Concept explainers
1
Concept Introduction:
Income Statement:
The income statement shows the revenues and expenses during the period and the resulting
Statement of
Statement of retained earnings shows the opening balance to which resulting profits or losses are added/subtracted and dividends if any are deducted resulting in closing retained earnings balance.
Balance Sheet:
The balance Sheet shows the assets and liabilities and owner’s equity of the business as of the date of preparation. The sum of assets is equal to the sum of liabilities and owners equity.
To prepare:
The t-accounts from the given unadjusted
1
Explanation of Solution
Cash | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount $ |
31-Dec | balance c/d | 60,000 | |||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 0 | |||
Teaching supplies | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 70,000 | |||
Prepaid Insurance | |||||
Dr | Cr | ||||
Date | Balance | Amount $ | Date | Balance | Amount$ |
31-Dec | balance c/d | 19,000 | |||
Prepaid Rent | |||||
Dr | Cr | ||||
Date | Balance | Amount $ | Date | Balance | Amount$ |
31-Dec | balance c/d | 3,800 | |||
Professional library | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 12,000 | |||
Accumulated | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 2,500 | |||
Equipment | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 40,000 | |||
Accumulated Depreciation-Equipment | |||||
Dr | Cr | ||||
Date | Balance | Amount $ | Date | Balance | Amount$ |
31-Dec | balance c/d | 20000 | |||
Accounts Payable | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 11,200 | |||
Salaries Payable | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 0 | |||
Unearned training fees | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 28,600 | |||
Common stock | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 11,000 | |||
Retained Earnings | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 60,500 | |||
Dividends | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 20,000 | |||
Tuition fees earned | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 129,200 | |||
Training fees earned | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 68,000 | |||
Depreciation expenses-Professional library | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 0 | |||
Depreciation expenses-Equipment | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 0 | |||
Salaries expenses | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 44,200 | |||
Insurance expenses | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 0 | |||
Rent expenses | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 29,600 | |||
Teaching supplies expenses | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 0 | |||
Advertising expense | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 19,000 | |||
Utilities expense | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 13,400 | |||
2
Concept Introduction:
Income Statement:
The income statement shows the revenues and expenses during the period and the resulting profits or losses arising after all the expenses are deducted from the revenues
Statement of retained earnings:
Statement of retained earnings shows the opening balance to which resulting profits or losses are added/subtracted and dividends if any are deducted resulting in closing retained earnings balance.
Balance Sheet:
The balance sheet shows the assets and liabilities and owner’s equity of the business as of the date of preparation. The sum of assets is equal to the sum of liabilities and owners equity
To prepare:
The
2
Explanation of Solution
Date | Accounts & explanation | Debit $ | Credit $ | |
a | 31-Dec | Insurance expenses | 9,500 | |
Prepaid Insurance | 9,500 | |||
To record insurance expenses | ||||
b | 31-Dec | Teaching supplies expenses | 50,000 | |
Teaching supplies | 50,000 | |||
To record teaching supplies expenses | ||||
c | 31-Dec | Depreciation expenses-Equipment | 5,000 | |
Accumulated depreciation-Equipment | 5,000 | |||
To record depreciation expenses-equipment | ||||
d | 31-Dec | Depreciation expenses-professional library | 2,400 | |
Accumulated depreciation-professional library | 2,400 | |||
To record depreciation expenses-professional library | ||||
e | 31-Dec | Unearned Training fees | 28,600 | |
Training fees earned | 28,600 | |||
To record training fees earned | ||||
f | 31-Dec | Account Receivable | 5,750 | |
Tuition fees earned | 5,750 | |||
To record tuition fees earned | ||||
g | 31-Dec | Salaries expenses | 450 | |
Salaries payable | 450 | |||
To record salaries payable | ||||
h | 31-Dec | Rent expenses | 3,800 | |
Prepaid Rent | 3,800 | |||
To record rent expenses accrued |
The adjustment entries have been posted to T-accounts as follows
