Requirement 2
Income overstated
(understated)
Adjustments to revenues:
Adjustments to expenses:
Overstatement of insurance expense (1,500)
Understatement of depreciation expense 6,000
Problem 2–8
1. Depreciation expense ($75,000 ÷ 8 years)………..…….… 9,375
Accumulated depreciation……………..…….….……... 9,375
2. Salaries and wages expense ($4,500 – 3,000)…….…..... 1,500
Salaries and wages payable……….…….…….…….…. 1,500
Problem 2–9
Requirements 1 and 2
a. Depreciation expense ($50,000 ÷ 50 years)………………. 1,000
Accumulated depreciation – buildings……….……... 1,000
b. Depreciation expense ($100,000 x 10%)…………..……... 10,000
Accumulated depreciation—office equipment...... 10,000
Problem 2–9 (continued)
BALANCE SHEET ACCOUNTS
Cash Accounts receivable
_____________________________________________________________________________ _____________________________________________________________________________
Bal. 8,000
12/31 Bal.
Prepaid insurance
_____________________________________________________________________________
Land Buildings
_______________________________________________________________________________________________ _______________________________________________________________________________________________
12/31 Bal.
Office equipment Accumulated depreciation—bldg.
_______________________________________________________________________________________________ _______________________________________________________________________________________________
Bal. 100,000
20,000 Bal.
Accumulated depreciation—office equip. Accounts payable
_______________________________________________________________________________________________ _______________________________________________________________________________________________
40,000 Bal. 35,050
Bal.
Problem 2–9 (continued)
Salaries and wages payable Deferred rent revenue
_______________________________________________________________________________________________ _______________________________________________________________________________________________
0 Bal. 0 Bal.
Common stock Retained earnings
_______________________________________________________________________________________________________________________________________________________________________________________________________ _______________________________________________________________________________________________________________________________________________________________________________________________________
INCOME STATEMENT ACCOUNTS
Sales revenue Interest revenue
_______________________________________________________________________________________________ _______________________________________________________________________________________________
Rent revenue Salaries and wages expense
_____________________________________________________________________________ _____________________________________________________________________________
Depreciation expense
_____________________________________________________________________________________________________________________________________
Bal. 0
Problem 2–9 (continued)
Insurance expense Utility expense
_____________________________________________________________________________ _____________________________________________________________________________
_______
12/31 Bal.
Maintenance expense
________________________________________________________________
Problem 2–9 (continued)
Requirement 3
Account Title Debits Credits
Cash 8,000
Accounts receivable 9,000
Prepaid insurance 1,500
Land 200,000
Problem 2–9 (continued)
Requirement 4
December 31, 2018
Sales revenue…………………………………..….…….…….……. 90,000
Interest revenue …………………………………………………….. 3,000
Rent revenue ………………………………………….…….…….… 6,300
Problem 2–9 (concluded)
Requirement 5
Account Title Debits Credits
Cash 8,000
Accounts receivable 9,000
Prepaid insurance 1,500
Land 200,000
Buildings 50,000
Problem 2–10
Computations:
Sales revenue
Cost of goods sold
Accounts payable
0 1/1 Balance
Inventory
1/1 Balance 0
Purchases 250,000
Rent expense and prepaid rent
Depreciation expense
Interest expense
Salaries and wages expense