Skip to main content

Bartleby Sitemap - Textbook Solutions

All Textbook Solutions for Financial Accounting

1DQ 2DQ 3DQ Josh 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 sellers counteroffer of 167,500. Describe how Reliable Repair Service should record the land.6DQ Describe 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 owners equity? (b) What item appears on both the balance sheet and the statement of owners equity? (c) What item appears on both the balance sheet and the statement of cash flows?On February 3, Clairemont Repair Service extended an offer of 360,000 for land that had been priced for sale at 400,000. On February 28, Clairemont Repair Service accepted the sellers counteroffer of 380,000. On October 23, the land was assessed at a value of 390,000 for property tax purposes. On January 15 of the next year, Clairemont Repair Service was offered 450,000 for the land by a national retail chain. At what value should the land be recorded in Clairemont Repair Services records?On March 31, Higgins Repair Service extended an offer of 415,000 for land that had been priced for sale at 460,000. On April 15, Higgins Repair Service accepted the sellers counteroffer of 437,500. On September 9, the land was assessed at a value of 375,000 for property tax purposes. On December 8, Higgins Repair Service was offered 475,000 for the land by a national retail chain. At what value should the land be recorded in Higgins Repair Services records?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: a. Owners equity as of December 31, 2018. b. Owners equity as of December 31, 2019, assuming that assets increased by 112,300 and liabilities increased by 32,000 during 2019.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. Owners equity as of December 31, 2018. b. Owners equity as of December 31, 2019, assuming that assets decreased by 65,000 and liabilities increased by 36,000 during 2019.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, Owners 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; Owners Equity (Jerome Foley, Capital) increases by 40,000.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, Owners 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; Owners Equity (Katie Wyer, Capital) increases by 18,000.The revenues and expenses of Adventure Travel Service for the year ended April 30, 2019, follow: Prepare an income statement for the year ended April 30, 2019.The revenues and expenses of Sentinel Travel Service for the year ended August 31, 2019, follow: Prepare an income statement for the year ended August 31, 2019.Using the income statement for Adventure Travel Service shown in Practice Exercise 1-4A, 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.Using the income statement for Sentinel Travel Service shown in Practice Exercise 1-4B, prepare a statement of owners 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.Using the following data for Adventure Travel Service as well as the statement of owners equity shown in Practice Exercise 1-5A, prepare a report form balance sheet as of April 30, 2019:Using the following data for Sentinel Travel Service as well as the statement of owners equity shown in Practice Exercise 1-5B, prepare a report form balance sheet as of August 31, 2019:A summary of cash flows for Adventure Travel Service for the year ended April 30, 2019, follows: 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.A summary of cash flows for Sentinel Travel Service for the year ended August 31, 2019, follows: 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.The following data were taken from Mesa Companys balance sheet: a. Compute the ratio of liabilities to owners equity. b. Has the creditors risk increased or decreased from December 31, 2018, to December 31, 2019?The following data were taken from Alvarado Companys balance sheet: a. Compute the ratio of liabilities to owners equity. b. Has the creditors risk increased or decreased from December 31, 2018, to December 31, 2019?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. FedEx 9. Ford Motor Company 10. Gap Inc. 11. HR Block 12. Hilton Hospitality, Inc. 13. Procter Gamble 14. SunTrust 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 companys home page or use the finance website of Yahoo (finance.yahoo.com). b. For which of the preceding companies is the accounting equation relevant?A fertilizer manufacturing company wants to relocate to Lakeside County. A report from a fired researcher at the company indicates the companys product is releasing toxic by-products. The company suppressed that report. A later report commissioned by the company shows there is no problem with the fertilizer. Should the companys chief executive officer reveal the content of the unfavorable report in discussions with Lakeside County representatives? Discuss.3E 4E The total assets and total liabilities (in millions) of Dollar Tree Inc. and Target Corporation follow: Determine the owners equity of each company.Determine the missing amount for each of the following: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 15,000 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.Indicate whether each of the following is identified with (1) an asset, (2) a liability, or (3) owners equity: a. accounts receivable b. accounts payable c. cash d. fees earned e. land f. rent expense g. supplies 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.10E Indicate whether each of the following types of transactions will either (a) increase owners equity or (b) decrease owners equity: 1. expenses 2. owners investments 3. owners withdrawals 4. revenues 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 owners equity. d. Decrease in an asset, decrease in a liability. e. Decrease in an asset, decrease in owners equity.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 owners 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 owners 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?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.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 owners equity, are summarized as follows: 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 owners 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.