Principles of Accounting

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A ~I Data Table Squeaky Clean Company

Preparation of Adjusted Trial Balance

December 31, 2010

Trial Balance ,

Account Debit Credit

Cash 1,100

Supplies 4,000

Prepaid insurance 600

Equipment 28,000

Accumulated depreciation 4,000

Accounts payable 1,800

Salary payable

Unearned service revenue 400

Rita Dorfman, Capital 14,500

Rita Dorfman, Withdrawals 1,000

Service revenue 23,000

Salary expense 9,000

Supplies expense

Depreciation expense

Insurance expense

Total 43,700 43,700

(This information has been Incorporated Into the work sheets In the exercise. Therefore, the popup can be closed while you are working on the exercise.)

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a. Used supplies of $1,700 b. Used up prepaid insurance of $580 c. Used up $530 of the equipment through depreciation d. Accrued salary expense of $300 that Squeaky Clean hasn't paid yet e. Earned $380 of the unearned service revenue

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Sqeaky Company, the cleaning service, started the preparation of its adjusted trial balance as follows: See chart A. During the twelve months ended December 3,2010, Squeaky CleanSqueaky Clean- See chart B

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qUirement 1 . omplete the adjusted trial balance. Key each adjustment by letter.

equirement 1. Complete the adjusted trial balance. Key each adjustment by letter. First, post the adjustments in the appropriate column of the trial balance. Then enter the adjusted balances in the last two columns. (Leave unused cells blank.)

First, post the adjustments in the appropriate column of the trial balance. Then enter the adjusted balances in the last two columns. (Leave unused cells blank. Complete all transactions before checking your answer.)

Squeaky Clean Company

Preparation of Adjusted Trial Balance

December 31,2010

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J Trial Balance Adi t t Adjusted Trial lJUS men s Balance--!!----::---+!---::-----I":"---::---.~- J!~_-A_C-c-o-u-n-t---~Debit ~ Credit II_~Debit ~~ Credit IIDebit II Credit l

A, b, c, d, or

Cash 1,100

e,

A, b, c, d, or e

Supplies 4,000

Prepaid insurance 600

Equipment 28,000

Accumulated 4,000depreciation

Accounts payable 1,800

Salary payable ~

Unearned service 400revenue

Rita Dorfman, Capital 14,500

Rita Dorfman, 1,000Withdrawals

Service revenue 23,000

Salary expense ~ l-qr ~ t9,000

Supplies expense

Depreciation expense

Insurance expense

Total 43,700 43,700 ;~ r .~; Choose from any list or enter any number in the input fields and then click Check Answer.

Carolina's Golf School, Inc., completed the following transactions during October,2012.0ctober.

Oct. 1 Prepaid insurance for October through December, $900 4 Performed services (gave golf lessons) on account, $2,500 5 Purchased equipment on account, $1,400 8 Paid property tax expense, $100

11 Purchased office equipment for cash, $1,800 19 Performed services and received cash, $1,200 24 Collected $300 on account 26 Paid account payable from October 5

29 Paid salary expense, $1,000 31 Recorded adjusting entry for October insurance expense (see October 1) 31 Debited unearned revenue and credited revenue in an adjusting entry, $1,200

Requirements 1. Prepare journal entries for each transaction. 2. Using the journal entries as a guide, show whether each

transaction would be handled as a revenue or an expense, using both the accrual and cash basis.

3. Calculate the amount of net income or net loss for the company under the accrual and cash basis for October.

4. Considering your results from requirement 3, which method gives the best picture of the true earnings of Carolina's Golf School, Inc.? Why?

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uirement repare journal entries for each transaction. Use the accrual method of accounting. (Remember, when

eating journal entries record debits first, then credits.) . Prepare the journal entries in chronological order. Begin with the first transaction on October 1, then follow with the second transaction on October 4.

Journal Entry

Date Accounts Debit Credit

Oct.

Acct. payable, acct, receivable, cash, equipment, insurance exp, prepaid insur., prepaid rent, property tax exp, rent exp., salary exp., salary payable, retained earnings, service revenue OR unearned service revenue

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Data Table

Concord Bed and Breakfast

Trial Balance

December 31, 2010

Account Debit Credit

Cash $ 12,000

Accounts receivable 14,300

Prepaid insurance 2,200

Supplies 1,200

Building 417,000

Accumulated depreciation $ 306,500

Accounts payable 1,930

Salary payable

Unearned service revenue 2,300

W Taylor, Capital 123,300

W Taylor, Withdrawals 2,920

Service revenue 19,000

Salary expense 2,600

Insurance expense

Depreciation expense

Advertising expense 810

Supplies expense

Total· $ 453,030 $ 453,030

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Adjustment data at December 31: a. Prepaid insurance still in force, $800 b. Supplies used during the month, $400

c. Depreciation for the month, $1, 100 d. Accrued salary expense, $100

e. Unearned service revenue still unearned, $1,100

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Choose from any list or enter any number in the input fields and then click Check Answer.

