Concept explainers
Exercise 4.16A
Preparing reversing entries
P4
Hawk Company records prepaid assets and unearned revenues in balance sheet accounts. The following information was used to prepare
a. The company has earned $6,000 in service fees that were not yet recorded at period-end.
b. The expired portion of prepaid insurance is $3,700.
C. The company has earned $2,900 of its Unearned Service Fees account balance.
d.
e. Employees have earned but have not been paid salaries of $3,400.
Prepare any necessary reversing entries for the accounting adjustments a through e assuming that the company uses reversing entries in its accounting system.
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Fundamental Accounting Principles
- Adjusting entries and errors At the end of April, the first month of operations, the following selected data were taken from the financial statements of Shelby Crawford, an attorney: Net income for April 120,000 Total assets at April 30 750,000 Total liabilities at April 30 300,000 Total owner's equity at April 30 450,000 In preparing the financial statements, adjustments for the following data were overlooked: Supplies used during April, 2,750. Unbilled fees earned at April 30, 23,700. Depreciation of equipment for April, 1,800. Accrued wages at April 30, 1,400. Instructions 1. Journalize the entries to record the omitted adjustments. 2. Determine the correct amount of net income for April and the total assets, liabilities, and owner's equity at April 30. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. The adjustment for supplies used is presented as an example.arrow_forwardLedger accounts, adjusting entries, financial statements, and closing entries; optional spreadsheet The unadjusted trial balance of Lakota Freight Co. at March 31, 2016, the end of the year, follows: Lakota Freight Co. Unadjusted Trial Balance March 31,2016 Debit Balances Credit Balances 11 Cash.................................................... 12,000 13 Supplies.................................................... 30,000 14 Prepaid Insurance........................................... 3,600 16 Equipment.................................................. 110,000 17 Accumulated DepreciationEquipment...................... 25,000 18 Trucks...................................................... 60,000 19 Accumulated DepreciationTrucks........................... 15,000 21 Accounts Payable........................................... 4,000 31 Common Stock............................................. 26,000 32 Retained Earnings........................................... 70,000 33 Dividends.................................................. 15,000 41 Service Revenue............................................ 160,000 51 Wages Expense............................................. 45,000 53 Rent Expense............................................... 10,600 54 Truck Expense............................................... 9,000 59 Miscellaneous Expense...................................... 4,800 300,000 300,000 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 year are 1,800. c. Depreciation of equipment during year is 8,350. d. Depreciation of trucks during 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 pan (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 Expense Trucks, 56; Insurance Expense, 57. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a retained earnings statement, and a balance sheet. 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. (Income Summary is account 34 in the chart of accounts.) Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.arrow_forwardAdjusting entries and errors At the end of April, the first month of operations, the following selected data were taken from the financial statements of Shelby Crawford, an attorney: Net income for April 120,000 Total assets at April 30 750,000 Total liabilities at April 30 300,000 Total stockholders equity at April30 450,000 In preparing the financial statements, adjustments for the following data were overlooked: Supplies used during April, 2,750. Unbilled fees earned at April30, 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 Stockholders 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.arrow_forward
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- Adjusting entries and errors 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: Net income for August 112,500 Total assets at August 31 650,000 Total liabilities at August 31 225,000 Total stockholders equity at August 31 425,000 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 stockholders 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.arrow_forwardIncome: 27,350 accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of La Mesa Laundry at August 31, 20Y5, the end of the fiscal year, follows: The data needed to determine ear-end adjustments are as follows: (a) Wages accrued but not paid at August 31 are 2,200. (b) Depreciation of equipment during the year it 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. 51 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 by Adj. and the new balances as Adj. Bal. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of stockholders equity, and a balance sheet. During the year ended August 51, 20Y5, common stock of 3,000 was issued. 6. Journalize and post the closing entries. Identify the closing entries by Clos. 7. Prepare a post-closing trial balance.arrow_forwardAdjusting entries and errors At the end of April, the first month of operations, the following selected data were taken from the financial statements of Shelby Crawford, an attorney: Net income for April 120,000 Total assets at April 30 750,000 Total liabilities at April 30 300,000 Total stockholders equity at April30 450,000 In preparing the financial statements, adjustments for the following data were overlooked: Supplies used during April, 2,750. Unbilled fees earned at April30, 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 Stockholders 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.arrow_forward
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