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 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 Based on the data presented in Exercise 1-16, identify those items that would appear on the income statement.Financial information related to Udder Products Company, a proprietorship, for the month ended April 30, 2019, is as follows: a. Prepare a statement of owners equity for the month ended April 30, 2019. b. Why is the statement of owners equity prepared before the April 30, 2019, balance sheet?Dairy Services was organized on August 1, 2019. A summary of the revenue and expense transactions for August follows: Prepare an income statement for the month ended August 31.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 owners equity during the year.)21E 22E 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.A summary of cash flows for Ethos Consulting Group for the year ended May 31, 2019, follows: 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.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?26E 27E 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 deposit 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 month, 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 owners investment and revenues increased owners equity, while withdrawals and expenses decreased owners equity. 3. Determine the net income for June. 4. How much did Junes transactions increase or decrease Chad Wilsons capital?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, Ian withdrew 42,000. Instructions 1. Prepare an income statement for the year ended December 31, 2019. 2. Prepare a statement of owners 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 owners equity and the balance sheet?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 owners 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, 2019.4PA DLite 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 DLite 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 Palks capital as of July 1 of the current year. 2. State the assets, liabilities, and owners 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 owners equity for July, and a balance sheet as of July 31. 4. (Optional) Prepare a statement of cash flows for July.The financial statements at the end of Wolverine Realtys first month of operations are as follows: Instructions By analyzing the interrelationships among the four financial statements, determine the proper amounts for (a) through (p).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 owners investment and revenues increased owners equity, while withdrawals and expenses decreased owners equity. 3. Determine the net income for March. 4. How much did Marchs transactions increase or decrease Amy Austins capital?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. Instructions 1. Prepare an income statement for the year ended April 30, 2019. 2. Prepare a statement of owners 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 owners equity?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 owners 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.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 owners equity for April, and a balance sheet as of April 30.Bevs 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 Bevs 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, 24,000; 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 Zahns capital as of November 1. 2. State the assets, liabilities, and owners 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 owners equity for November, and a balance sheet as of November 30. 4. (Optional) Prepare a statement of cash flows for November.The financial statements at the end of Atlas Realtys first month of operations follow: Instructions By analyzing the interrelationships among the four financial statements, determine the proper amounts for (a) through (p).Peyton Smith enjoys listening to all types of music and owns countless CDs. Over the years, Peyton has gained a local reputation for knowledge of music from classical to rap and the ability to put together sets of recordings that appeal to all ages. During the last several months, Peyton served as a guest disc jockey on a local radio station. In addition, Peyton has entertained at several friends parties as the host deejay. On June 1, 2019, Peyton established a proprietorship known as PS Music. Using an extensive collection of music MP3 files, Peyton will serve as a disc jockey on a fee basis for weddings, college parties, and other events. During June, Peyton entered into the following transactions: June 1.Deposited 4,000 in a checking account in the name of PS Music. 2.Received 3,500 from a local radio station for serving as the guest disc jockey for June. 2.Agreed to share office space with a local real estate agency, Pinnacle Realty. PS Music will pay one-fourth of the rent. In addition, PS Music agreed to pay a portion of the wages of the receptionist and to pay one-fourth of the utilities. Paid 800 for the rent of the office. 4.Purchased supplies from City Office Supply Co. for 350. Agreed to pay 100 within 10 days and the remainder by July 5, 2019. 6.Paid 500 to a local radio station to advertise the services of PS Music twice daily for two weeks. 8.Paid 675 to a local electronics store for renting digital recording equipment. 12.Paid 350 (music expense) to Cool Music for the use of its current music demos to make various music sets. 13.Paid City Office Supply Co. 100 on account. 16.Received 300 from a dentist for providing two music sets for the dentist to play for her patients. 22.Served as disc jockey for a wedding party. The father of the bride agreed to pay 1,000 in July. 25.Received 500 for serving as the disc jockey for a cancer charity ball hosted by the local hospital. 29.Paid 240 (music expense) to Galaxy Music for the use of its library of music demos. 30.Received 900 for serving as PS disc jockey for a local clubs monthly dance. 30.Paid Pinnacle Realty 400 for PS Musics share of the receptionists wages for June. 30.Paid Pinnacle Realty 300 for PS Musics share of the utilities for June. 30.Determined that the cost of supplies on hand is 170. Therefore, the cost of supplies used during the month was 180. 