Problem 2–4 (continued)
Sales revenue Interest revenue
___________________________ ___________________________
148,000 Bal. 0 Bal.
Cost of goods sold Salaries and wages expense
___________________________ ___________________________
Bal. 70,000 Bal. 18,900
Rent expense Depreciation expense
___________________________ ___________________________
Bal. 11,000 Bal. 0
Interest expense Supplies expense
___________________________ ___________________________
Bal. 0 Bal. 1,100
2–62 Intermediate Accounting, 8/e
Problem 2–4 (continued)
Insurance expense Advertising expense
___________________________ ___________________________
Bal. 6,000 Bal. 3,000
Income summary Retained earnings
___________________________ ___________________________
Bal. 0 24,500 Bal.
147,333 Closing
Problem 2–4 (concluded)
Requirement 6
Account Title
Debits
Credits
Cash
30,000
Accounts receivable
40,000
Prepaid rent
1,000
Prepaid insurance
Inventory
60,000
Note receivable
20,000
Interest receivable
1,333
Office equipment
80,000
equipment
40,000
Accounts payable
31,000
Salaries and wages payable
1,500
Note payable
50,000
Interest payable
1,500
Deferred revenue
2,000
Retained earnings
Problem 2–5
Rent expense …………………………………………………………. 800
Prepaid rent ………………………………………………………. 800
Supplies expense ……………………………………………………. 700
Supplies …………………………………………………………….. 700
Problem 2–6
Requirement 2
a. Cash …………………………………………………………………. 70,000
Accounts receivable ………………………………………….. 30,000
Service revenue ……………………………………………… 100,000
b. Cash …………………………………………………………………. 27,300
Accounts receivable ……………………………………….. 27,300
Problem 2–6 (continued)
Requirements 1 and 3
BALANCE SHEET ACCOUNTS
Cash Accounts receivable
___________________________ ___________________________
1/1 Bal. 30,000 1/1 Bal. 15,000
Equipment
___________________________
1/1 Bal. 20,000
f. 15,000
_______________
12/31 Bal. 35,000
Accumulated depreciation Salaries payable
___________________________ ___________________________
6,000 1/1 Bal. 9,000 1/1 Bal.
d. 9,000
2–66 Intermediate Accounting, 8/e
Problem 2–6 (continued)
INCOME STATEMENT ACCOUNTS
Service revenue Miscellaneous expenses
___________________________ ___________________________
0 1/1 Bal. 1/1 Bal. 0
Salaries expense
___________________________
1/1 Bal. 0
Requirement 4
Account Title
Debits
Credits
Cash
45,800
Accounts receivable
17,700
Equipment
35,000
Accumulated depreciation
Salaries payable
Common stock
Retained earnings
Service revenue
Salaries expense
41,000
Miscellaneous expenses
24,000
Problem 2–6 (continued)
Requirement 5
Salaries expense …………………………………………………….. 1,000
Salaries payable …………………………………………………. 1,000
Problem 2–6 (continued)
BALANCE SHEET ACCOUNTS
Cash Accounts receivable
___________________________ ___________________________
1/1 Bal. 30,000 1/1 Bal. 15,000
a. 70,000 50,000 d. a. 30,000 27,300 b.
Equipment
___________________________
1/1 Bal. 20,000
Accumulated depreciation Salaries payable
___________________________ ___________________________
6,000 1/1 Bal. 9,000 1/1 Bal.
Common stock Retained earnings
___________________________ ___________________________
40,500 1/1 Bal. 9,500 1/1 Bal.
Problem 2–6 (continued)
INCOME STATEMENT ACCOUNTS
Service revenue Miscellaneous expenses
___________________________ ___________________________
0 1/1 Bal. 1/1 Bal. 0
Depreciation expense
___________________________
1/1 Bal. 0
Salaries expense
___________________________
1/1 Bal. 0
d. 41,000
2–70 Intermediate Accounting, 8/e
Problem 2–6 (continued)
Requirement 6
Account Title
Debits
Credits
Cash
45,800
Accounts receivable
17,700
Equipment
35,000
Salaries payable
Common stock
50,500
Retained earnings
Service revenue
Salaries expense
42,000
Depreciation expense
Requirement 7
KARLIN COMPANY
Income Statement
For the Year Ended December 31, 2016
Service revenue …………………………………….