Cash | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 60,000 | |||
Accounts Receivable | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 0 | |||
31-Dec | Tuition fees earned | 5,750 | |||
Teaching supplies | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 70,000 | 31-Dec | Teaching supplies expenses | 50,000 |
Prepaid Insurance | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 19,000 | 31-Dec | Insurance expenses | 9,500 |
Prepaid Rent | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 3,800 | 31-Dec | Rent expenses | 3,800 |
Professional library | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 12,000 | |||
Accumulated Depreciation-Professional library | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 2,500 | |||
31-Dec | Depreciation expenses-Professional library | 2,400 | |||
Equipment | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 40,000 | |||
Accumulated Depreciation-Equipment | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 20,000 | |||
31-Dec | Depreciation expenses-Equipment | 5,000 | |||
Accounts Payable | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 11,200 | |||
Salaries Payable | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 0 | |||
31-Dec | Salaries expenses | 450 | |||
Unearned training fees | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | Training fees earned | 28,600 | 31-Dec | balance c/d | 28,600 |
Common stock | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 11,000 | |||
Retained Earnings | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 60,500 | |||
Dividends | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 20,000 | |||
Tuition fees earned | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 129,200 | |||
31-Dec | Accounts Receivable | 5,750 | |||
Training fees earned | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 68,000 | |||
31-Dec | Unearned training fees | 28,600 | |||
Depreciation expenses-Professional library | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 0 | |||
31-Dec | Accumulated Depreciation-Professional library | 2,400 | |||
Depreciation expenses-Equipment | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 0 | |||
31-Dec | Accumulated Depreciation-Equipment | 5,000 | |||
Salaries expenses | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 44,200 | |||
31-Dec | Salaries Payable | 450 | |||
Insurance expenses | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 0 | |||
31-Dec | Prepaid Insurance | 9,500 | |||
Rent expenses | |||||
Dr | Cr | ||||
Date | Balance | Amount $ | Date | Balance | Amount$ |
31-Dec | balance c/d | 29,600 | |||
31-Dec | Prepaid rent | 3,800 | |||
Teaching supplies expenses | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 0 | |||
31-Dec | Teaching supplies | 50,000 | |||
Advertising expense | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 19,000 | |||
Utilities expense | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 13,400 | |||
3
Concept Introduction:
Income Statement:
The income statement shows the revenues and expenses during the period and the resulting profits or losses arising after all the expenses are deducted from the revenues
Statement of retained earnings:
Statement of retained earnings shows the opening balance to which resulting profits or losses are added/subtracted and dividends if any are deducted resulting in closing retained earnings balance.
Balance Sheet:
The Balance Sheet shows the assets and liabilities and owner’s equity of the business as of the date of preparation. The sum of assets is equal to the sum of liabilities and owners equity
The closing balances of t-accounts and prepare the adjusted trial balance
3
Explanation of Solution
The T-accounts with updated balances have been presented below
Cash | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 60,000 | 31-Dec | balance c/d | 60,000 |
60,000 | 60,000 | ||||
Accounts Receivable | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 0 | 31-Dec | balance c/d | 5,750 |
31-Dec | Tuition fees earned | 5,750 | |||
5,750 | 5,750 | ||||
Teaching supplies | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 70,000 | 31-Dec | Teaching supplies expenses | 50,000 |
31-Dec | balance c/d | 20,000 | |||
70,000 | 70,000 | ||||
Prepaid Insurance | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 19000 | 31-Dec | Insurance expenses | 9500 |
31-Dec | balance c/d | 9500 | |||
19,000 | 19,000 | ||||
Prepaid Rent | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 3800 | 31-Dec | Rent expenses | 3800 |
31-Dec | balance c/d | 0 | |||
3800 | 3800 | ||||
Professional library | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 12,000 | |||
31-Dec | balance c/d | 12,000 | |||
12,000 | 12,000 | ||||
