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Name some users of accounting information.2DQ3DQJosh Reilly is the owner of Dispatch Delivery Service. Recently, Josh paid interest of 4,500 on a personal loan of 75,000 that he used to begin the business. Should Dispatch Delivery Service record the interest payment? Explain.On July 12, Reliable Repair Service extended an offer of 150,000 for land that had been priced for sale at 185,000. On September 3, Reliable Repair Service accepted the seller's counteroffer of 167,500. Describe how Reliable Repair Service should record the land.6DQDescribe the difference between an account receivable and an account payable.A business had revenues of 679,000 and operating expenses of 588,000. Did the business (a) incur a net loss or (b) realize net income?A business had revenues of 640,000 and operating expenses of 715,000. Did the business (a) incur a net loss or (b) realize net income?The financial statements are interrelated. (a) What item of financial or operating data appears on both the income statement and the statement of owner's equity? (b) What item appears on both the balance sheet and the statement of owner's equity? (c) What item appears on both the balance sheet and the statement of cash flows?1.1APE1.1BPEAccounting equation Terry Fleming is the owner and operator of Go-For-It LLC, a motivational consulting business. At the end of its accounting period, December 31, 2018, Go-For-It has assets of 675,000 and liabilities of 215,000. Using the accounting equation, determine the following amounts: Owner's equity as of December 31, 2018. Owner's equity as of December 31, 2019, assuming that assets increased by 112,300 and liabilities increased by 32,000 during 2019.Accounting equation Fritz Evans is the owner and operator of Be-The-One, a motivational consulting business. At the end of its accounting period, December 31, 2018, Be-The-One has assets of 395,000 and liabilities of 97,000. Using the accounting equation, determine the following amounts: a. Owner's equity as of December 31, 2018. b. Owner's equity as of December 31, 2019, assuming that assets decreased by 65,000 and liabilities increased by 36,000 during 2019.Transactions Bridgeport Delivery Service is owned and operated by Jerome Foley. The following selected transactions were completed by Bridgeport Delivery Service during February: 1.Received cash from owner as additional investment, 40,000. 2.Billed customers for delivery services on account, 13,750. 3.Paid creditors on account, 2,500. 4.Received cash from customers on account, 9,000. 5.Paid cash to owner for personal use, 1,000. Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owner's Equity, Drawing, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) follows: (1) Asset (cash) increases by 40,000; Owner's Equity (Jerome Foley, Capital) increases by 40,000.Transactions Interstate Delivery Service is owned and operated by Katie Wyer. The following selected transactions were completed by Interstate Delivery Service during May: 1.Received cash from owner as additional investment, 18,000. 2.Paid advertising expense, 4,850. 3.Purchased supplies on account, 2,100. 4.Billed customers for delivery services on account, 14,700. 5.Received cash from customers on account, 8,200. Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owner's Equity, Drawing, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) follows: (1) Asset (Cash) increases by 18,000; Owner's Equity (Katie Wyer, Capital) increases by 18,000.Income statement The revenues and expenses of Adventure Travel Service for the year ended April 30, 2019, follow: Fees earned 2,180,000 Office expense 400,000 Miscellaneous expense 25,000 Wages expense 1,300,000 Prepare an income statement for the year ended April 30, 2019.Income statement The revenues and expenses of Sentinel Travel Service for the year ended August 31, 2019, follow: Fees earned 750,000 Office expense 295,000 Miscellaneous expense 12,000 Wages expense 450,000 Prepare an income statement for the year ended August 31, 2019.Statement of owner's equity Using the income statement for Adventure Travel Service shown in Practice Exercise 14A, prepare a statement of owners equity for the year ended April 30, 2019 Jerome Foley, the owner, invested an additional 60,000 in the business during the year and withdrew cash of 40,000 for personal use. Jerome Foley, capital as of May 1, 2018, was 1,020,000.Statement of owner's equity Using the income statement for Sentinel Travel Service shown in Practice Exercise 14B, prepare a statement of owner's equity for the year ended August 31, 2019. Barb Schroeder, the owner, invested an additional 36,000 in the business during the year and withdrew cash of 18,000 for personal use. Barb Schroeder, capital as of September 1, 2018, was 380,000.Balance sheet Using the following data for Adventure Travel Service as well as the statement of owner's equity shown in Practice Exercise 15A, prepare a report form balance sheet as of April 30, 2019: Accounts payable 105,000 Accounts receivable 485,000 Cash 197,000 Land 900,000 supplies 18,000Balance sheet Using the following data for Sentinel Travel Service as well as the statement of owner's equity shown in Practice Exercise 15B, prepare a report form balance sheet as of August 31, 2019: Accounts payable 44,600 Accounts receivable 75,000 Cash 45,000 Land 310,000 supplies 4,700Statement of cash flows A summary of cash flows for Adventure Travel Service for the year ended April 30, 2019, follows: Cash receipts: Cash received from customers 2,080,000 Cash received from additional investment of owner 60,000 Cash payments: Cash paid for operating expenses 1,706,000 Cash paid for land 400,000 Cash paid to owner for personal use 40,000 The cash balance as of May 1, 2018, was 203,000. Prepare a statement of cash flows for Adventure Travel Service for the year ended April 30, 2019.Statement of cash flows A summary of cash flows for Sentinel Travel Service for the year ended August 31, 2019, follows: Cash receipts: Cash received from customers 734,000 Cash received from additional investment of owner 36,000 Cash payments: Cash paid for operating expenses 745,600 Cash paid for land 50,000 Cash paid to owner for personal use 20,000 The cash balance as of September 1, 2019, was 89,000. Prepare a statement of cash flows for Sentinel Travel Service for the year ended August 31, 2019.Ratio of liabilities to owner's equity The following data were taken from Mesa Company's balance sheet: Dec. 31, 2019 Dec. 31, 2018 Total liabilities 547,800 518,000 Total owners equity 415,000 370,000 a.Compute the ratio of liabilities to owner's equity. b.Has the creditor's risk increased or decreased from December 31, 2018, to December 31, 2019?Ratio of liabilities to owner's equity The following data were taken from Alvarado Company's balance sheet: Dec. 31, 2019 Dec. 31, 2018 Total liabilities 4,085,000 2,880,000 Total owners equity 4,300,000 3,600,000 a.Compute the ratio of liabilities to owner's equity. b.Has the creditor's risk increased or decreased from December 31, 2018, to December 31, 2019?Types of businesses The following is a list of well-known companies: 1. Alcoa Inc. 2. Boeing 3. Caterpillar 4. Citigroup Inc. 5. CVS 6. Delta Air lines 7. eBay Inc. 8. Fed Ex 9. Ford Motor Company 10. Gap Inc. 11. HR Block 12. Hilton Hospitality, Inc. 13. Procter Gamble 14. Sun Trust 15. Wal-Mart Stores, Inc. a. Indicate whether each of these companies is primarily a service, merchandise, or manufacturing business. If you are unfamiliar with the company, use the Internet to locate the company's home page or use the finance website of Yahoo (finance.yahoo.com). b. For which of the preceding companies is the accounting equation relevant?1.2EX1.3EX1.4EX1.5EXAccounting equation Determine the missing amount for each of the following: Assets = Liabilities + Owners Equity a. = 556,000 + 3,374,000 b. 6,111,200 = + 5,725,000 c. 2,150,000 = 812,500 +Accounting equation Annie Rasmussen is the Owner and operator of Go44, a motivational consulting business. At the end of its accounting period, December 31, 2018, Go44 has assets of 720,000 and liabilities of 180,000. Using the accounting equation and considering each case independently, determine the following amounts: a.Annie Rasmussen, capital, as of December 31, 2018. b.Annie Rasmussen, capital, as of December 31, 2019, assuming that assets increased by 96,500 and liabilities increased by 30,000 during 2019. c.Annie Rasmussen, capital, as of December 31, 2019, assuming that assets decreased by 168,000 and liabilities increased by l5,000 during 2019. d.Annie Rasmussen, capital, as of December 31, 2019, assuming that assets increased by 175,000 and liabilities decreased by 18,000 during 2019 . e.Net income (or net loss) during 2019, assuming that as of December 31, 2019, assets were 880,000, liabilities were 220,000, and there were no additional investments or withdrawals.Asset, liability, and owner's equity items Indicate whether each of the following is identified with (1) an asset, (2) a liability, or (3) owner's equity: a.accounts receivable b.accounts payable c.cash d.fees earned e.land f.rent expense g.suppliesEffect of transactions on accounting equation Describe how the following business transactions affect the three elements of the accounting equation: a.Invested cash in business. b.Paid for utilities used in the business. c.Purchased supplies for cash. d.Purchased supplies on account. e.Received cash for services performed.Effect of transactions on accounting equation a.A vacant lot acquired for 115,000 is sold for 298,000 in cash. What is the effect of the sale on the total amount of the seller's (1) assets, (2) liabilities, and (3) owner's equity? b.Assume that the seller owes 80,000 on a loan for the land. After receiving the 298,000 cash in (a), the seller pays the 80,000 owed. What is the effect of the payment on the total amount of the seller's (1) assets, (2) liabilities, and (3) owner's equity? c.Is it true that a transaction always affects at least two elements (Assets, Liabilities, or Owner's Equity) of the accounting equation? Explain.Effect of transactions on owner's equity Indicate whether each of the following types of transactions will either (a) increase owner's equity or (b) decrease owner's equity: 1.expenses 2.owner's investments 3.owner's withdrawals 4.revenuesTransactions The following selected transactions were completed by Silverado Delivery Service during February: 1.Received cash from owner as additional investment, 25,000. 2.Purchased supplies for cash, 750. 3.Paid rent for February, 3,000. 4.Paid advertising expense, 1,500. 5.Received cash for providing delivery services, 16,800. 6.Billed customers for delivery services on account, 32,500. 7.Paid creditors on account, 1,400. 8.Received cash from customers on account, 23,770. 9.Determined that the cost of supplies on hand was 275 and 475 of supplies had been used during the month. 10.Paid cash to owner for personal use, 5,000. Indicate the effect of each transaction on the accounting equation by listing the numbers identifying the transactions, (1) through (10), in a column and inserting at the right of each number the appropriate letter from the following list: a.Increase in an asset, decrease in another asset. b.Increase in an asset, increase in a liability. c.Increase in an asset, increase in owner's equity. d.Decrease in an asset, decrease in a liability. e.Decrease in an asset, decrease in owner's equity.Nature of transactions Teri West operates her own catering service. Summary financial data for July are presented in equation form as follows. Each line designated by a number indicates the effect of a transaction on the equation. Each increase and decrease in owner's equity, except transaction (5), affects net income. a.Describe each transaction. b.What is the amount of the net increase in cash during the month? c.What is the amount of the net increase in owner's equity during the month? d.What is the amount of the net income for the month? e.How much of the net income for the month was retained in the business?Net income and owner's withdrawals The income statement of a proprietorship for the month of February indicates a net income of 17,500. During the same period, the owner withdrew 25,500 in cash from the business for personal use. Would it be correct to say that the business had incurred a net loss of 8,000 during the month? Discuss.Net income and owner's equity for four businesses Four different proprietorships, Jupiter, Mars, Saturn, and Venus, show the same balance sheet data at the beginning and end of a year. These data, exclusive of the amount of owner's equity, are summarized as follows: Total Assets Total Liabilities Beginning of the year 550,000 215,000 End of the year 844,000 320,000 On the basis of the preceding data and the following additional information for the year, determine the net income (or loss) of each company for the year. (Hint: First, determine the amount of increase or decrease in owner's equity during the year.) Jupiter: The owner had made no additional investments in the business and had made no withdrawals from the business. Mars: The owner had made no additional investments in the business but had withdrawn 36,000. Saturn: The owner had made an additional investment of 60,000 but had made no withdrawals. Venus: The owner had made an additional investment of 60,000 and had withdrawn 36,000.Balance sheet items From the following list of selected items taken from the records of Rosewood Appliance Service as of a specific date, identify those that would appear on the balance sheet: 1.Accounts Payable 2.Accounts Receivable 3.Andrew King, Capital 4.Cash 5.Fees Earned 6.Land 7.Rent Expense 8.Supplies 9.Wages Expense 10.Wages PayableBalance sheet items From the following list of selected items taken from the records of Rosewood Appliance Service as of a specific date, identify those that would appear on the balance sheet: 1. Accounts Payable 2. Accounts Receivable 3. Andrew King, Capital 4. Cash 5. Fees Earned 6. Land 7. Rent Expense 8. Supplies 9. Wages Expense 10. Wages Payable Income statement items Based on the data p resented in Exercise 1-16, identify those items that would appear on the income statement.Statement of owner's equity Financial information related to Udder Products Company, a proprietorship, for the month ended April 30, 2019, is as follows: Net income for April 166,000 Mark Kominksy's withdrawals during April 25,000 Mark Kominksy's capital, April1, 2019 384,500 a.Prepare a statement of owner's equity for the month ended April 30, 2019. b.Why is the statement of owner's equity prepared before the April 30, 2019, balance sheet?Income statement Dairy Services was organized on August 1, 2019. A summary of the revenue and expense transactions for August follows: Fees earned 783,000 Wages expense 550,000 Rent expense 35,000 Supplies expense 8,500 Miscellaneous expense 11,400 Prepare an income statement for the month ended August 31.Missing amounts from balance sheet and income statement data One item is omitted in each of the following summaries of balance sheet and income statement data for the following four different proprietorships: Determine the missing amounts, identifying them by letter. (Hint: First, determine the amount of increase or decrease in owner's equity during the year.)Balance sheets, net income Financial information related to the proprietorship of Ebony Interiors for February and March 2019 is as follows: February 29, 2019 March 31, 2019 Accounts payable 310,000 400,000 Accounts receivable 800,000 960,000 Cash 320,000 380,000 Justin Berk, capital ? ? Supplies 30,000 35,000 a. Prepare balance sheets for Ebony Interiors as of February 29 and March 31, 2019. b. Determine the amount of net income for March, assuming that the owner made no additional investments or withdrawals during the month. c. Determine the amount of net income for March, assuming that the owner made no additional investments but withdrew 50,000 during the month.Financial statements Each of the following items is shown in the financial statements of Exxon Mobil Corporation: 1. Accounts payable 2. Cash equivalents 3. Crude oil inventory 4. Equipment 5. Exploration expenses 6. Income taxes payable 7. Investments 8. Long-term debt 9. Marketable securities 10. Notes and loans payable 11. Notes receivable 12. Operating expenses 13. Prepaid taxes 14. Sales 15. Selling expenses a. Identify the financial statement (balance sheet or income statement) in which each item would appear. b. Can an item appear on more than one financial statement? c. Is the accounting equation relevant for Exxon Mobil Corporation?Statement of cash flows Indicate whether each of the following activities would be reported on the statement of cash flows as (a) an operating activity, (b) an investing activity, or (c) a financing activity: 1.Cash received from fees earned. 2.Cash paid for expenses. 