30.Paid for miscellaneous expenses, 415. 30.Paid 1,000 royalties (music expense) to National Music Clearing for use of various artists music during the month. 30.Withdrew 500 of cash from PS Music for personal use. 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 PS Music for the month ended June 30, 2019. 3. Prepare a statement of owners equity for PS Music for the month ended June 30, 2019. 4. Prepare a balance sheet for PS Music as of June 30, 2019.Marco Brolo is one of three partners who own and operate Silkroad Partners, a global importexport business. Marco is the partner in charge of recording partnership transactions in the accounts. On his way to work one day, Marcos car broke down. At the repair shop, Marco learned that his cars engine had significant damage, and it will cost over 2,000 to repair the damage. He does not have enough money in his bank account to cover the cost of the repair, and his credit cards are at their limit. This car is the only form of transportation that Marco has to get to and from work every day. He does not use his car for any business travel. After considering his options, Marco decides to take 2,000 from the partnership for the repair and record it as an expense of the partnership. He believes that this is appropriate since he needs his car to get to work every day. 1. Is Marco behaving ethically? Why or why not? 2. Who is affected by Marcos decision? 3. What other alternatives might Marco consider?Colleen Fernandez, president of Rhino Enterprises, applied for a 175,000 loan from First Federal Bank. The bank requested financial statements from Rhino Enterprises as a basis for granting the loan. Colleen has told her accountant to provide the bank with a balance sheet. Colleen has decided to omit the other financial statements because there was a net loss during the past year. In groups of three or four, discuss the following questions: 1. Is Colleen behaving in a professional manner by omitting some of the financial statements? 2. a. What types of information about their businesses would owners be willing to provide bankers? What types of information would owners not be willing to provide? b.What types of information about a business would bankers want before extending a loan? c.What common interests are shared by bankers and business owners?4CP 5CP 6CP What is the difference between an account and a ledger?2DQ 3DQ eCatalog 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 Bank 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?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 Payable 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 Earned 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.2PEB Prepare a journal entry on April 30 for fees earned on account, 11,250.Prepare a journal entry on August 13 for cash received for services rendered, 9,000.Prepare a journal entry on December 23 for the withdrawal of 20,000 by Steve Buckley for personal use.Prepare a journal entry on June 30 for the withdrawal of 11,500 by Dawn Pierce for personal use.5PEA 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.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 1,600 and debited to Accounts Payable for 1,600.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 184 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.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.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.8PEA 8PEB The following accounts appeared in recent financial statements of Delta Air Lines: 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.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, 3owners 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.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: 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).The following table summarizes the rules of debit and credit. For each of the items (a) through (l), indicate whether the proper answer is a debit or a credit.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 Expense 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 Expense 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.On September 18, 2019, Afton Company purchased 2,475 of supplies on account. In Afton Companys 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 Companys 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?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?During the month, Warwick Co. received 515,000 in cash and paid out 375,000 in cash. a. Do the data indicate that Warwick Co. had net income of 140,000 during the month? Explain. b. If the balance of the cash account is 200,000 at the end of the month, what was the cash balance at the beginning of the month?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.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.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, owners 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:Based upon the T accounts in Exercise 2-13, prepare the nine journal entries from which the postings were made. Journal entry explanations may be omitted.Based upon the data presented in Exercise 2-13, (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.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. Prepare an unadjusted trial balance, listing the accounts in their normal order and inserting the missing figure for cash.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.The following preliminary unadjusted trial balance of Ranger Co., a sports ticket agency, does not balance: 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.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 Fees 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. 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:Identify the errors in the following trial balance. All accounts have normal balances.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.