-building
12,525
Supplies
2,590
Accum. depr-equipment
7,340
Prepaid insurance
800
Net income
11,500
Land
24,000
Total current assets
$ 42,060
Total liabilities
$ 41,365
Owner’s Equity
Property, plant, and equipment:
Wages payable
$ 1,500
Building
$43,700
Brock Morton, Capital
88,645
Equipment
29,250
Total owner’s equity
$ 90,145
Total property, plant,
and equipment
72,950
Total liabilities and
Total assets
$131,510
owner’s equity
$131,510
(a) List the errors in the balance sheet above and (b) prepare a corrected balance sheet.
(a)
(1)
Date of statement should be “December 31, 2010” and not “For the Year Ended December 31, 2010.”
(2)
Accounts payable should be a current liability.
(3)
Land is a fixed asset and should be listed as Property, Plant and Equipment.
(4)
Accumulated depreciation should be deducted from the related fixed asset in the Property Plant, and Equipment section.
(5)
An adding error was made in determining the amount of total assets.
(6)
Accounts receivable should be a current asset.
(7)
Net income would be reported on the income statement.
(8)
Wages payable should be a current liability.
Brock Morton Services Co.
Current assets:
Cash
$ 7,170
Accounts receivable
10,000
Supplies
2,590
Prepaid insurance
800
Total current assets
$20,560
Property, plant, and equipment:
Land
$24,000
Building
$43,700
Total property, plant, and equipment
77,085
Total assets
$97,645
188. The following is the adjusted trial balance for Nadia Company.
Nadia Company
Adjusted Trial Balance
December 31, 2014
Cash
5,130
Accounts Receivable
3,300
Prepaid Expenses
420
Equipment
12,400
Accumulated Depreciation
2,200
Accounts Payable
700
Notes Payable – Due on June 30, 2011
3,070
Nadia Porter, Capital
13,000
Nadia Porter, Drawing
700
Fees Earned
10,930
Wages Expense
2,450
Rent Expense
1,900
Utilities Expense
1,475
Depreciation Expense
1,150
Miscellaneous Expense
975
Totals
29,900
29,900
Prepare an Income Statement, Balance Sheet, and Statement of Owner’s Equity. Assume that the capital account started with a beginning balance of
$10,000.
Income Statement
For Year Ended December 31, 2014
Fees Earned
$10,930
Expenses:
Wages Expense
$2,450
Rent Expense
1,900
Utilities Expense
1,475
Depreciation Expense
1,150
Miscellaneous Expense
975
Total Expenses
7,950
Net Income
$2,980
Statement of Owner’s Equity
For Year Ended December 31, 2014
Sub-Total
$15,980
Current liabilities:
Accounts payable
$7,500
Wages payable
1,500
Total liabilities
$ 9,000
Brock Morton, Capital
88,645
Total liabilities and owner’s equity
$97,645
189. Prepare an income statement and a statement of owner’s equity, for the month ended August 31, 2014,
from the following T-Accounts of Marley Company.
Prepaid
Insurance
Accounts
Receivable
Unearned
Revenues
Wages
Payable
1,100
5,400
1,400
480
200
800
400
Marley,
Capital
Marley,
Drawing
Income
Summary
Fees Earned
6,500
3,200
9,775
7,500
2,800
3,200
3,995
2,000
5,780
5,780
275
3,200
9,775
Wages
Expense
Rent
Expense
Insurance
Expense
Utilities
Expense
2,200
990
285
95
425
990
285
95
2,625
Fees Earned
$9,775
Expenses:
Wages Expense
$2,625
Rent Expense
990
Insurance Expense
285
Utilities Expense
95
Total Expenses
$3,995
Net Income
$5,780
Marley, Capital, August 1, 2014
$6,500
Add: Additional Investments during August, 2014
2,800
Sub-total
$9,300
Add: Net Income Month Ended August 31, 2014
$5,780
Less: withdrawals
3,200
Increase in Owner’s Equity
2,580
Marley, Capital, August 31, 2014
$11,880
190. Prepare an income statement and a statement of owner’s equity for the month ended September 30, 2010
from the T-accounts below of Carson Company.
Prepaid
Insurance
Accou
nts
Receiv
able
Unearned
Revenues
Wages
Payable
1,400
1,600
1,200
435
120
400
200
Carson,
Capital
Carson
,
Drawin
g
Income
Summary
Fees Earned
6,800
2,400
4,150
3,300
2,500
2400
4,760
500
610
610
350
2,400
4,150
Wages
Expense
Rent
Expens
e
Insurance
Expense
Utilities
Expense
3,200
1,130
80
125
225
1,130
80
125
3,425
Fees Earned
$4,150
Expenses:
Wages Expense
$3,425
Rent Expense
1,130
Insurance Expense
80
Utilities Expense
Total Expenses
$4,760
Net Loss
($610)
Carson Company
Statement of Owner’s Equity
For the Month Ended September 30, 2010
Carson, Capital, September 1, 2010
$6,800
Add: Additional Investments during September, 2010
2,500
Sub-total
$9,300
Less: Net Loss Month Ended September 30, 2010
$610
191. Selected ledger accounts appear below for Fulton Surveying Services for 2014.
Fulton,
Capital
Fulton,
Drawing
12/31
25,000
1/1
20,000
3/31
12,000
12/31
25,000
12/31
48,000
12/22
13,000
Income
Summary
12/31
19,000
12/31
67,000
12/31
48,000
Prepare a statement of owner’s equity.
Fulton, Capital, 1/1/2014
$20,000
Net income
$ 48,000
Less withdrawals
25,000
Fulton, Capital, 12/31/2014
$43,000
192. On the basis of the following data taken from the Adjusted Trial Balance columns of the work sheet for the
year ended March 31 for Boles Athletic Company, journalize the four closing entries.
Cash
$ 30,000
Accounts Receivable
45,200
Supplies
5,000
Equipment
169,900
Accumulated Depreciation
$ 32,000
Accounts Payable
12,500
Jason Boles, Capital
71,600
Jason Boles, Drawing
47,000
Fees Earned
510,000
Salary Expense
244,500
Rent Expense
48,000
Depreciation Expense
25,000
Supplies Expense
9,500
Miscellaneous Expense
2,000
$626,100
$626,100
Mar. 31
Fees Earned
510,000
Income Summary
510,000
31
Income Summary
329,000
Salary Expense
244,500
Rent Expense
48,000
Depreciation Expense
25,000
Supplies Expense
9,500
Miscellaneous Expense
2,000
31
Income Summary
181,000
Jason Boles, Capital
181,000
31
Jason Boles, Capital
47,000
Jason Boles, Drawing
47,000