The trial balance of Concord Bed and Breakfast at December 31,2010, and the data needed for the month-end adjustments follow.

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. ew the trial balance- Chart A 3. equirements

. Journalize the adjusting entries. 2. The unadjusted balances have been entered for you in the general ledger accounts. Post the adjusting entries

to the ledger accounts. 3. Prepare the adjusted trial balance. 4. Prepare the income statement, statement of owner's equity and balance sheet for the business for the month

ended December 31,2010. (There were no owner investments for the accounting period.)

view the data- Chart B

Journal

" Accounts Debit Credit~H----------------------------H--------~------------Accumulated depreciation, depreciation expense, insurance expense, prepaid expense, salary expense,

a. salary payable, service revenue, supplies, supplies expense, OR unearned service revenue

Choose from any list or enter any number in the input fields and then click Check Answer.

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During 2011, the business recorded the following:

a. Prepaid annual rent of $6,000

b. Made the year-end adjustment to record rent expense of $5,500 for the year c. Collected $4,100 cash in advance for service revenue to be earned later

d. Made the year-end adjustment to record the earning of $4,700 service revenue that had been collected in advance

Data Table

Mitchell Sign Company

Work Sheet

September 30, 2011

Account t I

ICash II Supplies

Prepaid rent, 'I Equipment iAccumulated depreciation IAccounts payable IISalary payable I Unearned service revenueI Note payable, long-term

P. Mitchell, Capital

P. Mitchell, Withdrawals

IService revenue IISalary expense IRent expense

Depreciation expense

Supplies expense

Utilities expense

I!Total

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II Adjusted Trial Balance :' Debit II Credit

II

II ·1II

Ii14,00011 'I

2,50011 1,100 I

I

50,000, I II

" II

II

I I

I 75,90011

6,400

4,600

700 1

4,400'1

5,700,1

37,10011 II II II

17000il, II

II II il

II II

~I 75,90011

II II II II II j'

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Todd McKinney's Show's accounting records include the following account balances:

December 31, 2010 Prepaid rent $ 800 Unearned service revenue $1100

2011 $1300 $500

Requirements 1. The T-accounts have been set up for you. Insert beginning and ending balances for Prepaid rent

and Unearned service revenue. 2. Journalize the previous journal entries a-d, and post to the accounts. Explanations are not

required. 3. What is the balance in Service revenue after adjusting? 4. What is the balance in Rent expense after adjusting?

Requirement 1. The T-accounts have been set up for you. Insert beginning and ending balances for Prepaid rent and Unearned service revenue. (Leave unused cells blank.)

Prepaid rent Rent expense Unearned service revenue I I I L I I,

r: I

Service revenue

I--I --I-- I

~Uirements

1. Journalize Mitchell's closing entries at September 30 (Record debits first, then credits) 2. How much net income or net loss did Mitchell earn for September? How can you tell?

Requirement 1. Journalize Mitchell's closing entries at September30. (Record debits first, then credits) First, we will close the revenue account.

Journal Entry Date "II Accounts ij Debit Credit-------" i',--------!

II Acct. payable, acct. receivable, cash, II II depreciation exp., income summary, P. II II Mitchell capital, P. Mitchell withdrawals, II II rent expense, salary expense, service II IIrevenue, supplies exp., OR utilities il II expense II d U q P Ii II II II II Ii II Ii II !

September

Data Table

Bob McKinney Magic Show Company

Work Sheet

July 31,2011

Account Debit II CreditI

I Adjusted Trial Balance

Cash

Supplies

Prepaid rent

Equipment

Accumulated depreciation

Accounts payable

Salary payableIUnearned service revenue ILong-term note payable IIK. McKinney, Capital I K. McKinney, Withdrawals

Service revenue

15,700

1,70011

1,20011

54,00011

I II II

II II II I i !