3.Cash paid for land. 4.Cash paid to owner for personal use.Statement of cash flows A summary of cash flows for Ethos Consulting Group for the year ended May 31, 2019, follows: Cash receipts: Cash received from customers 637,500 Cash received from additional investment of owner 62,500 Cash payments: Cash paid for operating expenses 475,000 Cash paid for land 90,000 Cash paid to owner for personal use 17,500 The cash balance as of June 1, 2018, was 58,000 Prepare a statement of cash flows for Ethos Consulting Group for the year ended May 31, 2019.Financial statements We-Sell Realty, organized August 1, 2019, is owned and operated by Omar Farah. How many errors can you find in the following statements for We-Sell Realty, prepared after its first month of operations?Ratio of liabilities to stockholders' equity The Home Depot is the world's largest home improvement retailer and one of the largest retailers in the United States based on net sales volume. The Home De pot operates over 2,200 Home Depot stores that sell a wide assortment of building materials and home improvement and lawn and garden products. The Home Depot recently reported tl1e following balance sheet data (in millions): Year2 Year1 Total assets 39,946 40,518 Total stockholders' equity 9,322 12,522 a.Determine the total liabilities at the end of Years 2 and 1. b.Determine the ratio of liabilities to stockholders' equity for Year 2 and Year 1. Round to two decimal places. c.What conclusions regarding the margin of protection to the creditors can you draw from (b)?1.27EXTransactions On June 1 of the current year, Chad Wilson established a business to manage rental property. He completed the following transactions during June: a. Opened a business bank account with a de posit of 30,000 from personal funds. b. Purchased office supplies on account, 1,800. c. Received cash from fees earned for managing rental property, 10,000. d. Paid rent on office and equipment for the mo nth, 4,500. e. Paid creditors on account, 1,250. f. Billed customers for fees earned for managing rental property, 16,800. g. Paid automobile expenses (including rental charges) for the month, 750, and miscellaneous expenses, 980. h. Paid office salaries, 4,000. i. Determined that the cost of supplies on hand was 680; therefore, the cost of supplies used was 1,120. j. Withdrew cash for personal use, 7,500. Instructions 1.Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: 2.Briefly explain why the owner's investment and revenues increased owner's equity, while withdrawals and expenses decreased owner's equity. 3.Determine the net income for June. 4.How much did June's transactions increase or decrease Chad Wilson's capital?Financial statements The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2019, the end of the year, and its revenue and expenses for the year follow. The capital of Ian Eisele, owner, was 670,000 on January 1, 2019, the beginning of the year. During the year, fan withdrew 42,000. Chapter 1 Introduction to Accounting and Business Accounts payable 69,500 Accounts receivable 285,000 Cash 190,500 Fees earned 912,500 Land 544,000 Miscellaneous expense 6,400 Rent expense 36,000 Supplies 5,500 Supplies 4,100 Utilities expenses 28,500 Wages expense 510,000 Instructions 1.Prepare an income statement for the year ended December 31, 2019. 2.Prepare a statement of owner's equity for the year ended December 31, 2019. 3.Prepare a balance sheet as of December 31, 2019. 4.What item appears on both the statement of owner's equity and the balance sheet?Financial statements Seth Feye established Reliance Financial Services on July 1, 2019. Reliance Financial Services offers financial planning advice to its clients. The effect of each transaction and the balances after each transaction for July follow: Instructions 1.Prepare an income statement for the month ended July 31, 2019. 2.Prepare a statement of owner's equity for the month ended July 31, 2019. 3.Prepare a balance sheet as of July 31, 2019. 4.(Optional) Prepare a statement of cash flows for the month ending July 31, 2019.1.4APRTransactions; financial statements D'Lite Dry Cleaners is owned and operated by Joel Palk. A building and equipment are currently being rented, pending expansion to new facilities. The actual work of dry cleaning is done by another company for a fee. The assets and liabilities of the business on July 1, 2019, are as follows: Cash, 45,000; Accounts Receivable, 93,000; Supplies, 7,000; Land, 75,000; Accounts Payable. 40,000. Business transactions during July are summarized as follows: a. Joel Palk invested additional cash in the business with a deposit of 35,000 in the business bank account. b. Paid 50,000 for the purchase of land adjacent to land currently owned by D'Lite Dry Cleaners as a future building site. c. Received cash from cash customers for dry cleaning revenue, 32,125. d. Paid rent for the month, 6,000. e. purchased supplies on account, 2,500. f. Paid creditors on account, 22,800. g. Charged customers for dry cleaning revenue on account, 84,750. h. Received monthly invoice for dry cleaning expense for July (to be paid on August 10), 29,500. i. Paid the following: wages expense, 7,500; truck expense, 2,500; utilities expense, 1,300; miscellaneous expense, 2,700. j. Received cash from customers on account, 88,000. k. Determined that the cost of supplies on hand was 5,900; therefore, the cost of supplies used during the month was 3,600. l. Withdrew 12,000 cash for personal use. Instructions 1.Determine the amount of Joel Palk's capital as of July 1 of the current year. 2.State the assets, liabilities, and owner's equity as of July 1 in equation form similar to that shown in Exhibit 5. In tabular form below the equation, indicate increases and decreases resulting from each transaction and the new balances after each transaction. 3.Prepare an income statement for July, a statement of owner's equity for July, and a balance sheet as of July 31. 4.(Optional) Prepare a statement of cash flows for July.Missing amounts from financial statements The financial statements at the end of Wolverine Realtys first month of operations are as follows: Wolverine Realty Income Statement For the Month Ended April 30,2019 Fees earned (a) Expenses: Wages expense 300,000 Rent expense 100,000 Supplies expense (b) Utilities expense 20,000 Miscellaneous expense 25,000 Total expenses 475,000 Net income 275,000 Wolverine Realty Statement of Owner's Equity For the Month Ended April 30, 2019 Dakota Rowe, capital, April 1, 2019 (c) Investment on April 1, 2019 375,000 Net income for April (d) Withdrawals (125,000) Increase in owner's equity (e) Dakota Rowe, capital, April 30, 2019 (f) Wolverine Realty Balance Sheet April 30,2019 Assets Cash 462,500 Supplies 12,500 Land 150,000 Total assets (g) Liabilities Accounts payable 100,000 Owner's Equity Dakota Rowe, capital (h) Total liabilities and owner's equity (1) Wolverine Realty Statement of Cash Flows For the Month Ended April 30,2019 Cashflows from operating activities: Cash receipts from customers (j) Cash payments for expenses and payments to creditors (387,500) Net cash flow from operating activities (k) Cashflows from investing activities: Cash payments for acquisition of land (l) Cash flows from financing activities: Cash receipt of owner's investment (m) Cash withdrawals by owner (n) Net cash flow from financing activities (0) Net increase (decrease) in cash and April 30,2019, cash balance (p) Instructions By analyzing the interrelationships among the four financial statements, determine the proper amounts for (a) through (p).Transactions Amy Austin established an insurance agency on March 1 of the current year and completed the following transactions during March: a. Opened a business bank account with a deposit of 50,000 from personal funds. b. Purchased supplies on account, 4,000. c. Paid creditors on account, 2,300. d. Received cash from fees earned on insurance commissions, 13,800. e. Paid rent on office and equipment for the month, 5,000. f. Paid automobile expenses for the month, 1,150, and miscellaneous expenses, 300. g. Paid office salaries, 2,500. h. Determined that the cost of supplies on hand was 2,700; therefore, the cost of supplies used was 1,300. i. Billed insurance companies for sales commissions earned, 12,500. j. Withdrew cash for personal use, 3,900. Instructions 1.Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: 2.Briefly explain why the owner's investment and revenues increased owner's equity, while withdrawals and expenses decreased owner's equity. 3.Determine the net income for March. 4.How much did March's transactions increase or decrease Amy Austin's capital?Financial statements The amounts of the assets and liabilities of Wilderness Travel Service at April 30, 2019, the end of the year, and its revenue and expenses for the year follow. The capital of Harper Borg, owner, was 180,000 at May 1, 2018, the beginning of the year, and the owner withdrew 40,000 during the year. Accounts payable 25,000 Accounts receivable 210,000 Cash 146,000 Fees earned 875,000 Miscellaneous expense 15,000 Rent expense 75,000 Supplies 9,000 Supplies expense 12,000 Taxes expense 10,000 Utilities expenses 38,500 Wages expense 525,000 Instructions 1.Prepare an income statement for the year ended April 30, 2019. 2.Prepare a statement of owner's equity for the year ended April 30, 2019. 3.Prepare a balance sheet as of April 30, 2019. 4.What item appears on both the income statement and statement of owner's equity?Financial statements Jose Loder established Bronco Consulting on August 1, 2019. The effect of each transaction and the balances after each transaction for August follow: Instructions 1.Prepare an income statement for the month ended August 31, 2019. 2.Prepare a statement of owner's equity for the month ended August 31, 2019. 3.Prepare a balance sheet as of August 31, 2019. 4.(Optional) Prepare a statement of cash flows for the month ending August 31, 2019.Transactions; financial statements On April 1, 2019, Maria Adams established Custom Realty. Maria completed the following transactions during the month of April: a. Opened a business bank account with a deposit of 24,000 from personal funds. b. Paid rent on office and equipment for the month, 3,600. c. Paid automobile expenses (including rental charge) for the month, 1,350, and miscellaneous expenses, 600. d. Purchased office supplies on account, 1,200. e. Earned sales commissions (revenue) from selling real estate, receiving cash, 19,800. f. Paid creditor on account, 750. g. Paid office salaries, 2,500. h. Withdrew cash for personal use, 3,500. i. Determined that the cost of supplies on hand was 300; therefore, the cost of supplies used was 900. Instructions 1.Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: 2.Prepare an income statement for April, a statement of owner's equity for April, and a balance sheet as of April 30.Transactions; financial statements Bev's Dry Cleaners is owned and operated by Beverly Zahn. A building and equipment are currently being rented, pending expansion to new facilities. The actual work of dry cleaning is done by another company for a fee. The assets and the liabilities of the business on November 1, 2019, are as follows: Cash, 39,000; Accounts Receivable, 80,000; Supplies, 11,000; Land, 50,000; Accounts Payable, 31,500. Business transactions during November are summarized as follows: a. Beverly Zahn invested additional cash in the business with a deposit of 21,000 in the business bank account. b. Purchased land adjacent to land currently owned by Bev's Dry Cleaners to use in the future as a parking lot, paying cash of 35,000. c. Paid rent for the month, 4,000. d. Charged customers for dry cleaning revenue on account, 72,000. e. Paid creditors on account, 20,000. f. Purchased supplies on account, 8,000. g. Received cash from cash customers for dry cleaning revenue, 38,000. h. Received cash from customers on account, 77,000. i. Received monthly invoice for dry cleaning expense for November (to be paid on December 10), 29,450. j. Paid the following: wages expense, 14,000; truck expense, 2,100; utilities expense, 1,800; miscellaneous expense, 1,300. k. Determined that the cost of supplies on hand was 11,800; therefore, the cost of supplies used during the month was 7,200. l. Withdrew 5,000.for personal use. Instructions 1.Determine the amount of Beverly Zahn's capital as of November 1. 2.State the assets, liabilities, and owner's equity as of November 1 in equation form similar to that shown in Exhibit 5. In tabular form below the equation, indicate increases and decreases resulting from each transaction and the new balances after each transaction. 3.Prepare an income statement for November, a statement of owner's equity for November, and a balance sheet as of November 30. 4.(Optional) Prepare a statement of cash flows for November.Missing amounts from financial statements The financial statements at the end of Atlas Realty's first month of operations follow: Atlas Realty Income Statement For the Month Ended May 31,2019 Fees earned 400,000 Expenses: Wages expense (a) Rent expense 48,000 Supplies expense 17,600 Utilities expense 14,400 Miscellaneous expense 4,800 Total expenses 288,000 Net income (b) Atlas Realty Statement of Owner's Equity For the Month Ended May 31, 2019 LuAnn Martin, capital, May 1, 2019 (c) Investment on May 1, 2019 (d) Net income for May (e) Withdrawals (f) lncrease in owner's equity (g) LuAnn Martin, capital, May 31, 2019 (g) Atlas Realty Balance Sheet May 31,2019 Assets Cash 123,200 Supplies 12,800 Land (i) Total assets (j) Liabilities Accounts payable 48,000 Owner's Equity LuAnn Martin, capital (k) Total liabilities and owner's equity (1) Atlas Realty Statement of Cash Flows For the Month Ended May 31,2019 Cashflows from operating activities: Cash receipts from customers (m) Cash payments for expenses and payments to creditors (252,800) Net cash flow from operating activities (n) Cashflows from investing activities: Cash payments for acquisition of land (120,000) Cash flows from financing activities: Cash receipt of owner's investment (160,000) Cash withdrawals by owner (64,000) Net cash flow from financing activities (0) Net increase (decrease) in cash and April 30,2019, cash balance (p) Instructions By analyzing the interrelationships among the four financial statements, determine the proper amounts for (a) through (p).1COP1.1CP1.2CP1.4CPNet income On January 1, 2018, Dr. Marcie Cousins established Health-Wise Medical, a medical practice organized as a proprietorship. The following conversation occurred the following August between Dr. Cousins and a former medical school classmate, Dr. Avi Abu, at an American Medical Association convention in Seattle: Dr. Abu: Marcie, good to see you again. Why didn't you call when you were in Miami? We could have had dinner together. Dr. Cousins: Actually, I never made it to Miami this year. My husband and kids went up to our Vail condo twice, but I got stuck in Jacksonville. I opened a new consulting practice this January and haven't had any time for myself since. Dr. Abu: I heard about it ... Health ... something ... right? Dr. Cousins: Yes, Health-Wise Medical. My husband chose the name. Dr. Abu: I've thought about doing something like that. Are you making any money? I mean, is it worth your time? Dr. Cousins: You wouldn't believe it. I started by opening a bank account with 25,000, and my July bank statement has a balance of 80,000. Not bad for six monthsall pure profit. Dr. Abu: Maybe I'll try it in Miami! Let's have breakfast together tomorrow, and you can fill me in on the details. Comment on Dr. Cousins' statement that the difference between the opening bank balance (25,000) and the July statement balance (80,000) is pure profit.1.6CPWhat is the difference between an account and a ledger?2DQ3DQeCatalog Services Company performed services in October for a specific customer for a fee of 7,890. Payment was received the following November. (a).Was the revenue earned in October or November? (b).What accounts should be debited and credited in (1) October and (2) November?If the two totals of a trial balance are equal, does it mean that there are no errors in the accounting records? Explain.Assume that a trial balance is prepared with an account balance of 8,900 listed as 9,800 and an account balance of 1,000 listed as 100. Identify the transposition and the slide.Assume that when a purchase of supplies of 2,650 for cash was recorded, both the debit and the credit were journalized and posted as 2,560. (a) Would this error cause the trial balance to be out of balance? (b) Would the trial balance be out of balance if the 2,650 entry had been journalized correctly but the credit to Cash had been posted as 2,560?Assume that Muscular Consulting erroneously recorded the payment of 7,500 of owner withdrawals as a debit to Salary Expense. (a) How would this error affect the equality of the trial balance? (b) How would this error affect the income statement, statement of owners equity, and balance sheet?Assume that Sunshine Realty Co. borrowed 300,000 from Columbia First Rank and Trust. In recording the transaction, Sunshine erroneously recorded the receipt as a debit to Cash, 300,000, and a credit to Fees Earned, 300,000. (a) How would this error affect the equality of the trial balance? (b) How would this error affect the income statement, statement of owners equity, and balance sheet?Checking accounts are a common form of deposits for banks. Assume that Surety Storage has a checking account at Ada Savings Bank. What type of account (asset, liability, owners equity, revenue, expense, drawing) does the account balance of 11,375 represent from the viewpoint of (a) Surety Storage and (b) Ada Savings Bank?Rules of debit and credit and normal balances State for each account whether it is likely to have (a) debit entries only, (b) credit entries only, or (c) both debit and credit entries. Also indicate its normal balance. 1. Accounts Receivable 2. Commissions Earned 3. Heidi Schmidt, Capital 4. Rent Expense 5. Rent Revenue 6. Wages PayableRules of debit and credit and normal balances State for each account whether it is likely to have (a) debit entries only, (b) credit entries only, or (c) both debit and credit entries. Also indicate its normal balance. 