General Instructions
1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
Integrative Problem
Debit Credit
Cash 77,400$
Billings Receivable (net) 151,000
Medical Supplies 73,000
Extended Warranty 3,000
Automobiles 90,000
Required
Refer to the information provided in the textbook.
The following unadjusted trial balance is available for Mountain Home Health on December 31, 2016.
MOUNTAIN HOME HEALTH INC.
UNADJUSTED TRIAL BALANCE
DECEMBER 31, 2016
Salary and Wages Expense
Supplies Expense
T Accounts:
77,400 151,000 73,000 64,347 (b)
(f) 16,000
3,000 (g) 800 (a) 10,000
100,000 100,000 50,000
99,900 10,000 550,000
Mortgage Payable
Capital Stock
Additional Paid-In Capital
Retained Earnings
Dividends
Medical Services Revenue
Cash
Billings Receivable (Net)
Medical Supplies
Salary and Wages Payable
Dividend Payable
(d) 10,000 (e) 3,000
year ended December 31, 2016.
Revenues:
Medical services revenue 566,000$
Expenses:
Beginning balance 99,900$
Net income 17,353
FOR THE YEAR ENDED DECEMBER 31, 2016
MOUNTAIN HOME HEALTH INC.
RETAINED EARNINGS STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2016
4. Prepare a balance sheet for Mountain Home Health as of December 31, 2016.
Extended Warranty
Dep. Exp.—Building
Contract Expense
3. Prepare an income statement and a statement of retained earnings for Mountain Home Health
for the
MOUNTAIN HOME HEALTH INC.
INCOME STATEMENT
Assets
Current assets:
Cash 77,400$
Billings receivable (net) 167,000
Medical supplies 8,653
Liabilities
Current liabilities:
Accounts payable 22,000$
Interest payable 3,000
Salary and wages payable 800
Working capital 217,253$
Current ratio 7.07
BALANCE SHEET
AS OF DECEMBER 31, 2016
5. Compute the following as of December 31, 2016: (a) working capital and (b) current ratio.
6. Which adjusting entries could cause a difference between cash- and accrual-based income?
MOUNTAIN HOME HEALTH INC.
Supply of cash needed:
DAILY SEVEN WEEKS
talking to a local bank loan officer. The firm tries to maintain a seven-week supply of cash to meet
demands of payroll, medical supply purchases, and gasoline. Determine the amount of cash Mountain
Home needs to meet the seven-week supply.
7. Mary Francis, controller of Mountain Home, became concerned about the company‘s cash flow after
By their nature, all adjusting entries cause a difference between the amount of income
General Instructions
P4-9A
Lewis and Associates has been in the termite inspection and treatment business for five
years. An unadjusted trial balance at June 30, 2016, follows.
Debit Credit
Cash 6,200$
Accounts Receivable 10,400
Prepaid Rent 4,400
Chemical Inventory 9,400
Equipment 18,200
Required
Bal.
6,200 Bal. 10,400
1 and 2. Record the beginning balances and enter the adjusting entries.
Cash
Accounts Receivable
Unadjusted Trial Balance
June 30, 2016
1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
LEWIS AND ASSOCIATES
d. Wages and salaries owed but unpaid to employees at the end of the month amount to $1,080.
a. Lewis rents a warehouse with office space and prepays the annual rent of $4,800 on May 1 of each year.
b. The asset account Equipment represents the cost of treatment equipment, which has an estimated useful life
of ten years and an estimated salvage value of $200.
c. Chemical inventory on hand equals $1,300.
Bal. 18,200 1,050 Bal.
150 (b)
1,200 Bal.
Bal.
22,500 Bal. 1,240
(d)
1,080
Bal. 23,580
Bal.
860 (a) 400
150 (c) 8,100
1,881
Income Tax Expense
Debits Credits
6,200$
10,400
4,000
1,300
18,200
1,200$
Chemical Inventory
Equipment
Accumulated Depreciation
LEWIS AND ASSOCIATES
ADJUSTED TRIAL BALANCE
JUNE 30, 2016
Cash
Accounts Receivable
Prepaid Rent
Advertising Expense
Rent Expense
3. Prepare a trial balance to prove the equality of debits and credits after posting the adjusting entries.
Wages and Salary Expense
Utilities Expense
Equipment
Accumulated Depreciation
4. On the basis of the information you have, does Lewis appear to be a profitable
business? Explain your answer.
$4,389/$40,600, or approximately 11%.
On the basis of the information available, Lewis appears to be a profitable business. Net income for the month
was $6,270 – $1,881 (taxes), or $4,389. With treatment revenue of $40,600, this results in a profit margin of
Rent Expense
Depreciation Expense
Chemical Expense
Income Tax Expense
Capital Stock
Retained Earnings
Treatment Revenue
Wages and Salary Expense
Utilities Expense
Advertising Expense
Accounts Payable
Wages and Salaries Payable
Income Tax Payable
General Instructions
P 4-11A
84,000$
10,500
Required
1. Prepare income statements for Years 1 and 2.
Year 1 Year 2
21,000$ 63,000$
2. (a) Prepare the closing entries for each year.
