Financial Accounting -

Assignment #1

Problem #1

The following amounts were taken from the accounting records of Russell Services, Inc. as of Dec 31, 2009. Russell Services began its operations on January 1, 2009.

1. Interest Expense $ 2,000 2. Land $ 98,000 3. Miscellaneous Expense $ 8,000 4. Taxes Expense $ 22,000 5. Rent Expense $ 28,000 6. Fees Earned $300,000 7. Salaries Expense $ 87,000 8. Dividends $ 13,000 9. Cash $ 62,000 10. Notes Payable $ 30,000 11. Capital Stock $ 30,000 12. Utilities Expense $ 40,000

Instructions:

1. Prepare an income statement for the year ending December 31, 2009. 2. Prepare a retained earnings statement for the year ending December 31, 2009. 3. Prepare a balance sheet as of December 31, 2009. 4. Prepare a statement of cash flows for the year ending December 31, 2009.

Assignment #1

Problem #2

At the end of August, the first month of operations, the following data was taken from the financial statements of LDP Consultants, Inc.

Net income for August $ 85,000

Total assets at August 31 $ 650,000

Total liabilities at August 31 $ 200,000

Total stockholders’ equity at August 31 $450,000

In preparing the financial statements, adjustments for the following data were overlooked:

1. Unbilled fees earned at August 31 $ 5,200

2. Depreciation of equipment for August $3,500

3. Prepaid insurance expired for August $750

4. Accrued wages at August 31 $ 2,000

Instructions:

Based on the accounting equation, determine the effect of each omitted adjustment to net income, total asset s, total liabilities, and total equities. In addition, determine the correct amounts after adjustments for the accounts mentioned above.

Net Income Total Assets =Total Liabilities+ Total Equity

Reported Amounts $ 85,000 $ 650,000 $ 200,000 $450,000

Adjustment #1

Adjustment #2

Adjustment #3

Adjustment #4

Corrected Amounts