1. Accounts Payable 2. Cash 3. Del Robinson, Drawing 4. Miscellaneous Expense 5. Insurance Expense 6. Fees EarnedJournal entry for asset purchase Prepare a journal entry for the purchase of office equipment on February 19 for 18,500 paying 4,500 cash and the remainder on account.Journal entry for asset purchase Prepare a journal entry for the purchase of office supplies on September 30 for 2,500, paying 800 cash and the remainder on account.Journal entry for fees earned Prepare a journal entry on April 30 for fees earned on account, 11,250.Journal entry for fees earned Prepare a journal entry on August 13 for cash received for services rendered, 9,000.Journal entry for owner's withdrawal Prepare a journal entry on December 23 for the withdrawal of 20,000 by Steve Buckley for personal use.Journal entry for owner's withdrawal Prepare a journal entry on June 30 for the withdrawal of 11,500 by Dawn Pierce for personal use.2.5APEMissing amount from an account On August 1, the supplies account balance was 1,025. During August, supplies of 3,110 were purchased, and 1,324 of supplies were on hand as of August 31. Determine supplies expense for August.Trial balance errors For each of the following errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal. If the error would cause the trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. a.The payment of an insurance premium of 5,400 for a three-year policy was debited to Prepaid Insurance for 5,400 and credited to Cash for 4,500. b.A payment of 270 on account was debited to Accounts Payable for 720 and credited to Cash for 720. c.A purchase of supplies on account for 1,600 was debited to Supplies for 51,600 and debited to Accounts Payable for 1,600.Trial balance errors For each of the following errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal. If the error would cause the trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. a.The payment of cash for the purchase of office equipment of 12,900 was debited to Land for 12,900 and credited to Cash for 12,900. b.The payment of 1,840 on account was debited to Accounts Payable for l84 and credited to Cash for 1,840. c.The receipt of cash on account of 3,800 was recorded as a debit to Cash for 8,300 and a credit to Accounts Receivable for 3,800.Correcting entries The following errors took place in journalizing and posting transactions: a.Rent expense of 4,650 paid for the current month was recorded as a debit to Miscellaneous Expense and a credit to Rent Expense. b.The payment of 3,700 from a customer on account was recorded as a debit to Cash and a credit to Accounts Payable. Journalize the entries to correct the errors. Omit explanations.Correcting entries The following errors took place in journalizing and posting transactions: a.The receipt of 8,400 for services rendered was recorded as a debit to Accounts Receivable and a credit to Fees Earned. b.The purchase of supplies of 2,500 on account was recorded as a debit to Office Equipment and a credit to Supplies. Journalize the entries to correct the errors. Omit explanations.Horizontal analysis Two income statements for Fuller Company follow: Fuller Company Income Statements For Years Ended December 31 2019 2018 Fees earned 680,000 850,000 Operating expenses 541,875 637,500 Net income 138,125 212,500 Prepare a horizontal analysis of Fuller Company's income statements.Horizontal analysis Two income statements for Paragon Company follow: Paragon Company Income Statements For Years Ended December 31 2019 2018 Fees earned 1,416,000 1,200,000 Operating expenses 1,044,000 900,000 Net income 372,000 300,000 Prepare a horizontal analysis of Paragon Company's income statements.Chart of accounts The following accounts appeared in recent financial statements of Delta Air Lines: Accounts Payable Flight Equipment Advanced Payments for Equipment Frequent Flyer (Obligations) Air Traffic Liability Fuel Inventory Aircraft Fuel (Expense) Landing Fees (Expense) Aircraft Maintenance (Expense) Parts and Supplies Aircraft Rent (Expense) Passenger Commissions (Expense) Cargo Revenue Passenger Revenue Cash Prepaid Expenses Contract Carrier Arrangements (Expense) Taxes Payable Identify each account as either a balance sheet account or an income statement account. For each balance sheet account, identify it as an asset, a liability, or owners equity. For each income statement account, identify it as a revenue or an expense.Chart of accounts Oak Interiors is owned and operated by Fred Biggs, an interior decorator. In the ledger of Oak Interiors, the first digit of the account number indicates its major account classification (1assets, 2liabilities, 3owner's equity, 4revenues, 5expenses). The second digit of the account number indicates the specific account within each of the preceding major account classifications. Match each account number with its most likely account in the list that follows. The account numbers are 11, 12, 13, 21, 31, 32, 41, 51, 52, and 53. Accounts Payable Fred Biggs, Drawing Accounts Receivable Land Cash Miscellaneous Expense Fees Earned Supplies Expense Fred Biggs, Capital Wages ExpenseChart of accounts Outdoor Leadership School is a newly organized business that teaches people how to inspire and influence others. The list of accounts to be opened in the general ledger is as follows: Accounts Payable Miscellaneous Expense Accounts Receivable Prepaid Insurance Cash Rent Expense Equipment Supplies Fees Earned Supplies Expense Lorri Ross, Capital Unearned Rent Lorri Ross, Drawing Wages Expense List the accounts in the order in which they should appear in the ledger of Outdoor Leadership School and assign account numbers. Each account number is to have two digits: the first digit is to indicate the major classification (1 for assets, for example), and the second digit is to identify the specific account within each major classification (11 for Cash, for example).Rules of debit and credit The following table summarizes the rules of debit and credit. For each of the items (a) through (1), indicate whether the proper answer is a debit or a credit.Normal entries for accounts During the month, Midwest Labs Co. has a substantial number of transactions affecting each of the following accounts. State for each account whether it is likely to have (a) debit entries only, (b) credit entries only, or (c) both debit and credit entries. 1. Accounts Payable 2. Accounts Receivable 3. Cash 4. Fees Earned 5. Insurance Expense 6. Jerri Holt, Drawing 7. Utilities ExpenseNormal balances of accounts Identify each of the following accounts of Dispatch Services Co. as asset, liability, owners equity, revenue, or expense and state in each case whether the normal balance is a debit or a credit: a. Accounts Payable b. Accounts Receivable c. Ashley Griffin, Capital d. Ashley Griffin, Drawing e. Cash f. Fees Earned g. Office Equipment h. Rent Expense i. Supplies j. Wages ExpenseTransactions Concrete Consulting Co. has the following accounts in its ledger: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts Payable; Jason Payne, Capital; Jason Payne, Drawing; Fees Earned; Rent Expense; Advertising Expense; Utilities Expense; Miscellaneous Expense. Journalize the following selected transactions for October 2019 in a two-column journal. Journal entry explanations may be omitted. Oct. 1. Paid rent for the month, 3,600. 3. Paid advertising expense, 1,200. 5. Paid cash for supplies, 750. 6. Purchased office equipment on account, 8,000. 10. Received cash from customers on account, 14,800. 15. Paid creditors on account, 7,110. 27. Paid cash for miscellaneous expenses, 400. 30. Paid telephone bill (utility expense) for the month, 250. 31. Fees earned and billed to customers for the month, 33,100. 31. Paid electricity bill (utility expense) for the month, 1,050. 31. Withdrew cash for personal use, 2,500.Journalizing and posting On September 18, 2019, Afton Company purchased 2,475 of supplies on account. In Afton Company's chart of accounts, the supplies account is No. 15, and the accounts payable account is No. 21. a.Journalize the September 18, 2019, transaction on page 87 of Afton Company's two-column journal. Include an explanation of the entry. b.Prepare a four-column account for Supplies. Enter a debit balance of 840 as of September 1, 2019. Place a check mark () in the Posting Reference column. c.Prepare a four-column account for Accounts Payable. Enter a credit balance of 10,900 as of September 1, 2019. Place a check mark () in the Posting Reference column. d.Post the September 18, 2019, transaction to the accounts. e.Do the rules of debit and credit apply to all companies?Transactions and T accounts The following selected transactions were completed during August of the current year: 1.Billed customers for fees earned, 73,900. 2.Purchased supplies on account, 1,960. 3.Received cash from customers on account, 62,770. 4.Paid creditors on account, 820. a.Journalize these transactions in a two-column journal, using the appropriate number to identify the transactions. Journal entry explanations may be omitted. b.Post the entries prepared in (a) to the following T accounts: Cash, Supplies, Accounts Receivable, Accounts Payable, Fees Earned. To the left of each amount posted in the accounts, place the appropriate number to identify the transactions. c.Assume that the unadjusted trial balance on August 31 shows a credit balance for Accounts Receivable. Does this credit balance mean that an error has occurred?2.10EXAccount balances a.During February, 186,500 was paid to creditors on account, and purchases on account were 201,400. Assuming that the February 28 balance of Accounts Payable was 59,900, determine the account balance on February 1. b.On October 1, the accounts receivable account balance was 115,800. During October, 449,600 was collected from customers on account. Assuming that the October 31 balance was 130,770, determine the fees billed to customers on account during October. c.On April 1, the cash account balance was 46,220. During April, cash receipts totaled 248,600 and the April 30 balance was 56,770. Determine the cash payments made during April.Capital account balance As of January 1, Terrace Waters, Capital had a credit balance of 500,000. During the year, withdrawals totaled 10,000, and the business incurred a net loss of 320,000. a.Compute the balance of Terrace Waters, Capital as of the end of the year. b.Assuming that there have been no recording errors, will the balance sheet prepared at December 31 balance? Explain.Identifying transactions National Park Tours Co. is a travel agency. The nine transactions recorded by National Park Tours during May 2019, its first month of operations, are indicated in the following T accounts: Indicate for each debit and each credit (a) whether an asset, liability, owner's equity, drawing, revenue, or expense account was affected and (b) whether the account was increased (+)or decreased (). Present your answers in the following form, with transaction (1) given as an example: Account Debited Account Credited Transaction Type Effect Type Effect (1) asset + owner's equity +Journal entries Based upon the T accounts in Exercise 213, prepare the nine journal entries from which the postings were made. Journal entry explanations may be omitted.Trial balance Based upon the data presented in Exercise 213, (a) prepare an unadjusted trial balance, listing the accounts in their proper order. (b) Based upon the unadjusted trial balance, determine the net income or net loss.Trial balance The accounts in the ledger of Hickory Furniture Company as of December 31, 2019, are listed in alphabetical order as follows. All accounts have normal balances. The balance of the cash account has been intentionally omitted. Accounts payable 42,770 Accounts receivable 116,900 Cash ? Elaine wells, Capital 75,000 Elaine wells, Drawing 24,000 Fees Earned 745,230 Insurance Expense 3,600 Land 50,000 Miscellaneous Expense 9,500 Notes payable 50,000 Prepaid insurance 21,600 Rent Expense 48,000 Supplies 4,275 Supplies Expense 6,255 Unearned Rent 12,000 Utilities Expense 26,850 Wages Expense 580,700 Prepare an unadjusted trial balance, listing the accounts in their normal order and inserting the missing figure for cash.Effect of errors on trial balance Indicate which of the following errors, each considered individually, would cause the trial balance totals to be unequal: a.A fee of 21,000 earned and due from a client was not debited to Accounts Receivable or credited to a revenue account, because the cash had not been received. b.A receipt of 11,300 from an account receivable was journalized and posted as a debit of 11,300 to Cash and a credit of 11,300 to Fees Earned. c.A payment of 4,950 to a creditor was posted as a debit of 4,950 to Accounts Payable and a debit of 4,950 to Cash. d.A payment of 5,000 for equipment purchased was posted as a debit of 500 to Equipment and a credit of 500 to cash. e.Payment of a cash withdrawal of 19,000 was journalized and posted as a debit of 1,900 to Salary Expense and a credit of 19,000 to Cash. Indicate which of the preceding errors would require a correcting entry.Errors in trial balance The following preliminary unadjusted trial balance of Ranger Co., a sports ticket agency, does not balance: Ranger co. unadjusted Trail Balance August 31, 2019 Debit balances Credit Balances Cash 77,600 Accounts Receivable 37,750 Prepaid insurance 12,000 Equipment 19,000 Accounts payable 29,100 Unearned Rent 10,800 Carmen Meeks, Capital 110,000 Carmen Meeks, Drawing 13,000 Fees Earned 385,000 Wages Expense 213,000 Advertising Expense 16,350 Miscellaneous Expense 18,400 273,700 668,300 When the ledger and other records are reviewed, you discover the following: (1) the debits and credits in the cash account total 77,600 and 62,100, respectively; (2) a billing of 9,000 to a customer on account was not posted to the accounts receivable account; (3) a payment of 4,500 made to a creditor on account was not posted to the accounts payable account; (4) the balance of the unearned rent account is 5,400; (5) the correct balance of the equipment account is 190,000; and (6) each account has a normal balance. Prepare a corrected unadjusted trial balance.Effect of errors on trial balance The following errors occurred in posting from a two-column journal: 1.A credit of 6,000 to Accounts Payable was not posted. 2.An entry debiting Accounts Receivable and crediting Pees Earned for 5,300 was not posted. 3.A debit of 2,700 to Accounts Payable was posted as a credit. 4.A debit of 480 to Supplies was posted twice. 5.A debit of 3,600 to Cash was posted to Miscellaneous Expense. 6.A credit of 780 to Cash was posted as 870. 7.A debit of 12,620 to Wages Expense was posted as 12,260. (a) (b) (c) Error Out of Balance Difference Larger total 1. yes 6,000 debit Considering each case individually (i.e., assuming that no other errors had occurred), indicate (a) by "yes" or "no" whether the trial balance would be out of balance; (b) if answer to (a) is ''yes," the amount by which the trial balance totals would differ; and (c) whether the Debit or Credit column of the trial balance would have the larger total. Answers should be presented in the following form, with error (1) given as an example:Errors in trial balance Identify the errors in the following trial balance. All accounts have normal balances. Mascot co. Unadjusted Trail Balance For the Month Ending July 31, 2019 Account No. Debit balances Credit Balances Cash 11 36,000 Accounts Receivable 12 112,600 Prepaid insurance 13 18,000 Equipment 14 375,000 Accounts payable 21 53,300 Salaries payable 22 7,500 Samuel parson, Capital 31 297,200 Samuel parson, Drawing 32 17,000 Fees Earned 41 682,000 Salary Expense 51 392,800 Advertising Expense 52 73,000 Miscellaneous Expense 59 11,600 1,189,300 1,189,300Entries to correct errors The following errors took place in journalizing and posting transactions: a.Insurance of 18,000 paid for the current year was recorded as a debit to Insurance Expense and a credit to Prepaid Insurance. b.A withdrawal of 10,000 by Brian Phillips, owner of the business, was recorded as a debit to Wages Expense and a credit to Cash. Journalize the entries to correct the errors. Omit explanations.Entries to correct errors The following errors took place in journalizing and posting transactions: a.Cash of 8,800 received on account was recorded as a debit to Fees Earned and a credit to Cash. b.A 1,760 purchase of supplies for cash was recorded as a debit to Supplies Expense and a credit to Accounts Payable. Journalize the entries to correct the errors. Omit explanations2.23EX2.24EXEntries into T accounts and trial balance Connie Young, an architect, opened an office on October 1, 2019. During the month, she completed the following transactions connected with her professional practice: a.Transferred cash from a personal bank account to an account to be used for the business, 36,000. b.Paid October rent for office and workroom, 2,400. c.Purchased used automobile for 32,800, paying 7,800 cash and giving a note payable for the remainder. d.Purchased office and computer equipment on account, 9,000. e.Paid cash for supplies, 2,150. f.Paid cash for annual insurance policies, 4,000. g.Received cash from client for plans delivered, 12,200. h.Paid cash for miscellaneous expenses, 815. i.Paid cash to creditors on account, 4,500. j.Paid 5,000 on note payable. k.Received invoice for blueprint service, due in November, 2,890. l.Recorded fees earned on plans delivered, payment to be received in November, 18,300. m.Paid salary of assistants, 6,450. n.Paid gas, oil, and repairs on automobile for October, 1,020. Instructions 1.Record these transactions directly in the following T accounts, without journalizing: Cash; Accounts Receivable; Supplies; Prepaid Insurance; Automobiles; Equipment; Accounts Payable; ores Payable; Connie Young, Capital; Professional Fees; Salary Expense; Blueprint Expense; Rent Expense; Automobile Expense; Miscellaneous Expense. To the left of the amount entered in the accounts, place the appropriate letter to identify the transaction. 2.Determine account balances of the T accounts. Accounts containing a single entry only (such as Pre paid Insurance) do not need a balance. 3.Prepare an unadjusted trial balance for Connie Young, Architect, as of October 31, 2019. 4.Determine the net income or net loss for October.Journal entries and trial balance On January 1, 2019, Sharon Matthews established Tri-City Realty, which completed the following transactions during the month: a. Sharon Matthews transferred cash from a personal bank account to an account to be used for the business, 40,000. b. Paid rent on office and equipment for the month, 6,000. c. Purchased supplies on account, 3,200. d. Paid creditor on account, 1,750. e. Earned fees, receiving cash, 18,250. f. Paid automobile expenses (including rental charge) for month, 1,880, and miscellaneous expenses, 420. g. Paid office salaries, 5,000. h. Determined that the cost of supplies used was 1,400. i. Withdrew cash for personal use, 2,000. Instructions 1.Journalize entries for transactions (a) through (i), using the following account titles: Cash; Supplies; Accounts Payable; Sharon Matthews, Capital; Sharon Matthews, Drawing; Fees Earned; Rent Expense; Office Salaries Expense; Automobile Expense; Supplies Expense; Miscellaneous Expense. Explanations may be omitted. 