Textbook Problem

Your friend, Diane Kiefner, teaches elementary school and operates her own wilderness kayaking tours in the summers. She thinks she has been doing fine financially, but has never really measured her profits. Until this year, her business has always had more money at the end of the summer than at the beginning. She enjoys kayaking and as long as she came out a little ahead, that was fine. Unfortunately, Diane had to dip into her savings to make up for “losses” on her kayaking tours this past summer. Hearing that you have been studying accounting, she brought a list of cash receipts and expenditures and would like you to try to figure out what happened.

When asked for more details on the expenditures and the kayaking gear that you saw in her garage, Diane provided the following information:

Expenditures were made on the following items:

A trial balance based on this information follows. As you will note, Diane’s trial balance is not consistent with some of the concepts discussed in this chapter.

REQUIRED

1. 1. Complete Diane’s work sheet by making appropriate adjustments and extensions. Note: (a) You may need to add new accounts. (b) Some of the adjustments you need to make are actually “corrections of errors” Diane has made in classifying certain items.
2. 2. What is your best measure of Diane’s net income for the summer of 20--?