Accumulated Depreciation-Professional library | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 2500 | |||
31-Dec | balance c/d | 4,900 | 31-Dec | Depreciation expenses-Professional library | 2400 |
4,900 | 4,900 | ||||
Equipment | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 40000 | |||
31-Dec | balance c/d | 40000 | |||
40,000 | 40,000 | ||||
Accumulated Depreciation-Equipment | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 20,000 | |||
31-Dec | balance c/d | 25,000 | 31-Dec | Depreciation expenses-Equipment | 5,000 |
25,000 | 25,000 | ||||
Accounts Payable | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 11,200 | |||
31-Dec | balance c/d | 11,200 | |||
11,200 | 11,200 | ||||
Salaries Payable | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance c/d | 0 | |||
31-Dec | balance c/d | 450 | 31-Dec | Salaries expenses | 450 |
450 | 450 | ||||
Unearned training fees | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | Training fees earned | 28,600 | 31-Dec | balance b/d | 28,600 |
31-Dec | balance c/d | 0 | |||
28,600 | 28,600 | ||||
Common stock | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 11,000 | |||
31-Dec | balance c/d | 11,000 | |||
11,000 | 11,000 | ||||
Retained Earnings | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 60,500 | |||
31-Dec | balance c/d | 60,500 | |||
60,500 | 60,500 | ||||
Dividends | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 20,000 | |||
31-Dec | balance c/d | 20,000 | |||
20,000 | 20,000 | ||||
Tuition fees earned | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 129200 | |||
31-Dec | balance c/d | 134,950 | 31-Dec | Accounts Receivable | 5750 |
134,950 | 134,950 | ||||
Training fees earned | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 68,000 | |||
31-Dec | balance c/d | 96,600 | 31-Dec | Unearned training fees | 28,600 |
96,600 | 96,600 | ||||
Depreciation expenses-Professional library | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 0 | |||
31-Dec | Accumulated Depreciation-Professional library | 2,400 | 31-Dec | balance c/d | 2,400 |
2,400 | 2,400 | ||||
Depreciation expenses-Equipment | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 0 | |||
31-Dec | Accumulated Depreciation-Equipment | 5000 | 31-Dec | balance c/d | 5000 |
5000 | 5000 | ||||
Salaries expenses | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | 44,200 | ||||
31-Dec | Salaries Payable | 450 | 31-Dec | balance c/d | 44,650 |
44,650 | 44,650 | ||||
Insurance expenses | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 0 | |||
31-Dec | Prepaid Insurance | 9,500 | 31-Dec | balance c/d | 9,500 |
9,500 | 9,500 | ||||
Rent expenses | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 29,600 | |||
31-Dec | Prepaid rent | 3,800 | 31-Dec | balance c/d | 33,400 |
33,400 | 33,400 | ||||
Teaching supplies expenses | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 0 | |||
31-Dec | Teaching supplies | 50,000 | 31-Dec | balance c/d | 50,000 |
50,000 | 50,000 | ||||
Advertising expense | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 19,000 | |||
31-Dec | balance c/d | 19000 | |||
19,000 | 19,000 | ||||
Utilities expense | |||||
Dr | Cr | ||||
Date | Balance | Amount$ | Date | Balance | Amount$ |
31-Dec | balance b/d | 13,400 | |||
31-Dec | balance c/d | 13400 | |||
13,400 | 13,400 |
The Adjusted Trial Balance has been prepared below
A I | ||
Adjusted Trial Balance | ||
December 31 | ||
Debit ($) | Credit ($) | |
Cash | 60,000 | |
Accounts Receivable | 5,750 | |
Teaching supplies | 20,000 | |
Prepaid Insurance | 9,500 | |
Prepaid Rent | 0 | |
Professional library | 12,000 | |
Accumulated Depreciation-Professional library | 4,900 | |
Equipment | 40,000 | |
Accumulated Depreciation-Equipment | 25,000 | |
Accounts Payable | 11,200 | |
Salaries Payable | 450 | |
Unearned training fees | 0 | |
Common stock | 11,000 | |
Retained Earnings | 60,500 | |
Dividends | 20,000 | |
Tuition fees earned | 134,950 | |
Training fees earned | 96,600 | |
Depreciation expenses-Professional library | 2,400 | |
Depreciation expenses-Equipment | 5,000 | |
Salaries expenses | 44,650 | |
Insurance expenses | 9,500 | |
Rent expenses | 33,400 | |
Teaching supplies expenses | 50,000 | |
Advertising expense | 19,000 | |
Utilities expense | 13,400 | |
Totals | 344,600 | 344,600 |
4
Concept Introduction:
Income Statement:
The income statement shows the revenues and expenses during the period and the resulting profits or losses arising after all the expenses are deducted from the revenues
Statement of retained earnings:
Statement of retained earnings shows the opening balance to which resulting profits or losses are added/subtracted and dividends if any are deducted resulting in closing retained earnings balance.