2.Prepare T accounts, using the account titles in (1). Post the journal entries to these accounts, placing the appropriate letter to the left of each amount to identify the transactions. Determine the account balances after all posting is complete. Accounts containing only a single entry do not need a balance. 3.Prepare an unadjusted trial balance as of January 31, 2019. 4.Determine the following: a. Amount of total revenue recorded in the ledger. b. Amount of total expenses recorded in the ledger. c. Amount of net income for January. 5.Determine the increase or decrease in owner's equity for January.Journal entries and trial balance On June 1, 2019, Kris Storey established an interior decorating business, Eco-Centric Designs. During the montl1, Kris completed the following transactions related to the business: June 1. Kris transferred cash from a personal bank account to an account to be used for the business, 35,000. 1. Paid rent for period of June 1 to end of month, 4,750. 6. Purchased office equipment on account, 14,100. 8. Purchased a van for 28,500 paying 4,500 cash and giving a note payable for the remainder. 10. Purchased supplies for cash, 2,380. 12. Received cash for job completed, 12,200. 15. Paid annual premiums on property and casualty insurance, 3,600. 23. Recorded jobs completed on account and sent invoices to customers, 11,900. 24. Received an invoice for van expenses, to be paid in June, 1,500. June 29. Paid utilities expense, 3,100. 29. Paid miscellaneous expenses, 950. 30. Received cash from customers on account, 7,330. 30. Paid wages of employees, 5,070. 30. Paid creditor a portion of the amount owed for equipment purchased on June 6, 6,825. 30. Withdrew cash for personal use, 1,600. Instructions 1.Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Explanations may be omitted. 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 16 Equipment 18 Van 21 Notes Payable 22 Accounts Payable 31 Kris Storey, Capital 32 Kris Storey, Drawing 41 Fees Earned 51 Wages Expense 53 Rent Expense 54 Utilities Expense 55 Van Expense 59 Miscellaneous Expense 2.Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. 3.Prepare an unadjusted trial balance for Eco-Centric Designs as of June 30, 2019. 4.Determine the excess of revenues over expenses for June. 5. Can you think of any reason why the amount determined in (4) might not be the net income for June?Journal entries and trial balance Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2019, follows: The following business transactions were completed by Elite Realty during April 2019: Apr. 1. Paid rent on office for month, 6,500. 2. Purchased office supplies on account, 2,300. 5. Paid insurance premiums, 6,000. 10. Received cash from clients on account, 52,300. 15. Purchased land for a future building site for 200,000, paying 30,000 in cash and giving a note payable for the remainder. 17. Paid creditors on account, 6,450. 20. Returned a portion of the office supplies purchased on April 2, receiving full credit for their cost, 325. 23. Paid advertising expense, 4,300. Enter the following transactions on Page 19 of the two-column journal: 27. Discovered an error in computing a commission; received cash from the salesperson for the overpayment, 2,500. 28. Paid automobile expense (including rental charges for an automobile), 1,500. 29. Paid miscellaneous expenses, 1,400. 30. Recorded revenue earned and billed to clients during the month, 57,000. 30. Paid salaries and commissions for the month, 11,900. 30. Withdrew cash for personal use, 4,000. 30. Rented land purchased on April 15 to local merchants association for use as a parking lot in May and June, during a street rebuilding program; received advance payment of 10,000. Instructions 1.Record the April 1, 2019, balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark () in the Posting Reference column. 2.Journalize the transactions for April in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3.Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4.Prepare an unadjusted trial balance of the ledger as of April 30, 2019. 5.Assume that the April 30 transaction for salaries and commissions should have been 19,100. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this error a transposition or slide?Corrected trial balance The Colby Group has the following unadjusted trial balance as of August 31, 2019: The Colby Group Unadjusted Trial Balance August 31,2019 Debit Balances Credit Balances Cash 17,300 Accounts Receivable 37,000 Supplies 7.400 Prepaid Insurance 1,900 Equipment 196,000 Notes Payable 97,600 Accounts Payable 26,000 Terry Colby, Capital 129,150 Terry Colby, Drawing 56,000 Fees Earned 454,450 Wages Expense 270.000 Rent Expense 51,800 Advertising Expense 25,200 Miscellaneous Expense 5,100 667,700 707,200 The debit and credit totals are not equal as a result of the following errors: a.The cash entered on the trial balance was understated by 6,000. b.A cash receipt of 5,600 was posted as a debit to Cash of 6,500. c.A debit of 11,000 to Accounts Receivable was not posted. d.A return of 150 of defective supplies was erroneously posted as a 1,500 credit to Supplies. e.An insurance policy acquired at a cost of 1,200 was posted as a credit to Prepaid Insurance. f.The balance of Notes Payable was understated by 20,000. g.A credit of 4,800 in Accounts Payable was overlooked when determining the balance of the account. h.A debit of 7,000 for a withdrawal by the owner was posted as a credit to Terry Colby, Capital. i.The balance of 58,100 in Rent Expense was entered as 51,800 in the trial balance. j.Gas, Electricity, and Water Expense, with a balance of 24,150, was omitted from the trial balance. Instructions 1.Prepare a corrected unadjusted trial balance as of August 31, 2019. 2.Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.Entries into T accounts and trial balance Ken jones, an architect, opened an office on April 1, 2019. During the month, he completed the following transactions connected with his professional practice: a.Transferred cash from a personal bank account to an account to be used for the business, 18,000. b.Purchased used automobile for 19,500, paying 2,500 cash and giving a note payable for the remainder. c.Paid April rent for office and workroom, 3,150. d.Paid cash for supplies, 1,450. e.Purchased office and computer equipment on account, 6,500. f.Paid cash for annual insurance policies on automobile and equipment, 2,400. g.Received cash from a client for plans delivered, 12,000. h.Paid cash to creditors on account, 1,800. i.Paid cash for miscellaneous expenses, 375. j.Received invoice for blueprint service, due in May, 2,500. k.Recorded fees earned on plans delivered, payment to be received in May, 15,650. l.Paid salary of assistant, 2,800. m.Paid cash for miscellaneous expenses, 200. n.Paid 300 on note payable. o.Paid gas, oil, and repairs on automobile for April, 550. Instructions 1.Record these transactions directly in the following T accounts without journalizing: Cash; Accounts Receivable; Supplies; Prepaid Insurance; Automobiles; Equipment; Accounts Payable; Notes Payable; Ken Jones, Capital; Professional Fees; Rent Expense; Salary Expense; Blueprint Expense; Automobile Expense; Miscellaneous Expense. To the left of each amount entered in the accounts, place the appropriate letter to identify the transaction. 2.Determine account balances of the T accounts. Accounts containing a single entry only (such as Prepaid Insurance) do not need a balance. 3.Prepare an unadjusted trial balance for Ken jones, Architect, as of April 30, 2019. 4.Determine the net income or net loss for April.Journal entries and trial balance On August 1, 2019, Rafael Masey established Planet Realty, which completed the following transactions during the month: a. Rafael Masey transferred cash from a personal bank account to an account to be used for the business, 17,500. b. Purchased supplies on account, 2,300. c. Earned fees, receiving cash, 13,300. d. Paid rent on office and equipment for the month, 3,000. e. Paid creditor on account, 1,150. f. Withdrew cash for personal use, l, 800. g. Paid automobile expenses (including rental charge) for month, 1,500, and miscellaneous expenses, 400. h. Paid office salaries, 2,800. i. Determined that the cost of supplies used was 1,050. Instructions 1.Journalize entries for transactions (a) through (i), using the following account titles: Cash; Supplies; Accounts Payable; Rafael Masey, Capital; Rafael Masey, Drawing; Fees Earned; Rent Expense; Office Salaries Expense; Automobile Expense; Supplies Expense; Miscellaneous Expense. Journal entry explanations may be omitted. 2.Prepare T accounts, using the account titles in (1). Post the journal entries to these accounts, p lacing the appropriate letter to the left of each amount to identify the transactions. Determine the account balances after all posting is complete. Accounts containing only a single entry do not need a balance. 3.Prepare an unadjusted trial balance as of August 31, 2019. 4.Determine the following: a. Amount of total revenue recorded in the ledger. b. Amount of total expenses recorded in the ledger. c. Amount of net income for August. 5.Determine the increase or decrease in owner's equity for August.Journal entries and trial balance On October 1, 2019, jay Pryor established an interior decorating business, Pioneer Designs. During the month, jay completed the following transactions related to the business: Oct. 1. Jay transferred cash from a personal bank account to an account to be used for the business, 18,000. 4. Paid rent for period of October 4 to end of month, 3,000. 10. Purchased a used truck for 23,750, paying 3,750 cash and giving a note payable for the remainder. 13. Purchased equipment on account, 10,500. 14. Purchased supplies for cash, 2,100. 15. Paid annual premiums on property and casualty insurance, 3,600. 15. Received cash for job completed, 8,950. Enter the following transact ions on Page 2 of the two-column journal: 21. Paid creditor a portion of the amount owed for equipment purchased on October 13, 2,000. 24. Recorded jobs completed on account and sent invoices to customers, 14,150. 26. Received an invoice for truck expenses, to be paid in November, 700. 27. Paid utilities expense, 2,240. 27. Paid miscellaneous expenses, 1,100. Oct. 29. Received cash from customers on account, 7,600. 30. Paid wages of employees, 4,800. 31. Withdrew cash for personal use, 3,500. Instructions 1.Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted. 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 16 Equipment 18 Truck 21 Notes Payable 22 Accounts Payable 31 Jay Pryor, Capital 32 Jay Pryor, Drawing 41 Fees Earned 51 Wages Expense 53 Rent Expense 54 Utilities Expense 55 Truck Expense 59 Miscellaneous Expense 2.Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. 3.Prepare an unadjusted trial balance for Pioneer Designs as of October 31, 2019. 4.Determine the excess of revenues over expenses for October. 5.Can you think of any reason why the amount determined in (4) might not be the net income for October?Journal entries and trial balance Valley Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on July 31, 2019, follows: The following business transactions were completed by Valley Realty during August 2019: Aug. 1. Purchased office supplies on account, 3,150. 2. Paid rent on office for month, 7,200. 3. Received cash from clients on account, 83,900. 5. Paid insurance premiums, 12,000. 9. Returned a portion of the office supplies purchased on August 1, receiving full credit for their cost, 400. Aug. 17. Paid advertising expense, 8,000. 23. Paid creditors on account, 13,750. Enter the following transactions on Page 19 of the two-column journal: 29. Paid miscellaneous expenses, 1,700. 30. Paid automobile expense (including rental charges for an automobile), 2,500. 31. Discovered an error in computing a commission during July; received cash from the salesperson for the overpayment, 2,000. 31. Paid salaries and commissions for the month, 53,000. 31. Recorded revenue earned and billed to clients during the month, 183,500. 31. Purchased land for a future building site for 75,000, paying 7,500 in cash and giving a note payable for the remainder. 31. Withdrew cash for personal use, 1,000. 31. Rented land purchased on August 31 to a local university for use as a parking lot during football season (September, October, and November); received advance payment of 5,000. Instructions 1.Record the August 1 balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark () in the Posting Reference column. 2.Journalize the transactions for August in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3.Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4.Prepare an unadjusted trial balance of the ledger as of August 31, 2019. 5.Assume that the August 31 transaction for Cindy Getmans cash withdrawal should have been 10,000. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this error a transposition or slide?Corrected trial balance Tech Support Services has the following unadjusted trial balance as of January 31, 2019: Tech Support Services Unadjusted Trial Balance January 31, 2019 Debit Balances Credit Balances Cash 25,550 Accounts Receivable 44,050 Supplies 6,660 Prepaid Insurance 3,600 Equipment 162,000 Notes Payable 75,000 Accounts Payable 13,200 Thad Engelberg, Capital 101,850 Thad Engelberg, Drawing 33,000 Fees Earned 534,000 Wages Expense 306,000 Rent Expense 62,550 Advertising Expense 23,850 Gas, Electricity, and Water Expense 17,000 684,260 724,050 The debit and credit totals are not equal as a result of the following errors: a.The cash entered on the trial balance was overstated by 8,000. b.A cash receipt of 4,100 was posted as a debit to Cash of 1,400. c.A debit of 12,350 to Accounts Receivable was not posted. d.A return of 235 of defective supplies was erroneously posted as a 325 credit to Supplies. e.An insurance policy acquired at a cost of 3,000 was posted as a credit to Prepaid Insurance. f.The balance of Notes Payable was overstated by 21,000. g.A credit of 3,450 in Accounts Payable was overlooked when the balance of the account was determined. h.A debit of 6,000 for a withdrawal by the owner was posted as a debit to Thad Engelberg, Capital. i.The balance of 28,350 in Advertising Expense was entered as 23,850 in the trial balance. j.Miscellaneous Expense, with a balance of 4,600, was omitted from the trial balance. Instructions 1.Prepare a corrected unadjusted trial balance as of January 31, 2019. 2.Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.The transactions completed by PS Music during June 2019 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the business's operations: July 1. Peyton Smith made an additional investment in PS Music by depositing 5,000 in PS Music's checking account. 1. Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music: store. Paid rent for July, 1,750. 1. Paid a premium of 2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period. 2. Received 1,000 cash from customers on account. 3. On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for SO hours per month for a monthly fee of 3,600. Any additional hours beyond SO will be billed to KXMD at 40 per hour. In accordance with the contract, Peyton received 7,200 from KXMD as an advance payment for the first two months. 3. Paid 250 to creditors on account. 4. Paid an attorney 900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.) 5. Purchased office equipment on account from Office Mart, 7,500. 8. Paid for a newspaper advertisement, 200. 11. Received 1,000 for serving as a disc jockey for a party. 13. Paid 700 to a local audio electronics store for rental of digital recording equipment. 11. Paid wages of 1,200 to receptionist and part-time assistant. Enter the following transactions on Page 2 of the two-column journal: 16. Received 2,000 for serving as a disc jockey for a wedding reception. 18. Purchased supplies on account, 850. July 21. Paid 620 to Upload Music for use of its current music demos in making various music sets. 22. Paid 800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July. 23. Served as disc jockey for a party for 2,500. Received 750, with the remainder due August 4, 2019. 27. Paid electric bill, 915. 28. Paid wages of 1,200 to receptionist and part-time assistant. 29. Paid miscellaneous expenses, 540. 30. Served as a disc jockey for a charity ball for 1,500. Received 500, with the remainder due on August 9, 2019. 31. Received 3,000 for serving as a disc jockey for a party. 31. Paid 1,400 royalties (music expense) to National Music Clearing for use of various artists' music during July. 31. Withdrew l,250 cash from PS Music for personal use. PS Music's chart of accounts and the balance of accounts as of July 1, 2019 (all normal balances), are as follows: 11 Cash 3,920 12 Accounts receivable 1,000 14 Supplies 170 15 Prepaid insurance 17 Office Equipment 21 Accounts payable 250 23 Unearned Revenue 31 Peyton smith, Drawing 4,000 32 Fees Earned 500 41 Wages Expense 6,200 50 Office Rent Expense 400 51 Equipment Rent Expense 800 52 Utilities Expense 675 53 Supplies Expense 300 54 music Expense 1,590 55 Advertising Expense 500 56 Supplies Expense 180 59 Miscellaneous Expense 415 Instructions 1.Enter the July 1, 2019, account balances in the appropriate balance column of a four-column account. Write Balance in the Item column and place a check mark () in the Posting Reference column. (Hint: Verify the equality of the debit and credit balances in the ledger before proceeding with the next instruction.) 2.Analyze and journalize each transaction in a two-column journal beginning on Page 1, omitting journal entry explanations. 3.Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting. 4.Prepare an unadjusted trial balance as of July 31, 2019.2.1CP2.5CP2.6CP2.7CPHow are revenues and expenses reported on the income statement under (a) the cash basis of accounting and (b) the accrual basis of accounting?Is the matching concept related to (a) the cash basis of accounting or (b) the accrual basis of accounting?Why are adjusting entries needed at the end of an accounting period?What is the difference between adjusting entries and correcting entries?Identify the four different categories of adjusting entries frequently required at the end of an accounting period.If the effect of the debit portion of an adjusting entry is to increase the balance of an asset account, which of the following statements describes the effect of the credit portion of the entry? a. Increases the balance of a revenue account. b. Increases the balance of an expense account. c. Increases the balance of a liability account.If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following statements describes the effect of the debit portion of the entry? a. Increases the balance of a revenue account. b. Increases the balance of an expense account. c. Increases the balance of an asset account.Does every adjusting entry affect net income for period? Explain.9DQ(a) Explain the purpose of the two accounts: Depreciation Expense and Accumulated Depreciation. (b) What is the normal balance of each account? (c) Is it customary for the balances of the two accounts to be equal in amount? (d) In what financial statements, if any, will each account appear?Accounts requiring adjustment Indicate with a Yes or no whether or not each of the following accounts normally requires an adjusting entry: a. Building b. Cash c. Wages Expense d. Miscellaneous Expense e. Nancy Palmer, Capital f. Prepaid InsuranceAccounts requiring adjustment Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusting entry: a. Accumulated Depreciation b. Frank Kent, Drawing c. Land d. Salaries Payable e. Supplies f. Unearned Rent3.2APEType of adjustment Classify the following items as (1) prepaid expense, (2) unearned revenue, (3) accrued revenue, or (4) accrued expense: a. Cash received for services not yet rendered. b. Insurance paid for the next year. c. Interest revenue earned but not received. d. Salaries owed but not yet paid.Adjustment for accrued revenues At the end of the current year, 17,555 of fees have been earned but have not been billed to clients. Journalize the adjusting entry (include an explanation) to record the accrued fees.Adjustment for accrued expense Prospect Realty Co. pays weekly salaries of 27,600 for a six-day workweek (Monday thru Saturday). Journalize the necessary adjusting entry (include an explanation) assuming that the accounting period ends on Friday.Adjustment for accrued expense We-Sell Realty Co. pays weekly salaries of 11,800 on Friday for a five-day workweek ending on that day. Journalize the necessary adjusting entry (include an explanation) assuming that the accounting period ends on Wednesday.Adjustment for unearned revenue On June 1, 2019, Herbal Co. received 18,900 for the rent of land for 12 months. Journalize the adjusting entry (include an explanation) required for unearned rent on December 31, 2019.Adjustment for unearned revenue The balance in the unearned fees account, before adjustment at the end of the year, is 272,500. Journalize the adjusting entry (include an explanation) required if the amount of unearned fees at the end of the year is 189,750.Adjustment for prepaid expense The prepaid insurance account had a beginning balance of 4,500 and was debited for 16,600 of premiums paid during the year. Journalize the adjusting entry (include an explanation) required at the end of the year, assuming the amount of unexpired insurance related to future periods is 5,600.Adjustment for prepaid expense The supplies account had a beginning balance of 3,375 and was debited for 6,450 for supplies purchased during the year. Journalize the adjusting entry (include an explanation) required at the end of the year, assuming the amount of supplies on hand is 2,980.Adjustment for depreciation The estimated amount of depreciation on equipment for the current year is 7,700. Journalize the adjusting entry (include an explanation) to record the depreciation.Adjustment for depreciation The estimated amount of depreciation on equipment for the current year is 6,880. Journalize the adjusting entry (include an explanation) to record the depreciation.Effect of omitting adjustments For the year ending April 30, Urology Medical Services Co. mistakenly omitted adjusting entries for (1) 1,400 of supplies that were used, (2) unearned revenue of 6,600 that was earned, and (3) insurance of 9,000 that expired. Indicate the effect of the errors on (a) revenues, (b) expenses, and (c) net income for the year ended April 30.Effect of omitting adjustments For the year ending August 31, Mammalia Medical Co. mistakenly omitted adjusting entries for (1) depreciation of 5,800, (2) fees earned that were not billed of 44,500, and (3) accrued wages of 7,300. Indicate the effect of the errors on (a) revenues, (b) expenses, and (c) net income for the year ended August 31.Effect of errors on adjusted trial balance For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. a. The adjustment for accrued wages of 5,200 was journalized as a debit to Wages Expense for 5,200 and a credit to Accounts Payable for 5,200. b. The entry for 1,125 of supplies used during the period was journalized as a debit to Supplies Expense of 1,125 and a credit to Supplies of 1,152.Effect of errors on adjusted trial balance For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. a. The adjustment of 9,800 for accrued fees earned was journalized as a debit to Accounts Receivable for 9,800 and a credit to Fees Earned for 8,900. b. The adjustment of depreciation of 3,600 was omitted from the end-of-period adjusting entries.Vertical analysis Two income statements for Hemlock Company follow: Hemlock Company Income Statements For Years Ended December 31 2019 2018 Fees earned 725,000 615,000 Operating expenses 435,000 356,700 Operating income 290,000 258,300 a. Prepare a vertical analysis of Hemlock Company's income statements. b. Does the vertical analysis indicate a favorable or an unfavorable trend?Vertical analysis Two income statements for Cornea Company follow: Cornea Company Income Statements For Years Ended December 31 2019 2018 Fees earned 1,640,000 1,300,000 Operating expenses 869,200 715,000 Operating income 770,800 585,000 a. Prepare a vertical analysis of Cornea Company's income statements. b. Does the vertical analysis indicate a favorable or an unfavorable trend?Classifying types of adjustments Classify the following items as (a) accrued revenue, (b) accrued expense, (c) unearned revenue, or (d) prepaid expense: 1.Bill for ads that appeared in prior month's local newspaper. 2.Fees received but not yet earned. 3.Fees earned but not yet received. 4.Premium paid on a one-year insurance policy. 5.Rent received in advance for rental of office space. 6.Supplies on hand. 7.Rent paid in advance. 8.Wages owed but payable in the following period.Classifying adjusting entries The following accounts were taken from the unadjusted trial balance of Legislative Results Inc., a congressional lobbying firm. Indicate whether or not each account would normally require an adjusting entry. If the account normally requires an adjusting entry, use the following notation to indicate the type of adjustment: ARAccrued Revenue AEAccrued Expense URUnearned Revenue PEPrepaid Expense To illustrate, the answer for the first account follows: Account Answer Accounts Receivable Normally requires adjustment (AR). Cash Harriet Kasun, Capital Interest Expense Interest Receivable Land Office Equipment Prepaid Rent Supplies Unearned Fees Wages ExpenseAdjusting entry for accrued fees At the end of the current year, 59,500 of fees have been earned but have not been billed to clients. a. Journalize the adjusting entry to record the accrued fees. b. If the cash basis rather than the accrual basis had been used, would an adjusting entry have been necessary? Explain.Effect of omitting adjusting entry The adjusting entry for accrued fees was omitted at the end of the current year. Indicate which items will be in error, because of the omission, on (a) the income statement for the current year and (b) the balance sheet at the end of the year. Also indicate whether the items in error will be overstated or understated.Adjusting entries for accrued salaries Garcia Realty Co. pays weekly salaries of 17,250 on Friday for a five-day workweek ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends (a) on Wednesday and (b) on Thursday.Determining wages paid The wages payable and wages expense accounts at May 31, after adjusting entries have been posted at the end of the first month of operations, are shown in the following T accounts: Wages Payable Wages Expense Bal. 7,175 Bal. 73,250 Determine the amount of wages paid during the month.Effect of omitting adjusting entry Accrued salaries owed to employees for October 30 and 31 are not considered in preparing the financial statements for the year ended October 31. Indicate which items will be erroneously stated, because of the error, on (a) the income statement for the year and (b) the balance sheet as of October 31. Also indicate whether the items in error will be overstated or understated.Effect of omitting adjusting entry When preparing the financial statements for the year ended October 31, accrued salaries owed to employees for October 30 and 31 were omitted. The accrued salaries were included in the first salary payment in November. Indicate which items will be erroneously stated, because of failure to correct the initial error, on (a) the income statement for the month of November and (b) the balance sheet as of November 30.Adjusting entries for unearned fees The balance in the unearned fees account, before adjustment at the end of the year, is 18,000. Journalize the adjusting entry required if the amount of unearned fees at the end of the year is 3,600.Effect of omitting adjusting entry At the end of January, the first month of the business year, the usual adjusting entry transferring rent earned from the unearned rent account to a revenue account was omitted. Indicate which items will be incorrectly stated, because of the error, on (a) the income statement for January and (b) the balance sheet as of January 31. Also indicate whether the items in error will be overstated or understated.Adjusting entry for supplies The balance in the supplies account, before adjustment at the end of the year, is 4,850. Journalize the adjusting entry required if the amount of supplies on hand at the end of the year is 880.Determining supplies purchased The supplies and supplies expense accounts at February 28, after adjusting entries have been posted at the end of the first year of operations, are shown in the following T accounts: supplies Supplies Expenses Bal. 690 Bal. 4,110 Determine the amount of supplies purchased during the year.Effect of omitting adjusting entry At August 31, the end of the first month of operations, the usual adjusting entry transferring prepaid insurance expired to an expense account is omitted. Which items will be incorrectly stated, because of the error, on (a) the income statement for August and (b) the balance sheet as of August 31? Also indicate whether the items in error will be overstated or understated.Adjusting entries for prepaid insurance The balance in the prepaid insurance account, before adjustment at the end of the year, is 27,000. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: (a) the amount of insurance expired during the year is 20,250; (b) the amount of unexpired insurance applicable to future periods is 6,750.Adjusting entries for prepaid insurance The prepaid insurance account had a balance of 3,000 at the beginning of the year. The account was debited for 32,500 for premiums on policies purchased during the year. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: (a) the amount of unexpired insurance applicable to future periods is 4,800; (b) the amount of insurance expired during the year is 30,700.Adjusting entries for unearned and accrued fees The balance in the unearned fees account, before adjustment at the end of the year, is 97,770. Of these fees, 39,750 have been earned. In addition, 24,650 of fees have been earned but have not been billed. Journalize the adjusting entries (a) to adjust the unearned fees account and (b) to record the accrued fees.Adjusting entries for prepaid and accrued taxes A-Z Construction Company was organized on May 1 of the current year. On May 2, A-Z Construction prepaid 18,480 to the city for taxes (license fees) for the next 12 months and debited the prepaid taxes account. A-Z Construction is also required to pay in January an annual tax (on property) for the current calendar year of 45,000. a. Journalize the two adjusting entries required to bring the accounts affected by the two taxes up to date as of December 31, the end of the current year. b. What is the amount of tax expense for the current year?Adjustment for depreciation The estimated amount of depreciation on equipment for the current year is 8,200. Journalize the adjusting entry to record the depreciation.Determining fixed asset's book value The balance in the equipment account is 3,150,000, and the balance in the accumulated depreciationequipment account is 2,075,000. a. What is the book value of the equipment? b. Does the balance in the accumulated depreciation account mean that the equipment's loss of value is 2,075,000? Explain.Book value of fixed assets In a recent balance sheet, Microsoft Corporation reported Property, Plant, and Equipment of 27,804 million and Accumulated Depreciation of 14,793 million. a. What was the book value of fixed assets? b. Would the book value of Microsoft's fixed assets normally approximate their market values?Effects of errors on financial statements For a recent period, the balance sheet for Costco Wholesale Corporation reported accrued expenses of 3,446 million. For the same period, Costco reported income before income taxes of 3,197 million. Assume that the adjusting entry for 3,446 million of accrued expenses was not recorded at the end of the current period. What would have been the income (loss) before income taxes?Effects of errors on financial statements For a recent year, the balance sheet for The Campbell Soup Company includes accrued expenses of 553 million. The income before taxes for Campbell for the year was 1,073 million. a. Assume the adjusting entry for 553 million of accrued expenses was not recorded at the end of the year. By how much would income before taxes have been misstated? b. What is the percentage of the misstatement in (a) to the reported income of 1,073 million? Round to one decimal place.Effects of errors on financial statements The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year (34,900) and (b) accrued wages (12,770). Indicate the effect of each error, considered individually, on the income statement for the current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet. Set up a table similar to the following, and record your answers by inserting the dollar amount in the appropriate spaces. Insert a zero if the error does not affect the item. Error(a) Error(b) Over-stated Under-stated Over-stated Under-Stated 1. Revenue for the year would be 2. Expenses for the year would be 3. Net income for the year would be 4. Assets at July 31 would be 5. Liabilities at July 31 would be 6. Owners equity at July 31 would beEffects of errors on financial statements If the net income for the current year had been 196,400 in Exercise 323, what would have been the correct net income if the proper adjusting entries had been made?Adjusting entries for depreciation; effect of error On December 31, a business estimates depreciation on equipment used during the first year of operations to be 13,900. a. Journalize the adjusting entry required as of December 31. b. If the adjusting entry in (a) were o mitted, which items would be erroneously stated on (1) the income statement for the year and (2) the balance sheet as of December 31?Adjusting entries from trial balances The unadjusted and adjusted trial balances for American Leaf Company on October 31, 2019, follow: Journalize the five entries that adjusted the accounts at October 31, 2019. None of the accounts were affected by more than one adjusting entry.Adjusting entries from trial balances The accountant for Eva's Laundry prepared the following unadjusted and adjusted trial balances. Assume that all balances in the unadjusted trial balance and the amounts of the adjustments are correct. Identify the errors in the accountant's adjusting entries, assuming that none of the accounts were affected by more than one adjusting entry.3.28EX3.29EX3.30EXAdjusting entries On December 31, the following data were accumulated for preparing the adjusting entries for Bellingham Realty: The supplies account balance on December 31 is 1,375. The supplies on hand on December 31 are 280. The unearned rent account balance on December 31 is 9,000 representing the receipt of an advance payment on December 1 of four months' rent from tenants. Wages accrued but not paid at December 31 are 3,220. Fees earned but unbilled at December 31 are 18,750. Depreciation of office equipment is 2,900. Instructions 1. Journalize the adjusting entries required at December 31. 