$100,000
Operating expenses:
Problem 2–6 (continued)
KARLIN COMPANY
Balance Sheet
At December 31, 2016
Assets
Current assets:
Cash ……………………………………………………
$45,800
Accounts receivable ……………………………..
Total current assets …………………………..
Property and equipment:
Equipment …………………………………………..
Less: Accumulated depreciation …………….
$90,500
Liabilities and Shareholders’ Equity
Current liabilities:
Salaries payable …………………………………..
$ 1,000
Total current liabilities ………………………
1,000
Common stock …………………………………….
Retained earnings …………………………………
$90,500
Problem 2–6 (continued)
Requirement 8
December 31, 2016
Service revenue ……………………………………………………… 100,000
Income summary ………………………………………………… 100,000
Problem 2–6 (continued)
BALANCE SHEET ACCOUNTS
Cash Accounts receivable
___________________________ ___________________________
1/1 Bal. 30,000 1/1 Bal. 15,000
a. 70,000 50,000 d. a. 30,000 27,300 b.
Equipment
___________________________
1/1 Bal. 20,000
Accumulated depreciation Salaries payable
___________________________ ___________________________
6,000 1/1 Bal. 9,000 1/1 Bal.
Common stock Retained earnings
___________________________ ___________________________
40,500 1/1 Bal. 9,500 1/1 Bal.
2–74 Intermediate Accounting, 8/e
Problem 2–6 (continued)
INCOME STATEMENT ACCOUNTS
Service revenue Miscellaneous expenses
___________________________ ___________________________
0 1/1 Bal. 1/1 Bal. 0
100,000 a. e. 24,000
Salaries expense Income summary
___________________________ ___________________________
1/1 Bal. 0 100,000 Closing
d. 41,000 Closing 68,000
Problem 2–6 (concluded)
Requirement 9
Account Title
Debits
Credits
Cash
45,800
Accounts receivable
17,700
Equipment
35,000
Accumulated depreciation
Common stock
Retained earnings
98,500
Problem 2–7
Requirement 1
a. Interest receivable …………………………………………….. 600
Interest revenue ($10,000 x 12% x 1/2) …………………. 600
b. Depreciation expense ($30,000 x 1/5) ……………………… 6,000
Requirement 2
Income overstated
(understated)
Adjustments to revenues:
Adjustments to expenses:
Overstatement of insurance expense (1,500)
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
2–78 Intermediate Accounting, 8/e
Problem 2–9
Requirements 1 and 2
a. Depreciation expense ($50,000 ÷ 50 years) ………………. 1,000
Accumulated depreciation – buildings ………………. 1,000
Problem 2–9 (continued)
BALANCE SHEET ACCOUNTS
Cash Accounts receivable
___________________________ ___________________________
Bal. 8,000 Bal. 9,000
_______________ ______________
12/31 Bal. 8,000 12/31 Bal. 9,000
Land Buildings
___________________________ ___________________________
Bal. 200,000 Bal. 50,000
_______________ ______________
12/31 Bal. 200,000 12/31 Bal. 50,000
Office equipment Accumulated depreciation—bldg.
Problem 2–9 (continued)
Salaries and wages payable Deferred rent revenue
___________________________ ___________________________
0 Bal. 0 Bal.
1,500 Adjusting 1,200 Adjusting
_______________ ______________
1,500 12/31 Bal. 1,200 12/31 Bal.
Common stock Retained earnings
INCOME STATEMENT ACCOUNTS
Sales revenue Interest revenue
___________________________ ___________________________
90,000 Bal. 3,000 Bal.
_______________ ______________
90,000 12/31 Bal. 3,000 12/31 Bal.
Rent revenue Salaries and wages expense