Year 1:
Sales
21,000
Income Summary
21,000
17,500
6,000
2,500
To close revenue account.
Closing entries:
d. Rent has not changed since the shop opened.
Income statements for the first two years:
SUE’S AUDIO BOOK RENTALS
INCOME STATEMENTS
Sales revenue
Expenses:
a. Sales in the second year are triple those of the first year.
b. Advertising expense is for a $1,500 opening promotion and weekly ads in the newspaper.
c. Salaries represent one employee who was hired eight months ago. No raises have been granted.
accounts on her income statement:
Sales
Advertising Expense
1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
Two years ago, Sue Stern opened an audio book rental shop. Sue reports the following
These amounts represent two years of revenue and expenses. Sue asks you how she can
of business. She provides the following additional data:
Salaries Expense
Depreciation on CDs
2. (b) Prepare a short explanation for Sue about the purpose of closing temporary accounts.
Closing entries serve two purposes. First, the balances in all temporary accounts are returned to
zero to start the next accounting period. Second, the net income for the period, and any dividends,
are transferred to Retained Earnings.
General Instructions
P4-12A
Debit Credit
Cash 6,460$
Required
2. Enter the necessary adjustments in the appropriate columns for each of the following and complete the ten-column worksheet:
Forever Green Landscaping
Unadjusted Trial Balance
August 31, 2016
1. Enter the unadjusted trial balance in the first two columns of a ten-column work sheet.
1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
2. The blue cells are for data entry. Enter text in the T cells, formulas in the F cells, and
dollars or numbers in the $ cells.
3. The completed exercise/problem may be printed or e-mailed per direction from your instructor.
The unadjusted trial balance for Forever Green Landscaping on August 31, 2016, follows.
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 6,460 6,460 6,460
Accounts Receivable 23,400 23,400 23,400
Supplies on Hand 1,260 530 730 730
Trial Balance
Entries
Trial Balance
Statement
Sheet
c. The equipment has a four-year estimated useful life and no salvage value.
d. The buildings have an estimated useful life of 30 years and no salvage value.
e. The company leases space in its building to another company. The agreement requires the tenant to pay Forever Green
f. Wages and salaries earned by employees at the end of August but not yet paid amount to $3,320.
g. The company signed a six-month promissory note on August 1, 2016. Interest at an annual rate of 12% and the principal
3. Complete the remaining columns of the work sheet.
FOREVER GREEN LANDSCAPING
WORK SHEET
FOR THE MONTH ENDED AUGUST 31, 2016
Unadjusted
Adjusting
Adjusted
Income
Balance
a. A count of the supplies on hand at the end of August reveals a balance of $730.
b. The company paid $4,200 in cash on May 1, 2016, for a two-year insurance policy.
Depreciation Expense—Equipment 600 600 600
Depreciation Expense—Buildings 200 200 200
Net Income 2,770 2,770
14,900 14,900 135,590 135,590
Closing Entries on August 31:
Service Revenue 14,200
Rent Revenue 700
Income Summary 14,900
To close revenue accounts for August.
Prepare the necessary closing entries at August 31, 2016.
4. Assume that Forever Green closes its books at the end of each month before preparing financial statements.
General Instructions
P4-12
The following unadjusted trial balance is available for Ace Consulting Inc. on June 30, 2016:
Debit Credit
Cash 6,320$
Accounts Receivable 14,600
Supplies on Hand 800
Prepaid Rent 4,800
Required
c. Depreciation on furniture and fixtures for June is $375.
d. Ace prepays the rent on its office space on June 1 of each year. The rent amounts to $400 per month.
b. Supplies on hand at the end of June amount to $550.
e. Consulting services rendered and billed for which cash has not yet been received amount to $4,600.
3. Complete the remaining columns of the work sheet.
Unadjusted Trial Balance
June 30, 2016
1. Enter the unadjusted trial balance in the first two columns of a ten-column work sheet.
2. Enter the necessary adjustments in the appropriate columns of the work sheet for each of the following:
a. Wages and salaries earned by employees at the end of June but not yet paid amount to $2,380.
1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
2. The blue cells are for data entry. Enter text in the T cells, formulas in the F cells, and
dollars or numbers in the $ cells.
3. The completed exercise/problem may be printed or e-mailed per direction from your instructor.
ACE CONSULTING INC.
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 6,320 6,320 6,320
Accounts Receivable 14,600 4,600 19,200 19,200
Supplies on Hand 800
250 550 550
Prepaid Rent 4,800 400 4,400 4,400
Trial Balance
Entries
Trial Balance
Statement
Sheet
FOR THE MONTH ENDED JUNE 30, 2016
Unadjusted
Adjusting
Adjusted
Income
Balance
ACE CONSULTING INC.
WORK SHEET
375 6,000 6,000