2. Briefly explain the difference between adjusting entries and entries that would be made to correct errors.3.2APRAdjusting entries Milbank Repairs Service, an electronics repair store, prepared the following unadjusted trial balance at the end of its first year of operations: Milbank Repairs Service Unadjusted Trial Balance June 30,2019 Debit Balances Credit Balances Cash 10,350 Accounts Receivable 67,500 Supplies 16,200 Equipment 166,100 Accounts Payable 15,750 Unearned Fees 18,000 Nancy Townes, Capital 171,500 Nancy Townes, Drawing 13,500 Fees Earned 294,750 Wages Expense 94,500 Rent Expense 72,000 Utilities Expense 51,750 Miscellaneous Expense 8,100 500,000 500,000 For preparing the adjusting entries, the following data were assembled: Fees earned but unbilled on June 30 were 7,380. Supplies on hand on June 30 were 2,775. Depreciation of equipment was estimated to be 11,000 for the year. The balance in unearned fees represented the June 1 receipt in advance for services to be provided. During June, 16,500 of the services were provided. Unpaid wages accrued on June 30 were 3,880. Instructions 1.Journalize the adjusting entries necessary on June 30, 2019. 2.Determine the revenues, expenses, and net income of Milbank Repairs Service before the adjusting entries. 3.Determine the revenues, expenses, and net income of Milbank Repairs Service after the adjusting entries. 4.Determine the effect of the adjusting entries on Nancy Townes, Capital.Adjusting entries Good Note Company specializes in the repair of music equipment and is owned and operated by Robin Stahl. On November 30, 2019, the end of the current year, the accountant for Good Note prepared the following trial balances: Instructions Journalize the seven entries that adjusted the accounts at November 30. None of the accounts were affected by more than one adjusting entry.Adjusting entries and adjusted trial balances Pitman Company is a small editorial services company owned and operated by Jan Pitman. On October 31, 2019 the end of the current year, Pitman Company's accounting clerk prepared the following unadjusted trial balance: Pitman Company Unadjusted Trial Balance October 31,2019 Debit Balances Credit Balances Cash 7,500 Accounts Receivable 38,400 Prepaid Insurance 7,200 Supplies 1,980 Land 112,500 Building 300,250 Accumulated DepreciationBuilding 87,550 Equipment 135,300 Accumulated DepreciationEquipment 97,950 Accounts Payable 12,150 Unearned Rent 6,750 Jan Pitman, Capital 371,000 Jan Pitman, Drawing 15,000 Fees Earned 324.600 Salaries and Wages Expense 193,370 Utilities Expense 42,375 Advertising Expense 22,800 Repairs Expense 17,250 Miscellaneous Expense 6,075 900,000 900,000 The data needed to determine year-end adjustments are as follows: Unexpired insurance at October 31, 600. Supplies on hand at October 31, 675. Depreciation of building for the year, 12,000. Depreciation of equipment for the year, 8,600. Unearned rent at October 31, 2,250. Accrued salaries and wages at October 31, 2,800. Fees earned but unbilled on October 31, 10,050. Instructions 1.Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable, Rent Revenue, Insurance Expense, Depreciation Expense-Building, Depreciation Expense-Equipment, and Supplies Expense. 2.Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance.Adjusting entries and errors At the end of April, the first month of operations, the following selected data were taken from the financial statements of Shelby Crawford, an attorney: Net income for April 120,000 Total assets at April 30 750,000 Total liabilities at April 30 300,000 Total owner's equity at April 30 450,000 In preparing the financial statements, adjustments for the following data were overlooked: Supplies used during April, 2,750. Unbilled fees earned at April 30, 23,700. Depreciation of equipment for April, 1,800. Accrued wages at April 30, 1,400. Instructions 1. Journalize the entries to record the omitted adjustments. 2. Determine the correct amount of net income for April and the total assets, liabilities, and owner's equity at April 30. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. The adjustment for supplies used is presented as an example.Adjusting entries On May 31, the following data were accumulated to assist the accountant in preparing the adjusting entries for Oceanside Realty: Fees accrued but unbilled at May 31 are 19,750. The supplies account balance on May 31 is 12,300. The supplies on hand at May 31 are 4,150. Wages accrued but not paid at May 31 are 2,700. The unearned rent account balance at May 31 is 9,000, representing the receipt of an advance payment on May 1 of three months rent from tenants. Depreciation of office equipment is 3,200. Instructions 1. Journalize the adjusting entries required at May 31. 2. Briefly explain the difference between adjusting entries and entries that would be made to correct errors.3.2BPRAdjusting entries Crazy Mountain Outfitters Co., an outfitter store for fishing treks, prepared the following unadjusted trial balance at the end of its first year of operations: Crazy Mountain Outfitters Co. Unadjusted Trial Balance April 30,2019 Debit Balances Credit Balances Cash 11,400 Accounts Receivable 72,600 Supplies 7,200 Equipment 112,000 Accounts Payable 12,200 Unearned Fees 19,200 John Bridger, Capital 137,800 John Bridger, Drawing 10,000 Fees Earned 305,800 Wages Expense 157,800 Rent Expense 55,000 Utilities Expense 42,000 Miscellaneous Expense 7,000 475,000 475,000 For preparing the adjusting entries, the following data were assembled: Supplies on hand on April 30 were 1,380. Fees earned but unbilled on April 30 were 3,900. Depreciation of equipment was estimated to be 3,000 for the year. Unpaid wages accrued on April 30 were 2,475. The balance in unearned fees represented the April 1 receipt in advance for services to be provided. Only 14,140 of the services was provided between April 1 and April 30. Instructions 1.Journalize the adjusting entries necessary on April 30, 2019. 2.Determine the revenues, expenses, and net income of Crazy Mountain Outfitters Co. before the adjusting entries. 3.Determine the revenues, expenses, and net income of Crazy Mountain Outfitters Co. after the adjusting entries. 4.Determine the effect of the adjusting entries on John Bridger, Capital.Adjusting entries The Signage Company specializes in the maintenance and repair of signs, such as billboards. On March 31, 2019, the accountant for The Signage Company prepared the trial balances shown at the top of the following page. Instructions Journalize the seven entries that adjusted the accounts at March 31. None of the accounts were affected by more than one adjusting entry.Adjusting entries and adjusted trial balances Reece Financial Services Co., which specializes in appliance repair services, is owned and operated by Joni Reece. Reece Financial Services' accounting clerk prepared the following unadjusted trial balance at July 31, 2019: Reece Financial Services Co. Unadjusted Trial Balance July 31,2019 Debit Balances Credit Balances Cash 10,200 Accounts Receivable 34,750 Prepaid Insurance 6.000 Supplies 1,725 Land 50,000 Building 155,750 Accumulated DepreciationBuilding 62,850 Equipment 45,000 Accumulated DepreciationEquipment 17,650 Accounts Payable 3,750 Unearned Rent 3,600 Joni Reece, Capital 153,550 Joni Reece, Drawing 8,000 Fees Earned 158,600 Salaries and Wages Expense 56,850 Utilities Expense 14,100 Advertising Expense 7,500 Repairs Expense 6,100 Miscellaneous Expense 4,025 400,000 400,000 The data needed to determine year-end adjustments are as follows: Depreciation of building for the year, 6,400. Depreciation of equipment for the year, 2,800. Accrued salaries and wages at July 31, 900. Unexpired insurance at July 31, 1,500. Fees earned but unbilled on July 31, 10,200. Supplies on hand at July 31, 615. Rent unearned at July 31, 300. Instructions 1.Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable, Rent Revenue, Insurance Expense, Depreciation ExpenseBuilding, Depreciation ExpenseEquipment, and Supplies Expense. 2.Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance.3.6BPRThe unadjusted trial balance that you prepared for PS Music at the end of Chapter 2 should appear as follows: The data needed to determine adjustments are as follows: During July, PS Music provided guest disc jockeys for KXMD for a total of 115 hours. For information on the amount of the accrued revenue to be billed to KXMD, see the contract described in the July 3 transaction at the end of Chapter 2. Supplies on hand at July 31, 275. The balance of the prepaid insurance account relates to the July 1 transaction in Chapter 2. Depreciation of the office equipment is 50. The balance of the unearned revenue account relates to the contract between PS Music and KXMD, described in the July 3 transaction in Chapter 2. Accrued wages as of July 31 were 140. Instructions 1.Prepare adjusting journal entries. You will need the following additional accounts: 18 Accumulated Depreciation- Office Equipment 22 Wages Payable 57 Insurance Expense 58 Depreciation Expense 2.Post the adjusting entries, inserting balances in the accounts affected. 3.Prepare an adjusted trial balance.3.1CPEthics in Action Daryl Kirby opened Squid Realty Co. on January 1, 2018. At the end of the first year, the business needed additional capital. On behalf of Squid Realty Co., Daryl applied to Ocean National Bank for a loan of 375,000. Based on Squid Realty Co.'s financial statements, which had been prepared on a cash basis, the Ocean National Bank loan officer rejected the loan as too risky. After receiving the rejection notice, Daryl instructed his accountant to prepare the financial statements on an accrual basis. These statements included 65,000 in accounts receivable and 25,000 in accounts payable. Daryl then instructed his accountant to record an additional 30,000 of accounts receivable for commissions on property for which a contract had been signed on December 28, 2018. The title to the property is to transfer on January 5, 2019, when an attorney formally records the transfer of the property to the buyer. Daryl then applied for a 375,000 loan from Free Spirit Bank, using the revised financial statements. On this application, Daryl indicated that he had not previously been rejected for credit. Discuss the ethical and professional conduct of Daryl Kirby in applying for the loan from Free Spirit Bank.3.4CP3.5CPWhy do some accountants prepare an end-of-period spread sheet?Describe the nature of the assets that compose the following .sections of a balance sheet: (a) current assets and (b) property, plant, and equipment.3DQ4DQWhy are closing entries required at the end of an accounting period?What is the difference between adjusting entries and closing entries?What is the purpose of the post-closing trial balance?8DQWhat is the natural business year?10DQFlow of accounts into financial statements The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, statement of owner's equity, or balance sheet. 1.Accounts Payable 2.Depreciation Expense 3.Nat Hager, Capital (beginning of period) 4.Office Equipment 5.Rent Revenue 6.Supplies Expense 7.Unearned Rent 8.Wages PayableFlow of accounts into financial statements The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, statement of owner's equity, or balance sheet. 1.Accumulated Depreciation 2.Cash 3.Fees Earned 4.Insurance Expense 5.Prepaid Rent 6.Supplies 7.Tina Greer, Drawing 8.Wages ExpenseStatement of owner's equity Marcie Davies owns and operates Gemini Advertising Services. On January 1, 2018, Marcie Davies, Capital had a balance of 618,500. During the year, Marcie invested an additional 40,000 and withdrew 15,000. For the year ended December 31, 2018, Gemini Advertising Services reported a net income of 92,330. Prepare a statement of owner's equity for the year ended December 31, 2018.Statement of owner's equity Blake Knudson owns and operates Grab Bag Delivery Services. On January 1, 2018, Blake Knudson, Capital had a balance of 918,000. During the year, Blake made no additional investments and withdrew l5,000. For the year ended December 31, 2018, Grab Bag De livery Services reported a net loss of 43,500. Prepare a statement of owner's equity for the year ended December 31, 2018.Classified balance sheet The following accounts appear in an adjusted trial balance of Waterloo Consulting. Indicate whether each account would be reported in the (a) current asset; (b) property, plant, and equipment; (c) current liability; (d) long-term liability; or (e) owner's equity section of the December 31, 2018, balance sheet of Waterloo Consulting. 1.Building 2.Cindy Sue Delaney, Capital 3.Notes Payable (due in five years) 4.Prepaid Rent 5.Salaries Payable 6.Supplies 7.Taxes Payable 8.Unearned Service FeesClassified balance sheet The following accounts appear in an adjusted trial balance of Kangaroo Consulting. Indicate whether each account would be reported in the (a) current asset; (b) property, plant, and equipment; (c) current liability; (d) long-term liability; or (e) owner's equity section of the December 31, 2018, balance sheet of Kangaroo Consulting. l.Accounts Payable 2.Accounts Receivable 3.Accumulated Depreciation-Building 4.Cash 5.Lea Gabel, Capital 6.Note Payable (due in ten years) 7.Supplies 8.Wages PayableClosing entries After the accounts have been adjusted at December 31, the end of the fiscal year, the following balances were taken from the ledger of Pioneer Delivery' Services Co.: Kerry Buckner, Capital 9,556,300 Kerry Buckner, Drawing 80,000 Fees Earned 1,878,400 Wages Expense 1,415,500 Rent Expense 125,000 Supplies Expense 30,600 Miscellaneous expense 22,100 Journalize the two entries required to close the accounts.Closing entries After the accounts have been adjusted at April 30, the end of the fiscal year, the following balances were taken from the ledger of Nuclear Landscaping Co.: Felix Godwin, Capital 643,600 Felix Godwin, Drawing 10,500 Fees Earned 356,500 Wages Expense 283,100 Rent Expense 56,000 Supplies Expense 11,500 Miscellaneous Expense 13,000 Journalize the two entries required to close the accounts.Accounting cycle From the following list of steps in the accounting cycle, identify what two steps are missing: a.Transactions are analyzed and recorded in the journal. b.An unadjusted trial balance is prepared. c.Adjustment data are assembled and analyzed. d.An optional end-of-period spreadsheet is prepared. e.Adjusting entries are journalized and posted to the ledger. f.An adjusted trial balance is prepared. g.Closing entries are journalized and posted to the ledger. h.A post-closing trial balance is prepared.Accounting cycle From the following list of steps in the accounting cycle, identify what two steps are missing: a.Transactions are analyzed and recorded in the journal. b.Transactions are posted to the ledger. c.An unadjusted trial balance is prepared. d.An optional end-of-period spreadsheet is prepared. e.Adjusting entries are journalized and posted to the ledger. f.An adjusted trial balance is prepared. g.Financial statements are prepared. h.A post-closing trial balance is prepared.Working capital and current ratio Current assets and current liabilities for HQ Properties Company follow: 2019 2018 Current assets 2,175,000 1,900,000 Current liabilities 1,500,000 1,250,000 a.Determine the working capital and current ratio for 2019 and 2018. b.Does the change in the current ratio from 2018 to 2019 indicate a favorable or an unfavorable change?Working capital and current ratio Current assets and current liabilities for Brimstone Company follow: 2019 2018 Current assets 1,586,250 1,210,000 Current liabilities 705,000 550,000 a.Determine the working capital and current ratio for 2019 and 2018. b.Does the change in the current ratio from 2018 to 2019 indicate a favorable or an unfavorable change?Flow of accounts into financial statements The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, statement of owner's equity, or balance sheet. 1.Accounts Payable 2.Accounts Receivable 3.Cash 4.Eddy Rosewood, Drawing 5.Fees Earned 6.Supplies 7.Unearned Rent 8.Utilities Expense 9.Wages Expense 10.Wages PayableClassifying accounts Balances for each of the following accounts appear in an adjusted trial balance. Identify each as (a) asset, (b) liability, (c) revenue, or (d) expense. 