Balance Sheet:
The balance sheet shows the assets and liabilities and owner’s equity of the business as of the date of preparation. The sum of assets is equal to the sum of liabilities and owners equity
To prepare:
The income statement, statement of retained earnings and balance sheet
4
Explanation of Solution
The income statement has been presented below
A I | ||
Income statement | ||
for the year ended December 31 | ||
Amount $ | Amount $ | |
Tuition fees earned | 134,950 | |
Training fees earned | 96,600 | |
Total revenues | 231,550 | |
less. Expenses | ||
Depreciation expenses-Professional library | 2,400 | |
Depreciation expenses-Equipment | 5,000 | |
Salaries expenses | 44,650 | |
Insurance expenses | 9,500 | |
Rent expenses | 33,400 | |
Teaching supplies expenses | 50,000 | |
Advertising expense | 19,000 | |
Utilities expense | 13,400 | |
Total expenses | 177,350 | |
Net profit | 54,200 |
The statement of retained earnings has been presented below
A I | ||
Statement of retained earnings | ||
for the year ended December 31 | ||
Amount $ | ||
Opening balance | 60,500 | |
Add profits earned during the year | 54,200 | |
less dividends paid | -20,000 | |
Ending balance | 94,700 |
The Balance Sheet has been prepared as follows
A I | ||
Balance Sheet | ||
as ofDecember 31 | ||
Amount $ | Amount $ | |
Assets | ||
Current Assets | ||
Cash | 60,000 | |
Accounts Receivable | 5,750 | |
Current Assets | 20,000 | |
Prepaid Insurance | 9,500 | |
Total Current Assets | 95,250 | |
Non-Current Assets | ||
Professional library | 12,000 | |
less:Accumulated Depreciation-Professional library | -4,900 | 7,100 |
Equipment | 40,000 | |
less:Accumulated Depreciation-Equipment | -25,000 | 15,000 |
Total non-current Assets | 22,100 | |
Total Assets | 117,350 | |
Liability & owner's Equity | ||
Liabilities | ||
Accounts Payable | 11,200 | |
Salaries Payable | 450 | |
Total liabilities | 11,650 | |
Owner's equity | ||
Common stock | 11,000 | |
Retained Earnings | 94,700 | |
Total Equity | 105,700 | |
Total Liability & owner's Equity | 117,350 |
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Chapter 3 Solutions
FINANCIAL ACCT.FUNDAMENTALS <CUSTOM LL>
- WORKING BACKWARD FROM ADJUSTED TRIAL BALANCE TO DETERMINE ADJUSTING ENTRIES The partial work sheet shown below is taken from the books of Stark Street Computers, a business owned by Logan Cowart, for the year ended December 31, 20--. REQUIRED 1. Determine the adjusting entries by analyzing the difference between the adjusted trial balance and the trial balance. 2. Journalize the adjusting entries in a general journal.arrow_forwardADJUSTING, CLOSING, AND REVERSING ENTRIES Prepare entries for (a), (b), and (c) listed below using two methods. First, prepare the entries without making a reversing entry. Second, prepare the entries with the use of a reversing entry. Use T-accounts to assist your analysis. (a) Wages paid during 20-1 are 20,800. (b) Wages earned but not paid (accrued) as of December 31, 20-1, are 300. (c) On January 3, 20-2, payroll of 800 is paid, which includes the 300 of wages earned but not paid in December.arrow_forwardPrepare an adjusted trial balance from the following account information, considering the adjustment data provided (assume accounts have normal balances). Adjustments needed: Salaries due to administrative employees, but unpaid at period end, $2,000 Insurance still unexpired at end of the period, $12,000arrow_forward
- Exercise 2-53 Preparing a Trial Balance Preparation The fo1lowing accounts and account balances are available for Badger Auto Parts at December 31, 2019: Required: Prepare a trial balance. Assume that all accounts have normal balances.arrow_forwardCornerstone Exercise 2-26 Preparing a Trial Balance Listed below are the ledger accounts for Borges Inc. at December 31, 2019. All accounts have normal balances. Required: Prepare a trial balance for Borges at December 31. 2019.arrow_forwardJournal entries and trial balance Valley Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on July 31, 20Y8, follows: The following business transactions were completed by Valley Realty during August 20Y8: 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. 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. Paid dividends, 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, 20Y8. 5. Assume that the August 31 transaction for dividends 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?arrow_forward
- Adjustment process Using the data from Exercise 3-1, record the adjusting entries at the end of February to record the insurance expense and supplies expense. There was $150 of supplies on hand as of February 28. Identify the adjusting entry for insurance as (al) and supplies as (a2).arrow_forwardValley 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?arrow_forward
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