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 explanations.The following data (in millions) are taken from the financial statements of Target Corporation: a. For Target Corporation, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for: 1. Revenue 2. Operating expenses 3. Operating income b. What conclusions can you draw from your analysis of the revenue and the total operating expenses?The following data (in millions) were taken from the financial statements of Costco Wholesale Corporation: a. For Costco, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for: 1. Revenue 2. Operating expenses 3. Operating income b. Comment on the results of your horizontal analysis in part (a). c. Based upon Exercise 2-23, compare and comment on the operating results of Target and Costco for the recent year.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; Notes 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 Prepaid 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.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 owners equity for January.On June 1, 2019, Kris Storey established an interior decorating business, Eco-Centric Designs. During the month, 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. Enter the following transactions on Page 2 of the two-column journal: 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. 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?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?The Colby Group has the following unadjusted trial balance as of August 31, 2019: 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.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. . 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.2PB 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 transactions 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. 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?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. Analyzing Transactions 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?Tech Support Services has the following unadjusted trial balance as of January 31, 2019: 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 businesss operations: July 1.Peyton Smith made an additional investment in PS Music by depositing 5,000 in PS Musics 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 80 hours per month for a monthly fee of 3,600. Any additional hours beyond 80 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. 14.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 1,250 cash from PS Music for personal use. PS Musics chart of accounts and the balance of accounts as of July 1, 2019 (all normal balances), are as follows: 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.Buddy Dupree is the accounting manager for On-Time Geeks, a tech support company for individuals and small businesses. As part of his job, Buddy is responsible for preparing the companys trial balance. His supervisor placed a hard deadline of Friday at 5 PM for the completion of the trial balance. Unfortunately, Buddy was unable to get the trial balance to balance by the due date. The credit side of the trial balance exceeded the debit side by 3,000. To make the deadline, Buddy decided to add a 3,000 debit to the vehicles account balance. He selected the vehicles account because it will not be significantly affected by the additional 3,000. 1. Is Buddy behaving ethically? Why or why not? 2. Who is affected by Buddys decision? 3. How should Buddy have handled this situation?5CP The following discussion took place between Tony Cork, the office manager of Hallmark Data Company, and a new accountant, Cassie Miles: Cassie: Ive been thinking about our method of recording entries. It seems inefficient. Tony: In what way? Cassie: Wellcorrect me if Im wrongit seems like we have unnecessary steps in the process. We could easily develop a trial balance by posting our transactions directly into the ledger and bypassing the journal altogether. In this way, we could combine the recording and posting process into one step and save ourselves a lot of time. What do you think? Tony: We need to have a talk. What should Tony say to Cassie?7CP How 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.7DQ Does every adjusting entry affect net income for a period? Explain.9DQ 10DQ 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 Insurance 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 Rent Classify the following items as (1) prepaid expense, (2) unearned revenue, (3) accrued revenue, or (4) accrued expense: a. Cash received for use of land next month. b. Fees earned but not received in cash. c. Wages owed but not yet paid. d. Supplies on hand.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.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.At the end of the current year, 23,570 of fees have been earned but have not been billed to clients. Journalize the adjusting entry (include an explanation) to record the accrued fees.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.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.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.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.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.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.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.7PEB 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.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.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.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.10PEA 10PEB 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 months 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.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: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.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.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.6E 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.8E 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.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.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.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: Determine the amount of supplies purchased during the year.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.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.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.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.17E The estimated amount of depreciation on equipment for the current year is 8,200. Journalize the adjusting entry to record the depreciation.