1.Accounts Receivable 2.Equipment 3.Fees Earned 4.Insurance Expense 5.Land 6.Prepaid Rent 7.Rent Revenue 8.Salary Expense 9.Salary Payable 10.Supplies 11.Unearned Rent 12.Wages PayableFinancial statements from the end-of-period spreadsheet Bamboo Consulting is a consulting firm owned and operated by Lisa Gooch. The following end-of-period spreadsheet was prepared for the year ended July 31, 2019: Based on the preceding spreadsheet, prepare an income statement, statement of owner's equity, and balance sheet for Bamboo Consulting.Financial statements from the end-of-period spreadsheet Elliptical Consulting is a consulting firm owned and operated by Jayson Neese. The following end-of-period spreadsheet was prepared for the year ended June 30, 2019: Based on the preceding spreadsheet, prepare an income statement, statement of owner's equity, and balance sheet for Elliptical Consulting.Income statement The following account balances were taken from the adjusted trial balance for Laser Messenger Service, a deliver service firm, for the fiscal year ended April 30, 2019: Depreciation Expense 8.650 Fees Earned 674,000 Insurance Expense 1,500 Miscellaneous Expense 3,650 Rent Expense 60,000 Salaries Expense 336,900 Supplies Expense 4,100 Utilities Expense 41,200 Prepare an income statementIncome statement; net loss The following revenue and expense account balances were taken from the ledger of Wholistic Health Services Co. after the accounts had been adjusted on February 28, 2019, the end of the fiscal year: Depreciation Expense 7,500 Insurance Expense 3,000 Miscellaneous Expense 8,150 Rent Expense 54,000 Service Revenue 448,400 Supplies Expense 2,750 Utilities Expense 33,900 Wages Expense 360,000 Prepare an income statement.Income statement FedEx Corporation had the following revenue and expense account balances (in millions) for a recent year ending May 31: Depreciation Expense 2.61 Fuel Expense 3,720 Maintenance and Repairs Expense 2.099 Other Expense (Revenue) Net 9,121 Provision for Income Taxes 577 Purchased Transportation 8,483 Rentals and Landing Fees 2,682 Revenues 47.453 Salaries and Employee Benefits 17,110 Prepare an income statement.Statement of owners equity Apex Systems Co. offers its services to residents in the Seattle area. Selected accounts from the ledger of Apex Systems Co for the fiscal year ended December 31, 2019, are as follows: Bart Nesbit, Capital Bart Nesbit, Drawing Dec. 31 90,000 Jan. 1(2019) 1,375,000 Mar. 31 22,500 Dec. 31 90,000 Dec. 31 355,000 June 30 22,500 Sept. 30 22,500 Dec. 31 22,500 Prepare a .statement of owners equity for the year.Statement of owners equity; net loss Selected accounts from the ledger of Restoration Arts for the fiscal year ended April 30, 2019, are as follows: Prepare a statement of owners equity for the year.Classifying assets Identify each of the following as (a) a current asset or (b) property, plant, and equipment: 1.Accounts Receivable 2.Building 3.Cash 4.Land 5.Prepaid Insurance 6.SuppliesBalance sheet classification At the balance sheet date, a business owes a mortgage note payable of 375,000, the terms of which provide for monthly payments of 1,250. Explain how the liability should be classified on the balance sheet.Balance sheet Optimum Weight Loss Co. offers personal weight reduction consulting services to individuals. After all the accounts have been closed on November 30, 2019, the end of the fiscal year, the balances of selected accounts from the ledger of Optimum Weight Loss Co. are as follows: Accounts Payable 37,700 Accounts Receivable 116,750 Accumulated DepredationEquipment 186,400 Cash ? Equipment 474,150 Land 300,000 Prepaid Insurance 7,200 Prepaid Rent 21,000 Salaries Payable 9,000 Cheryl Viers, Capital 710,300 Supplies 4,800 Unearned Fees 18,000 Prepare a classified balance sheet that includes the correct balance for Cash.Balance sheet List the errors you find in the following balance sheet. Prepare a corrected balance sheet. Labyrinth Services Co. Balance Sheet For the Year Ended August 31,2019 Assets Current assets: Cash 18,500 Accounts payable 31,300 Supplies 6,500 Prepaid insurance 16,600 Land 225,000 Total current assets 297,900 Property, plant, and equipment: Building 400,000 Equipment 97,000 Total property, plant, and equipment 635,400 Total assets 933,300 Liabilities Current liabilities: Accounts receivable 41,400 Accumulated depreciationbuilding 155,000 Accumulated depreciationequipment 25,000 Net income 118,200 Total liabilities 339,600 Owner's Equity Wages payable 6,500 Ruben Daniel, capital 587,200 Total owner's equity 593,700 Total liabilities and owner's equity 933,300Identifying accounts to be closed From the list that follows, identify' the accounts that should he closed to the owners capital account at the end of the fiscal yean a. Accounts Receivable b. Accumulated Depreciation c. Building d. Depreciation Expense e. Fees Earned f. Jackie Lindsay, Capital g. Jackie Lindsay, Drawing h. Land i. Supplies j. Supplies Expense k. Unearned Rent l. Wages ExpenseClosing entries Prior to closing, total revenues were 12,840,000 and total expenses were 9,975,000. During the year, the owner made no additional investments and withdrew 630,000. After the closing entries, how much did the owners capital account change?Closing entries with net income Assume that the entry closing total revenues of 3,190,000 and total expenses of 2,350,000 has been made for the year. At the end of the fiscal year, Teresa Schafer, Capital has a credit balance of l,885,000 and Teresa Schafer, Drawing has a balance of 770,000. (a).Journalize the entry required to close the Teresa Schafer, Drawing account. (b).Determine the amount of Teresa Schafer, Capital at the end of the period.Closing entries with net loss Stylist Services Co. offers its services to individuals desiring to improve their personal images. After the accounts have been adjusted at July 31, the end of the fiscal year, the following balances were taken from the ledger of Stylist Services Co.: Marlena Fenton, Capital 1,060,000 Marlena Fenton, Drawing 75,000 Fees Earned 618,200 Wages Expense 388.400 Rent Expense 60,000 Supplies Expense 19,500 Miscellaneous Expense 6,150 Journalize the two entries required to close the accounts.Identifying permanent accounts Which of the following accounts will usually appear in the post-closing trial balance? a. Accounts Receivable b. Cash c. Depreciation Expense d. Fees Earned e. Doug Woods, Capital f. Doug Woods, Drawing g. Equipment h. Land i. Salaries Payable j. Unearned Rent k. Wages ExpensePost-closing trial balance An accountant prepared the following post-closing trial balance: La Casa Services Co. Post-Closing Trial Balance March 31, 2019 Debit Balances Credit Balances Cash 46,540 Accounts Receivable 122,260 Supplies 4,000 Equipment 127,200 Accumulated DepreciationEquipment 33,600 Accounts Payable 52,100 Salaries Payable 6,400 Unearned Rent 9,000 Sonya Flynn, Capital 198,900 462,400 137,600 Prepare a corrected post-closing trial balance. Assume that all accounts have normal balances and that the amounts shown are correct.Steps in the accounting cycle Rearrange the following steps in the accounting cycle in proper sequence: a.Transactions are analyzed and recorded in the journal. b.An unadjusted trial balance is prepared. c.Transactions are posted to the ledger. d.Adjustment data are assembled and analyzed. e.An adjusted trial balance is prepared. f.Adjusting entries are journalized and posted to the ledger. g.An optional end-of-period spreadsheet is prepared. h.A post-closing trial balance is prepared. i.Financial statements are prepared. j.Closing entries are journalized and posted to the ledger.Working capital and current ratio The following data (in thousands) were taken from recent financial statements of Under Armour, Inc.: December 31 Year 2 Year 1 Current assets 1,498,763 1,549,399 Current liabilities 478,810 421,627 a.Compute the working capital and the current ratio as of December 31, Year 2 and Year 1. Round to two decimal places. b.What conclusions concerning the companys ability to meet its financial obligations can you draw from part (a)?4.22EXCompleting an end-of-period spreadsheet List (a) through (j) in the order they would be performed in preparing and completing an end-of-period spreadsheet. a.Add the Debit and Credit columns of the Unadjusted Trial Balance columns of the spreadsheet to verify that the totals are equal. b.Add the Debit and Credit columns of the Balance Sheet and Income Statement columns of the spreadsheet to verify that the totals are equal. c.Add or deduct adjusting entry data to trial balance amounts, and extend amounts to the Adjusted Trial Balance columns. d.Add the Debit and Credit columns of the Adjustments columns of the spreadsheet to verify that the totals are equal. e.Add the Debit and Credit columns of the Balance Sheet and Income Statement columns of the spreadsheet to determine the amount of net income or net loss for the period. f.Add the Debit and Credit columns of the Adjusted Trial Balance columns of the spreadsheet to verify that the totals are equal. g.Enter the adjusting entries into the spreadsheet, based on the adjustment data. h.Enter the amount of net income or net loss for the period in the proper Income Statement column and Balance Sheet column. i.Enter the unadjusted account balances from the general ledger into the Unadjusted Trial Balance columns of the spreadsheet. j.Extend the adjusted trial balance amounts to the Income Statement columns and the Balance Sheet columns.Adjustment data on an end-of-period spreadsheet Alert Security Services Co. offers security services to business clients. The trial balance for Alert Security Services Co. has been prepared on the following end-of-period spreadsheet for the year ended October 31, 2019: Accum. Depr.Equipment 4 Accounts Payable 36 Wages Payable 0 Brenda Schultz, Capital 260 Brenda Schultz, Drawing 8 Fees Earned 200 Wages Expense 110 Rent Expense 12 Insurance Expense 0 Utilities Expense 6 Supplies Expense 0 Depreciation Expense 0 Miscellaneous Expense 2 500 500 The data for year-end adjustments are as follows: a.Fees earned but not yet billed, 13 b.Supplies on hand, 4. c.Insurance premiums expired, 10. d.Depreciation expense, 3. e.Wages accrued but not paid, 1. Enter the adjustment data and place the balances in the Adjusted Trial Balance columns.Completing an end-of-period spreadsheet Alert Security Services Co. offers security services to business clients. Complete the following end-of-period spreadsheet for Alert Security Services Co.:4.26EXAdjusting entries from an end-of-period spreadsheet Based on the data in Exercise 4-24, prepare the adjusting entries for Alert Security Services Co.Closing entries from an end-of-period spreadsheet Based on the data in Exercise 4-25, prepare the two closing entries for Alert Security Services Co.Reversing entry The following adjusting entry for accrued wages was recorded on December 31: Dec. 31 Wages Expense Wages Payable 5,500 5,500 a.Journalize the reversing entry that would be made on January 1 of the next period. b.Assume that the first paid period of the following year ends on January 6 and that wages of 61,375 were paid. Journalize the entry to record the payment of the January 6 wages. c.Journalize the entry to record the payment of the January 6 wages assuming that a reversing entry was not made on January 1. d.What is wages expense for the period January 1-6?Adjusting and reversing entries On the basis of the following data, (a) journalize the adjusting entries at December 31, the end of the current fiscal year, and (b) journalize the reversing entries on January 1, the first day of the following year: 1.Sales salaries are 2,350 per day for a five-day workweek, ending on Friday. The last payday of the year was Friday, December 26. 2.Accrued fees earned but not recorded at December 31, 51,300.Adjusting and reversing entries On the basis of the following data, (a) journalize the adjusting entries at June 30, the end of the current fiscal year, and (b) journalize the reversing entries on July 1, the first day of the following year; 1.Wages are 13,200 per day for a five-day workweek, ending on Friday. The last payday of the year was Thursday, June 27. 2.Accrued fees earned but not recorded at June 30, 25,000.Entries posted to wages expense account Portions of the wages expense account of a business follow: a.Indicate the nature of the entry (payment, adjusting, closing, reversing) from which each numbered posting was made. b.Journalize the complete entry from which each numbered posting was made. Close revenues and expenses to D. Bower, Capital.Entries posted to wages expense account Portions of the salaries expense account of a business follow: a.Indicate the nature of the entry (payment, adjusting, closing, reversing) from which each numbered posting was made. b.Journalize the complete entry from which each numbered posting was made. Close revenues and expenses to J. McHenry, Capital.Financial statements and closing entries Beacon Signals Company maintains and repairs warning lights, such as those found on radio towers and lighthouses. Beacon Signals Company prepared the following end-of-period spreadsheet at December 31, 2019, the end of the fiscal year: Instructions 1.Prepare an income statement for the year ended December 31. 2.Prepare a statement of owner's equity for the year ended December 31. No additional investments were made during the year. 3.Prepare a balance sheet as of December 31. 4.Based upon the end-of-period spreadsheet, journalize the closing entries. 5.Prepare a post-closing trial balance.Financial statements and closing entries Finders Investigative Services is an investigative services firm that is owned and operated by Stacy Tanner. On June 30, 2019, the end of the fiscal year, the accountant for Finders Investigative Services prepared an end-of-period spreadsheet, a part of which follows: Instructions 1.Prepare an income statement, a statement of owner's equity (no additional investments were made during the year), and a balance sheet. 2.Journalize the entries that were required to close the accounts at June 30. 3If Stacy Tanner, Capital has instead decreased 30,000 after the closing entries were posted, and the withdrawals remained the same, what would have been the amount of net income or net loss?T accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of Epicenter Laundry at June 30, 2019, the end of the fiscal year, follows: Epicenter Laundry Unadjusted Trial Balance June 30,2019 Debit Balances Credit Balances Cash 11,000 Laundry Supplies 21,500 Prepaid Insurance 9,600 Laundry Equipment 232,600 Accumulated Depreciation 125,400 Accounts Payable 11,800 Sophie Perez, Capital 105,600 Sophie Perez, Drawing 10,000 Laundry Revenue 232,200 Wages Expense 125,200 Rent Expense 40,000 Utilities Expense 19,700 Miscellaneous Expense 5,400 475,000 475,000 The data needed to determine year-end adjustments are as follows: a.Laundry supplies on hand at June 30 are 3,600. b.Insurance premiums expired during the year are 5,700. c.Depreciation of laundry equipment during the year is 6,500. d.Wages accrued but not paid at June 30 are 1,100. Instructions 1.For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as "June 30 Bal." In addition, add T accounts for Wages Payable, Depreciation Expense, Laundry Supplies Expense, and Insurance Expense. 2.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (1) as needed. 3.Journalize and post the adjusting entries. Identify the adjustments as "Adj." and the new balances as "Adj. Bal." 4.Prepare an adjusted trial balance. 5.Prepare an income statement, a statement of owner's equity (no additional investments were made during the year), and a balance sheet. 6.Journalize and post the closing entries. Identify the closing entries as "Clos." 7.Prepare a post-closing trial balance.Ledger accounts, adjusting entries, financial statements, and closing entries; optional spreadsheet The unadjusted trial balance of Lakota Freight Co. at March 31, 2019, the end of the year, follows: The data needed to determine year-end adjustments are as follows: a. Supplies on hand at March 31 are 7,500. b. Insurance premiums expired during the year are 1,800. c. Depreciation of equipment during the year is 8,350. d. Depreciation of trucks during the year is 6,200. e. Wages accrued but not paid at March 31 are 600. Instructions 1. For each account listed in the trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark () in the Posting Reference column. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (3) as needed. 3. Journalize and post the adjusting entries, inserting balances in the accounts affected. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Lakota Freight Co.'s chart of accounts should be used: Wages Payable, 22; Supplies Expense, 52; Depreciation ExpenseEquipment, 55; Depreciation ExpenseTrucks, 56; Insurance Expense, 57. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of owner's equity (no additional investments were made during the year), and a balance sheet. 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the Journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.Complete accounting cycle For the past several years, Jolene Upton has operated a part-time consulting business from her home. As of July 1, 2019, Jolene decided to move to rented quarters and to operate the business, which was to be known as Gourmet Consulting, on a full-time basis. Gourmet Consulting entered into the following transactions during July: July 1 The following assets were received from Jolene Upton: cash, 19,000; accounts receivable, 22,300; supplies, 3,800; and office equipment, 8,900. There were no liabilities received. 1. Paid three months rent on a lease rental contract, 6,000. 2. Paid the premiums on property and casualty insurance policies, 4,500. 4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, 8,000. 5. Purchased additional office equipment on account from Office Necessities Co., 5,100 6. Received cash from clients on account, 12,750. 10. Paid cash for a newspaper advertisement, 500. 12. Paid Office Necessities Co. for part of the debt incurred on July 5, 3,000. 12. Provided services on account for the period July 1-12, 14,200. 14. Paid receptionist for two weeks salary, 1,500. Record the following transactions on Page 2 of the journal: 17. Received cash from cash clients for fees earned during the period July 1-17, 10,400. 18. Paid cash for supplies, 1,000. 20. Provided services on account for the period July 13-20, 9,000. 24. Received cash from cash clients for fees earned for the period July 17-24, 8,500. 26. Received cash from clients on account, 12,000. 27. Paid receptionist for two weeks salary, 1,500. 29. Paid telephone bill for July, 325. 31. Paid electricity bill for July, 675. 31. Received cash from cash clients for fees earned for the period July 25-31, 7,100. 31. Provided services on account for the remainder of July, 5,500. 31. Jolene withdrew 20,000 for personal use. Instructions 1.Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) 11 Cash 12 Accounts Receivable 14 Supplies 15 Prepaid Rent 16 Prepaid Insurance 18 Office Equipment 19 Accumulated DepreciationOffice Equipment 21 Accounts Payable 22 Salaries Payable 23 Unearned Fees 31 Jolene Upton, Capital 32 Jolene Upton, Drawing 41 Fees Earned 51 Salary Expense 52 Rent Expense 53 Supplies Expense 54 Depreciation Expense 55 Insurance Expense 59 Miscellaneous Expense 2.Post the journal to a ledger of four-column accounts. 3.Prepare an unadjusted trial balance. 4.At the end of July, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a.Insurance expired during July is 375. b.Supplies on hand on July 31 are 2,850. c.Depreciation of office equipment for July is 400. d.Accrued receptionist salary on July 31 is 140. e.Rent expired during July is 2,000. f.Unearned fees on July 31 are 3,000. 5.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6.Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal. 7.Prepare an adjusted trial balance. 8.Prepare an income statement, a statement of owners equity, and a balance sheet. 