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E4-13 Prepare a correct income statement
The income statement of Norski Co. for the month of July shows net income of $2,000
based on Service Revenue $5,500; Salaries and Wages $2,100; Supplies Expense $900;
and Utilities Expense $500. In reviewing the statement, you discover the following:
1. Insurance expired during July of $350 was omitted.
2. Supplies expense includes $200 of supplies that are still on hand at July 31.
3. Depreciation on equipment of $150 was omitted.
4. Accrued but unpaid wages at July 31 of $360 were not included,
5. Services performed but unrecorded totaled $700.
Instructions
Prepare a correct income statement for July 2017.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .
Revenues
Service revenue Value
Expenses
Salaries and wages expense
Value
Supplies expense Value
Utilities expense Value
Insurance expense Value
Depreciation expense Value
Total expenses ?
Net income ?
After you have completed E4-13, consider the following additional question
1. Assume that services performed but unrecorded was $950; supplies expense included
$285 of supplies still on hand; and, insurance expense of $450 was omitted. What
impact do these changes have on the income statement?
NORSKI Co.
Income Statement
For the Month Ended July 31, 2017
E4-13 Solution
Revenues
Service revenue ($5,500 + $700) $6,200
Expenses
$2,460
700
NORSKI Co.
Income Statement
For the Month Ended July 31, 2017
Salaries and wages expense ($2,100 + $360)
Supplies expense ($900 - $200)
E4-13 Solution to additional question
1. Assume that services performed but unrecorded was $950; supplies expense included
$285 of supplies still on hand; and, insurance expense of $450 was omitted. What
impact do these changes have on the income statement?
Revenues
Expenses
Salaries and wages expense ($2,100 + $360) $2,460
Supplies expense ($900 - $285) 615
NORSKI Co.
Income Statement
For the Month Ended July 31, 2017
E4-15 Analyze adjusted data
This is a partial adjusted trial balance of Barone Company
RAMON COMPANY
Debit Credit
Supplies $700
Prepaid Insurance 1,560
Salaries and Wages Payable $1,060
Unearned Service Revenue 750
Supplies Expense 950
Insurance Expense 520
Salaries and Wages Expense 1,800
Service Revenue 4,000
Instructions
Answer these questions, assuming the year begins January 1.
(a) If the amount in Supplies Expense is the January 31 adjusting entry, and
$300 of supplies was purchased in January, what was the balance in Supplies
on January 1?
(b) If the amount in Insurance Expense is the January 31 adjusting entry, and the
original insurance premium was for 1 year, what was the total premium and
when was the policy purchased?
(c ) If $2,500 of salaries was paid in January, what was the balance in Salaries and
Wages Payable at December 31, 2016?
(d) If $1,800 was received in January for services performed in January, what was
the balance in Unearned Service Revenue at December 31, 2016?
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .
(a) Supplies expense Value
Add: Supplies (1/31) Value
Less: Supplies purchased
Value
Supplies (1/1) ?
(b) Monthly premium Value
Number of months X 12
Total premium ?
Prepaid Insurance, 1/31 Value
Monthly premium Value
Number of months remaining,1/31 ?
Date of Purchase Date
(c) Cash Paid Value
Salaries and wages payable, 1/31/17 Value
Adjusted Trial Balance
January 31, 2017
?
Less: Salaries and wages expense Value
Salaries and wages payable, 12/31/16 ?
(d) Service revenue Value
unearned revenue, 1/31/17 Value
Value
Cash received in January Value
Unearned revenue, 12/31/16 ?
After you have completed E4-15, consider the following additional question.
1. Assume that amounts for purchase of supplies, salaries paid and cash received in services performed in
January changed to $500, $1,800 and $2,800 respectively. How do these changes impact your responses?
E4-15 Solution
(a) Supplies expense $950
Add: Supplies (1/31) 700
(b) Monthly premium $520
Prepaid Insurance, 1/31 $1,560
(c) Cash Paid $2,500
Salaries and wages payable, 1/31/17 1,060
(d) Service revenue $4,000
unearned revenue, 1/31/17 750
1. Assume that amounts for purchase of supplies, salaries paid and cash received in services performed in
January changed to $500, $1,800 and $2,800 respectively. How do these changes impact your responses?
(a) Supplies expense $950
(b) Monthly premium $520
Number of months X 12
(c) Cash Paid $1,800
Salaries and wages payable, 1/31/17 1,060
(d) Service revenue $4,000
unearned revenue, 1/31/17 750
E4-21 Prepare adjusting entries from analysis of trial balance
The trial balance shown below are before and after adjustment for Ryan Company at the end of its fiscal year.
Dr. Cr. Dr. Cr.
Cash $10,900 $10,900
Accounts Receivable 8,800 9,400
Supplies 2,500 500
Prepaid Insurance 4,000 2,500
Equipment 16,000 16,000
Accumulated Depreciation - Equipment $3,600 $4,800
Accounts Payable 5,800 5,800
Salaries and Wages Payable 0 1,100
Unearned Rent Revenue 1,800 800
Common Stock 10,000 10,000
Retained Earnings
5,500 5,500
Dividends 2,800 2,800
Service Revenue 34,000 34,600
Rent Revenue 12,100 13,100
Salaries and Wages Expense 17,000 18,100
Supplies Expense 0 2,000
Rent Expense 10,800 10,800
Insurance Expense 0 1,500
Depreciation Expense 0 1,200
$72,800 $72,800 $75,700 $75,700
Instructions
Prepare the adjusting entries that were made
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .
Aug . 31 Value
Value
Aug . 31 Value
Value
Aug . 31 Value
Value
Aug . 31 Value
Value
Aug . 31 Value
Value
Account
Account
Account
Account
Account
Account
Account
Account
Account
Account
Before
Adjustment
After
Adjustment
RYAN COMPANY
Trial Balance
August 31, 2017
Aug . 31 Value
Value
After you have completed E4-21, consider the additional question.
1. Assume that the balance after adjustment for Accounts Receivable, Supplies, Prepaid Insurance,
and Unearned Rent Revenue changed to $9,800, $750, $2,750 and $900 respectively. Show the
impact on these changes on the adjusting entries.
Account
Account
E4-21 Solution
Aug . 31 600
600
Aug . 31 1,500
1,500
Accounts Receivable
Service Revenue
Insurance Expense
Prepaid Insurance
E4-21 Solution to additional question
1. Assume that the balance after adjustment for Accounts Receivable, Supplies, Prepaid Insurance,
and Unearned Rent Revenue changed to $9,800, $750, $2,750 and $900 respectively. Show the
impact on these changes on the adjusting entries.
Aug . 31 1,000
1,000
Aug . 31 1,200
1,200
Accounts Receivable
Service Revenue
Depreciation Expense
Accumulated Depreciation - Equipment
P4-1A Record transactions on accrual basis; convert revenue to cash receipts
The following selected data are taken from the comparative financial statements of Yankee
Curling Club. The club prepares its financial statements using the accrual basis of accounting.
2017 2016
Accounts receivable for member dues 15,000$ 19,000$
Unearned sales revenue 20,000 23,000
Service revenue (from member dues) 151,000 135,000
Dues are billed to members based upon their use of the club's facilities. Unearned sales
revenues arise from the sale of tickets to events, such as the Skins Game.
Instructions
(Hint: You will find it helpful to use T-accounts to analyze the following data. You must
analyze these data sequentially, as missing information must first be deduced before
moving on. Post your journal entries as you progress, rather than waiting until the end.)
(a) Prepare journal entries for each of the following events that took place during 2017.
1. Dues receivable from members from 2016 were all collected during 2017.
2. During 2017, goods were provided for all of the unearned sales revenue at the end
of 2016.
3. Additional tickets were sold for $44,000 cash during 2017, a portion of these were
used by the purchasers during the year. The entire balance remaining in Unearned
Sales Revenue relates to the upcoming Skins Game in 2017.
4. Dues for the 2016-2017 fiscal year were billed to members.
5. Dues receivable for 2017 (i.e., those billed in item (4) above ) were partially collected.
(b) Determine the amount of cash received by Yankee from the above transactions during
the year ended September 30, 2017.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .
(a)(1) Value
Value
(a)(2) Value
Value
(a)(3) Value
Value
Value
Value
(a)(4) Value
Value
(a)(5) Value
Value
(b) Cash received with respect to fees and dues
1. Collection of 2016 dues Value
Account
Account
Account
Account
Account
Account
Account
Account
Account
Account
Account
Account
September 30
3. Sales of tickets Value
5. Collection of 2017 dues Value
?
1. Value 4. Value
3. Value
5. Value 2017 ?
2017 ? Bal.
Bal.
2016 Value 1. Value 2. Value
Bal. 5. Value 3. Value
4. Value
2017 ?
2017 ? Bal.
Bal.
2. Value 2016 Value
3. Value Bal.
3. Value
2017 ?
Bal.
After you have completed P4-1A, consider the following additional question.
1. Assume that the 2017 balances for Unearned sales revenue and that additional ticket sold during
the year changed to $18,000 and $48,000 respectively. Recalculate the amount of cash collected
for the year ended September 30, 2017.
Unearned Sales Revenue
Service Revenue
Sales Revenue
Cash
Accounts Receivable
P4-1A Solution
(a)(1) 19,000
19,000
(a)(4) 151,000
151,000
(b) Cash received with respect to fees and dues
1. Collection of 2016 dues $19,000
1. 19,000 4. 151,000
3. 44,000
2016 19,000 1. 19,000 2. 23,000
2. 23,000 2016 23,000
Cash
Accounts Receivable
Accounts Receivable
Service Revenue
Unearned Sales Revenue
Cash
Service Revenue
Accounts Receivable
Sales Revenue
3. 24,000 Bal.
P4-1A Solution to additional question
1. Assume that the 2017 balances for unearned sales revenue and that additional ticket sold during
the year changed to $18,000 and $48,000 respectively. Recalculate the amount of cash collected
for the year ended September 30, 2017.
(a)(1) 19,000
19,000
30,000
30,000
(b) Cash received with respect to fees and dues
1. Collection of 2016 dues $19,000
1. 19,000 4. 151,000
2016 19,000 1. 19,000 2. 23,000
2. 23,000 2016 23,000
Cash
Accounts Receivable
Service Revenue
Accounts Receivable
Sales Revenue
Unearned Sales Revenue
Unearned Sales Revenue
($48,000 - $18,000)
Sales Revenue
Cash