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 equipments loss of value is 2,075,000? Explain.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 the fixed assets? b. Would the book value of Microsofts fixed assets normally approximate their market values?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?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.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.If the net income for the current year had been 196,400 in Exercise 3-23, what would have been the correct net income if the proper adjusting entries had been made?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 omitted, which items would be erroneously stated on (1) the income statement for the year and (2) the balance sheet as of December 31?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.The accountant for Evas 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 accountants adjusting entries, assuming that none of the accounts were affected by more than one adjusting entry.28E 29E 30E 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.Selected account balances before adjustment for Atlantic Coast Realty at July 31, the end of the current year, are as follows: Data needed for year-end adjustments are as follows: Unbilled fees at July 31, 11,150. Supplies on hand at July 31, 900. Rent expired, 6,000. Depreciation of equipment during year, 8,950. Unearned fees at July 31, 2,000. Wages accrued but not paid at July 31, 4,840. Instructions 1. Journalize the six adjusting entries required at July 31, based on the data presented. 2. What would be the effect on the income statement if the adjustments for unbilled fees and accrued wages were omitted at the end of the year? 3. What would be the effect on the balance sheet if the adjustments for unbilled fees and accrued wages were omitted at the end of the year? 4. What would be the effect on the Net increase or decrease in cash on the statement of cash flows if the adjustments for unbilled fees and accrued wages were omitted at the end of the year?Milbank Repairs Service, an electronics repair store, prepared the following unadjusted trial balance at the end of its first year of operations: 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 a. Journalize the adjusting entries necessary on June 30, 2019. b. Determine the revenues, expenses, and net income of Milbank Repairs Service before the adjusting entries. c. Determine the revenues, expenses, and net income of Milbank Repairs Service after the adjusting entries. d. Determine the effect of the adjusting entries on Nancy Townes, Capital.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.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 Companys accounting clerk prepared the following unadjusted trial balance: 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 ExpenseBuilding, Depreciation ExpenseEquipment, and Supplies Expense. 2. Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance.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: 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 owners 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.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.Selected account balances before adjustment for Intuit Realty at November 30, the end of the current year, follow: Data needed for year-end adjustments are as follows: Supplies on hand at November 30, 550. Depreciation of equipment during year, 1,675. Rent expired during year, 8,500. Wages accrued but not paid at November 30, 2,000. Unearned fees at November 30, 4,000. Unbilled fees at November 30, 5,380. Instructions 1. Journalize the six adjusting entries required at November 30, based on the data presented. 2. What would be the effect on the income statement if the adjustments for equipment depreciation and unearned fees were omitted at the end of the year? 3. What would be the effect on the balance sheet if the adjustments for equipment depreciation and unearned fees were omitted at the end of the year? 4. What would be the effect on the Net increase or decrease in cash on the statement of cash flows if the adjustments for equipment depreciation and unearned fees were omitted at the end of the year?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: 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.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.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: 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.At the end of August, the first month of operations, the following selected data were taken from the financial statements of Tucker Jacobs, an attorney: In preparing the financial statements, adjustments for the following data were overlooked: Unbilled fees earned at August 31, 31,900. Depreciation of equipment for August, 7,500. Accrued wages at August 31, 5,200. Supplies used during August, 3,000. Instructions 1. Journalize the entries to record the omitted adjustments. 2. Determine the correct amount of net income for August and the total assets, liabilities, and owners equity at August 31. 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 first adjustment is presented as an example.The 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 DepreciationOffice 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.Chris P. Bacon is the chief accountant for CV Industries, a large manufacturing company. In addition to its normal business activities, the company has excess warehouse space that it rents out to local businesses. Because the typical renter is a small business, CV Industries requires renters to make lease payments for the entire rental period on the day the lease is signed. As a result, CV Industries typically reports a large unearned rent balance on its balance sheet. After making adjusting entries for the current year, Chris prepares the adjusted trial balance and notices that the companys earnings will decline significantly. He presents the adjusted trial balance to the companys CFO, Antonio Beldin, who is concerned about the earnings decline. Mr. Beldin notices the large unearned rent balance and proposes making an additional end-of-period adjusting entry to recognize the entire unearned rent balance as revenue in the current period. Chris protests, reminding Mr. Beldin that the adjusting entry for unearned rent has already been made. Mr. Beldin assures Chris that his proposal is acceptable, reminding Chris that because we have already received the cash, we have the right to recognize the revenue in the current period. He instructs Chris to make the additional adjusting journal entry. Chris is hesitant to follow these instructions, but he is sensitive to the companys emphasis on earnings growth and makes the adjusting entry as instructed. 