9.Prepare and post the closing entries. Record the closing entries on Page 4 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 10.Prepare a post-closing trial balance.Financial statements and closing entries Last Chance Company offers legal consulting advice to prison inmates. Last Chance Company prepared the end-of-period spreadsheet shown at the top of the following page at June 30, 2019, the end of the fiscal year. Instructions 1.Prepare an income statement for the year ended June 30. 2.Prepare a statement of owner's equity for the year ended June 30. No additional investments were made during the year. 3.Prepare a balance sheet as of June 30. 4.On the basis of the end-of-period spreadsheet, journalize the closing entries. 5.Prepare a post-closing trial balance.Financial statements and closing entries The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. As of October 31, 2019, the end of the fiscal year, the accountant for The Gorman Group prepared an end-of-period spreadsheet, part of which follows: Instructions 1.Prepare an income statement, a statement of owner's equity (no additional investments were made during the year), and a balance sheet. 2.Journalize the entries that were required to close the accounts at October 31. 3.If the balance of Nicole Gorman, Capital had instead increased 115,000 after the closing entries were posted and the withdrawals remained the same, what would have been the amount of net income or net loss?T accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of La Mesa Laundry at August 31, 2019, the end of the fiscal year, follows: La Mesa Laundry Unadjusted Trial Balance August 31,2019 Debit Balances Credit Balances Cash 3,800 Laundry Supplies 9,000 Prepaid Insurance 6,000 Laundry Equipment 180,800 Accumulated Depreciation 49,200 Accounts Payable 7,800 Bobbi Downey. Capital 95,000 Bobbi Downey. Drawing 2,400 Laundry Revenue 248,000 Wages Expense 135,800 Rent Expense 43,200 Utilities Expense 16,000 Miscellaneous Expense 3,000 400,000 400,000 The data needed to determine year-end adjustments are as follows: a.Wages accrued but not paid at August 31 are 2,200. b.Depreciation of equipment during the year is 8,150. c.Laundry supplies on hand at August 31 are 2,000. d.Insurance premiums expired during the year are 5,300. Instructions 1.For each account listed in the unadjusted trial balance, enter the balance in a T account. Identity the balance as "Aug. 31 Bal." In addition, add T accounts for Wages Payable, Depreciation Expense, Laundry Supplies Expense, and Insurance Expense. 2.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (1) as needed. 3.Journalize and post the adjusting entries. Identity the adjustments as "Adj." and the new balances as "Adj. Bal." 4.Prepare an adjusted trial balance. 5.Prepare an income statement, a statement of owner's equity (no additional investments were made during the year), and a balance sheet. 6.Journalize and post the closing entries. Identify the closing entries as "Clos." 7.Prepare a post-closing trial balance.Ledger accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of Recessive Interiors at January 31, 2019, the end of the year, follows: The data needed to determine year-end adjustments are as follows: a. Supplies on hand at January 31 are 2,850. b. Insurance premiums expired during the year are 3,150. c. Depreciation of equipment during the year is 5,250. d. Depreciation of trucks during the year is 4,000. e. Wages accrued but not paid at January 31 are 900. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark () in the Posting Reference column. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (3) as needed. 3. Journalize and post the adjusting entries, inserting balances in the accounts affected. a. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Recessive Interiors' chart of accounts should be used: Wages Payable, 22; Depreciation ExpenseEquipment, 54; Supplies Expense, 55; Depreciation ExpenseTrucks, 56; Insurance Expense, 57. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of owner's equity (no additional investments were made during the year), and a balance sheet. 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.Complete accounting cycle For the past several years, Jeff Horton has operated a part-time consulting business from his home. As of April 1, 2019, Jeff decided to move to rented quarters and to operate the business, which was to be known as Rosebud Consulting, on a full-time basis. Rosebud Consulting entered into the following transactions during April: Apr. 1. The following assets were received from Jeff Horton cash, 20,000; accounts receivable, 14,700; supplies, 3,300; and office equipment, 12,000. There were no liabilities received. 1. Paid three months' rent on a lease rental contract, 6,000. 2. Paid the premiums on property and casualty insurance policies, 4,200. 4. Received cash from client as an advance payment for services to be provided and recorded it as unearned fees, 9,400. 5. Purchased additional office equipment on account from Smith Office Supply Co., 8,000. 6. Received cash from clients on account, 11,700. 10. Paid cash for a newspaper advertisement, 350 12. Paid Smith Office Supply Co. for part of the debt incurred on April 5, 6,400 12. Provided services on account for the period April 1-12, 21,900. 14. Paid receptionist for two weeks' salary, 1,650. Record the following transactions on Page 2 of the journal 17. Received cash from cash clients for fees earned during the period April 1-16, 6,600. 18. Paid cash for supplies, 725. 20. Provided services on account for the period April 13-20, 16,800. 24. Received cash from cash clients for fees earned for the period April 17-24, 4,450. 26. Received cash from clients on account, 26,500. 27. Paid receptionist for two weeks salary, 1,650. 29. Paid telephone bill for April, 540. 30. Paid electricity bill for April, 760. 30. Received cash from cash clients for fees earned for the period April 25-30, 5,160. 30. Provided services on account for the remainder of April, 2,590. 30. Jeff withdrew 18,000 for personal use. Instructions 1.Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to lie debited and credited (Do not insert the account numbers in the journal at this time.) 11 Cash 12 Accounts Receivable 14 Supplies 15 Prepaid Rent 16 Prepaid Insurance 18 Office Equipment 19 Accumulated DepreciationOffice Equipment 21 Accounts Payable 22 Salaries Payable 23 Unearned Fees 31 Jeff Horton, Capital 32 Jeff Horton, Drawing 41 Fees Earned 51 Salary Expense 52 Supplies Expense 53 Rent Expense 54 Depreciation Expense 55 insurance Expense 59 Miscellaneous Expense 2Post the journal to a ledger of four-column accounts. 3.Prepare an unadjusted trial balance. 4.At the end of April, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a.Insurance expired during April is 350. b.Supplies on hand on April 30 are 1,225. c.Depreciation of office equipment for April is 400. d.Accrued receptionist salary on April 30 is 275. e.Rent expired during April is 2,000. f.Unearned fees on April 30 are 2350. 5.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6.Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal. 7.Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owner's equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 4 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.The unadjusted trial balance of PS Music as of July 31, 2019, along with the adjustment data for the two months ended July 31, 2019, are shown in Chapter 3- Based upon the adjustment data, the following adjusted trial balance was prepared: PS Music Adjusted Trial Balance July 31,2019 Debit Balances Credit Balances Cash 9,945 Accounts Receivable 4,150 Supplies 275 Prepaid Insurance 2,475 Office Equipment 7,500 Accumulated DepreciationOffice Equipment 50 Accounts Payable 8,350 Wages Payable 140 Unearned Revenue 3,600 Peyton Smith, Capital 9,000 Peyton Smith, Drawing 1,750 Fees Earned 21,200 Music Expense 3,610 Wages Expense 2,940 Office Rent Expense 2,550 Advertising Expense 1,500 Equipment Rent Expense 1,375 Utilities Expense 1,215 Supplies Expense 925 Insurance Expense 225 Depreciation Expense 50 Miscellaneous Expense 1,855 42,340 42,340 Instructions 1.(Optional) Using the data from Chapter 3, prepare an end-of-period spreadsheet. 2.Prepare an income statement, a statement of owners equity, and a balance sheet. (Note: Peyton Smith made investments in PS Music on June 1 and July 1, 2019 ) 3.Journalize and post the closing entries. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 4.Prepare a post-closing trial balance.Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2019. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, 4,500. 5. Received cash from clients on account, 2,450. 9. Paid cash for a newspaper advertisement, 225. 13. Paid Office Station Co. for part of the debt incurred on April 5, 640. 15. Provided services on account for the period May 115, 9,180. 16. Paid part-time receptionist for two weeks' salary including the amount owed on April 30, 750. 17. Received cash from cash clients for fees earned during the period May 116, 8,360. Record the following transactions on Page 6 of the journal: 20. Purchased supplies on account, 735. 21. Provided services on account for the period May 1620, 4,820. 25. Received cash from cash clients for fees earned for the period May 1723, 7,900. 27. Received cash from clients on account, 9,520. 28. Paid part-time receptionist for two weeks' salary, 750. 30. Paid telephone bill for May, 260. 31. Paid electricity bill for May, 810. 31. Received cash from cash clients for fees earned for the period May 2631, 3,300. 31. Provided services on account for the remainder of May, 2,650. 31. Kelly withdrew 10,500 for personal use. Instructions 1.The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing trial balance as of April 30, 2019, is shown in Exhibit 17. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 2019, and place a check mark () in the Posting Reference column Journalize each of the May transactions in a two column Journal starting on Page 5 of the journal and using Kelly Consulting's chart of accounts. (Do not insert the account numbers in the journal at this time.) 2.Post the journal to a ledger of four-column accounts. 3Prepare an unadjusted trial balance. 4.At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a.Insurance expired during May is 275. b.Supplies on hand on May 3 1 are 715. c.Depreciation of office equipment for May is 330. d.Accrued receptionist salary on May 31 is 325. e.Rent expired during May is 1,600. f.Unearned fees on May 31 are 3,210. 5.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6.Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7.Prepare an adjusted trial balance. 8.Prepare an income statement, a statement of owner's equity, and a balance sheet. 9.Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 10.Prepare a post-closing trial balance.4.1CPCommunication Your friend, Daniel Nat, recently began work as the lead accountant for the Asheville Company. Dan prepared the following balance sheet for December 31, 2018: Asheville Company Balance Sheet For the Year Ended December 31,2018 Assets Land 100,000 Accounts payable 10,000 Accounts receivable 12,500 Cash 10,000 Daniel Nat, capital 235,000 Total assets 367,500 Liabilities Equipment 125,000 Wages payable 2,500 Total liabilities 127,500 White a brief memo to Daniel explaining the errors in the Asheville Company balance sheet and the correct presentation for the balance sheet.Financial statements The following is an excerpt from a telephone conversation between Ben Simpson, president of Main Street Co., and Tami Lundgren, owner of Reliable Employment Co.: Ben: Tami, you're going to have to do a better job of finding me a new computer programmer. That last guy was great at programming, but he didn't have any common sense. Tami: What do you mean? The guy had a master's degree with straight A's. Ben: Yes, well, last month he developed a new financial reporting system. He said we could do away with manually preparing an end-of-period spreadsheet and financial statements. The computer would automatically generate our financial statements with a push of a button. Tami: So what's the big deal? Sounds to me like it would save you time and effort. Ben: Right! The balance sheet showed a minus for supplies! Tami: Minus supplies? How can that be? Ben: That's what I asked. Tami: So, what did he say? Ben: Well, after he checked the program, he said that it must be right. The minuses were greater than the pluses.... Tami: Didn't he know that Supplies can't have a credit balanceit must have a debit balance? Ben: He asked me what a debit and credit were. Tami: I see your point. 1.Comment on (a) the desirability of computerizing Main Street Co.'s financial reporting system, (b) the elimination of the end-of-period spreadsheet in a computerized accounting system, and (c) the computer programmer's lack of accounting knowledge. 2.Explain to the programmer why Supplies could not have a credit balance.Financial statements Assume that you recently accepted a position with Five Star National Bank Trust as an assistant loan officer. As one of your first duties, you have been assigned the responsibility of evaluating a loan request for 300,000 from West Gate Auto Co., a small proprietorship. In support of the loan application, Joan Whalen, owner, submitted a Statement of Accounts (trial balance) for the first year of operations ended October 31, 2019. West Gate Auto Co. Statement of Accounts October 31,2019 Cash 5,000 Billings Due from Others 40,000 Supplies (chemicals, etc.) 7,500 Building 222,300 Equipment 50,000 Amounts Owed to Others 31,000 Investment in Business 179,000 Service Revenue 215,000 Wages Expense 75.000 Utilities Expense 10,000 Rent Expense 8,000 Insurance Expense 6,000 Other Expenses 1,200 425,000 425,000 1.Explain to Joan Whalen why a set of financial statements (income statement, statement of owners equity, and balance sheet) would be useful to you in evaluating the loan request. 2.In discussing the Statement of Accounts with Joan Whalen, you discovered that the accounts had not been adjusted at October 31. Analyze the Statement of Accounts and indicate possible adjusting entries that might be necessary before an accurate set of financial statements could be prepared. 3.Assuming that an accurate set of financial statements will be submitted by Joan Whalen in a few days, what other considerations or information would you require before making a decision on the loan request?Why would a company maintain separate accounts receivable ledgers for each customer, as opposed to maintaining a single accounts receivable ledger for all customers?What are the major advantages of the use of special journals?3DQHow many postings to Fees Earned for the month would be needed in Discussion Question 3 if the procedure described in (a) had been used; if the procedure described in (b) had been used?During the current month, the following errors occurred in recording transactions in the purchases journal or in posting from it: a.An invoice for 1,875 of supplies from Kelly Co. was recorded as having been received from Kelley Co., another supplier. b.A credit of 420 to Blackstone Company was posted as 240 in the subsidiary ledger. c.An invoice for equipment of 4,800 was recorded as 4,000. d.The Accounts Payable column of the purchases journal was overstated by 3,600.6DQWhat is an electronic form, and how is it used in a computerized accounting system?When are transactions posted in a computerized accounting system?What happens to the special journal in a computerized accounting system that uses electronic forms?10DQRevenue journal The following revenue transactions occurred during August: Aug. 4. Issued Invoice No. 162 to Carson Enterprises Co. for services provided on account, 255. 15. Issued Invoice No. 163 to City Electric Inc. for services provided on account, 340. 25. Issued Invoice No. 164 to Juniper Co. for services provided on account. 185. Record these three transactions in the following revenue journal format: REVENUEJOURNAL Invoice Post. Accts. Rec. Dr. Date No. Account Debited Ref. Fees Earned Cr.Revenue journal The following revenue transactions occurred during April: Apr.6. Issued Invoice No. 78 to Lemon Co. for services provided on account, 1,240. 11. Issued Invoice No. 79 to Hitchcock Inc. for services provided on account, 2,570. 19. Issued Invoice No. 80 to Fletcher Inc. for services provided on account, 990. Record these three transactions in the following revenue journal format: REVENUE JOURNAL Invoice Post. Accts. Rec. Dr. Date No. Account Debited Ref. Fees Earned Cr.Accounts receivable subsidiary ledger The debits and credits from two transactions are presented in the following customer account: Describe each transaction and the source of each posting.Accounts receivable subsidiary ledger The debits and credits from two transactions are presented in the following customer account: Describe each transaction and the source of each posting.Purchases journal The following purchase transactions occurred during October for K-Town Inc.: Oct. 6. Purchased office supplies for 190, on account from U-Save Supply Inc. 14. Purchased office equipment for 2,100, on account from Zell Computer Inc. 26. Purchased office supplies for 5295, on account from U-Save Supply Inc. Record these transactions in the following purchases journal format: PURCHASESJOURNAL Date Account Credited Post. Ref. Accounts Payable Cr. Party Supplies Dr. Other Accounts Dr. Post. Ref. AmountPurchases journal The following purchase transactions occurred during March for Celebration Catering Service: Mar. 11. Purchased party supplies for 610, on account from Party Hearty Supplies Inc. 14. Purchased party supplies for 312, on account from Fun 4 All Supplies Inc. 27. Purchased office furniture for 2,480, on account from Office Space Inc. Record these transactions in the following purchases journal format: PURCHASESJOURNAL Date Account Credited Post. Ref. Accounts Payable Cr. Party Supplies Dr. Other Accounts Dr. Post. Ref. AmountAccounts payable subsidiary ledger The debits and credits from two transactions are presented in the following creditors (suppliers) account: Describe each transaction and the source of each posting.