1. Is Chris behaving ethically? Why or why not? 2. Who is affected by Chriss decision?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.4CP Several years ago, your brother opened Magna Appliance Repairs. He made a small initial investment and added money from his personal bank account as needed. He withdrew money for living expenses at irregular intervals. As the business grew, he hired an assistant. He is now considering adding more employees, purchasing additional service trucks, and purchasing the building he now rents. To secure funds for the expansion, your brother submitted a loan application to the bank and included the most recent financial statements (which follow) prepared from accounts maintained by a part-time bookkeeper. After reviewing the financial statements, the loan officer at the bank asked your brother if he used the accrual basis of accounting for revenues and expenses. Your brother responded that he did and that is why he included an account for Amounts Due from Customers. The loan officer then asked whether or not the accounts were adjusted prior to the preparation of the statements. Your brother answered that they had not been adjusted. a. Why do you think the loan officer suspected that the accounts had not been adjusted prior to the preparation of the statements? b. Indicate possible accounts that might need to be adjusted before an accurate set of financial statements could be prepared.1DQ Describe the nature of the assets that compose the following sections of a balance sheet: (a) current assets and (b) property, plant, and equipment.3DQ 4DQ Why are closing entries required at the end of an accounting period?6DQ What is the purpose of the post-closing trial balance?8DQ 9DQ Recent fiscal years for several well-known companies are as follows: What general characteristic shared by these companies explains why they do not have fiscal years ending December 31?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 owners 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 Payable 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 owners 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 Expense 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 owners equity for the year ended December 31, 2018.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 15,000. For the year ended December 31, 2018, Grab Bag Delivery Services reported a net loss of 43,500. Prepare a statement of owners equity for the year ended December 31, 2018.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) owners 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 Fees 3PEB 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.: Journalize the two entries required to close the accounts.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.: Journalize the two entries required to close the accounts.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.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.Current assets and current liabilities for HQ Properties Company follow: 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 favourable or an unfavorable change?Current assets and current liabilities for Brimstone Company follow: 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 favourable or an unfavorable change?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 owners 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 Payable 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 Payable 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 owners equity, and balance sheet for Bamboo Consulting.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 owners equity, and balance sheet for Elliptical Consulting.The following account balances were taken from the adjusted trial balance for Laser Messenger Service, a delivery service firm, for the fiscal year ended April 30, 2019: Prepare an income statement.6E FedEx Corporation had the following revenue and expense account balances (in millions) for a recent year ending May 31: Prepare an income statement.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: Prepare a statement of owners equity for the year.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.Ex 410 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. Supplies 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.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: Prepare a classified balance sheet that includes the correct balance for Cash.List the errors you find in the following balance sheet. Prepare a corrected balance sheet.14E 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?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 1,885,000 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.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.: Journalize the two entries required to close the 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 Expense An accountant prepared the following post-closing trial balance: Prepare a corrected post-closing trial balance. Assume that all accounts have normal balances and that the amounts shown are correct.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.The following data (in thousands) were taken from recent financial statements of Under Armour, Inc.: 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)?The following data (in thousands) were taken from recent financial statements of Starbucks Corporation: a. Compute the working capital and the current ratio for 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)?23E 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: 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.Alert Security Services Co. offers security services to business clients. Complete the following end-of-period spreadsheet for Alert Security Services Co.:Based on the data in Exercise 4-25, prepare an income statement, statement of owners equity, and balance sheet for Alert Security Services Co.27E 28E 29E 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.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.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.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.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 owners 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.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 owners 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. 3. If 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?The unadjusted trial balance of Epicenter Laundry at June 30, 2019, the end of the fiscal year, follows: 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 owners 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.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 owners 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.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: 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.) 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.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 owners 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.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 owners 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?The unadjusted trial balance of La Mesa Laundry at August 31, 2019, the end of the fiscal year, follows: 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. Identify 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. 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 owners 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.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. 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 owners 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.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: 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.) 2. Post 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 2,350. 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.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: 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: Instructions 1. The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closingtrial 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 twocolumn journal starting on Page 5 of the journal and using Kelly Consultings 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. 3. Prepare 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 31 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 owners 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.New Wave Images is a graphics design firm that prepares its financial statements using a calendar year. Manny Kinn, the company treasurer and vice president of finance, has prepared a classified balance sheet as of December 31. In January, this balance sheet will be submitted along with an application for a loan from First Peoples Community Bank. An excerpt from the balance sheet follows: The accounts receivable balance includes a 56,000 loan to Tom Morrow, the company president. Tom borrowed the money from New Wave 18 months earlier for a down payment on a new home. Tom has orally assured Manny that he will pay off the loan within the next year. Because Tom is the company president, Manny treats the amount due as part of its normal accounts receivable. In addition, Manny knows that the bank will consider a large balance in accounts receivable more favorably than a large personal loan to a single individual. Manny reported the 56,000 in the same manner on the preceding years balance sheet. 1. Is Manny behaving ethically by reporting the loan to Tom as a trade account receivable? Why or why not? 2. Who will be affected by Mannys decision?3CP 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, youre going to have to do a better job of finding me a new computer programmer. That last guy was great at programming, but he didnt have any common sense. Tami: What do you mean? The guy had a masters degree with straight As. 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 whats 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: Thats 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: Didnt he know that Supplies cant 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 programmers lack of accounting knowledge. 2. Explain to the programmer why Supplies could not have a credit balance.5CP 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?In recording 400 fees earned on account during a single month, how many times will it be necessary to write Fees Earned (a) if each transaction, including fees earned, is recorded individually in a two-column general journal; (b) if each transaction for fees earned is recorded in a revenue journal?How 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.Assuming the use of a two-column general journal, a purchases journal, and a cash payments journal as illustrated in this chapter, indicate the journal in which each of the following transactions should be recorded: a. Purchase of office supplies on account. b. Purchase of supplies for cash. c. Purchase of store equipment on account.What 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?10DQ The following revenue transactions occurred during August: Record these three transactions in the following revenue journal format:1PEB The debits and credits from two transactions are presented in the following customer account: Describe each transaction and the source of each posting.The debits and credits from two transactions are presented in the following customer account: Describe each transaction and the source of each posting.The following purchase transactions occurred during October for K-Town Inc.: Record these transactions in the following purchases journal format:The following purchase transactions occurred during March for Celebration Catering Service: Record these transactions in the following purchases journal format:

Page: [1][2][3][4][5]