8001 1

II

5,300

5,100 I I

4001 1

5,0001 1

4,80011

41,4001 1\ ;j

17200" , 1I I ISalary expense 3,6001 II

I :1 Rent expense 1,1001 III I

IIDepreciation expense I II 200 11

I 1Supplies expense 3001

1I Utilities expense 6001

IITotal 79,200 I 79,200

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\. 0.-he adjusted trial balance and the income statement amounts from the July work sheet of Bob ~Kinney Magic Show Company follow: see chart #6

Requirements 1. Prepare the classified balance sheet of Bob McKinney Magic Show Company at July 3, 2011. Use the report form. You must compute the ending balance of Capital 2. Compute McKinney's current ratio and debt ratio at July 31, 2011. One

year ago, the current ratio was 1.40 and the debt ratio was 0.31. Indicate whether McKinney's ability to pay current and total debts has improved, deteriorated, or remained the same during the same during the current year.

Requirement 1. First, we will calculate the ending balance in CapitaL Begin by determining the formula, then enter the amounts and calculate the balance.

Beginning Capital Balance + - __ = Ending Capital Bal.

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Fugazy Investment Advisers

Trial Balance

December 31,2011

Trial Balance

Account

Cash

Accounts receivable

Supplies

Equipment

Accumulated depreciation

Accounts payable

Salary payable

Unearned service revenue

Note payable, long-term

S. Fugazy, Capital

S. Fugazy, Withdrawals

Service revenue

Salary expense

Supplies expense

Depreciation expense

.•Interest expense iJ II Rent expense "

Insurance expense

Total '-'-

More Info

IIr= ---. Debit Credit

25,000

50,000

~

7,000

24,000 I

11,000 Ii 16,000

2,000

43,000

40,000

52,000

95,000

35,000

4,000

3,000,

7,000 -----

207,000 ======,1

207,000

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Adjustment data at December 31, 2011: a. Unearned service revenue earned during the year, $400

b. Supplies on hand, $4,000

c. Depreciation for the year, $6,000

d. Accrued salary expense, $4,000

e. Accrued service revenue, $8, 000

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The trial balance of and the year-end adjustment data of Fugazy Investment Advisers at December 31, 2011 follow: see chart #7

Requirements 1.The unadjusted balances have been entered for you in the trial balance columns of a work sheet. Complete

the work sheet through the adjusted trial balance columns. Key each adjusting entry by the letter corresponding to the data given.

2. Prepare the income statement, the statement of owner's equity, and the classified balance sheet in account format.

3. Prepare closing journal entries from the work sheet. 4. Did the company have a good or a bad year during 20ll? Give the reason for your answer. Requirement 1. Enter the adjustments in the adjustments columns of the work sheet. Key adjusting entries by letter. Total the debit and credit columns. Then calculate the adjusted balances, enter them in the adjusted trial balance columns on the work sheet, and again, total the debit and credit columns. (Leave unused cells blank.)i Fugazy Investment Advisers , WorkSheet, I Year Ended December 31, 2011.

Trial Balance II-- ,_ Adjustments ii Debit I CreditiijJ

I Account " Debit ,I Credit

Insurance expense

Total

7,000

207,000 207,000.,J; Choose from any list or enter any number in the input fields and then click Check Answer.

Requirements

1. The accountant failed to make the following adjusting entries at December 31: a. Accrued salary expense, $2,400

b. Supplies expense, $600

c. Accrued interest expense on a note payable, $700

d. Depreciation of equipment, $1,200

e. Earned service revenue that had been collected in advance, $3,300 What is the overall effect of the adjustments to net income?

2. Journalize each omitted adjusting entry identified.

3. Assume Withdrawals were $8,000 for the year. Prepare the entry to close the WithdrawaiS-account.

The accountant for Hudson Streak, M.D., encountered the following situations while adjusting and closing the books at December 31. Consider each situation independently. See chart #8 Requirement 1. Compute the overall effect on net income.

- - Net income understated by omission of:

Total understatement II r--------·---I~--= Net income overstated by omission of:

--L.A-ccrued interest exp., accrued salary exp., I depreciation exp, revenue earned after collection ---- in advance, OR supply expense .d-

...-2- ~=--- ~

Total overstatement ~------- __ --.::...'~=--~-_-]> --- Over effect- net income overstated by OR Over effect- net income understated by

Choose from any list or enter any number in the input fields and then click Check Answer.

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Requirement 1. Prepare the company's classified balance sheet in report form at December 31, 2011. Complete the balance sheet. Begin by filling in the heading for the balance sheet. Next, complete the statement by selecting the account names, subtotal and total headings in the first column. Enter the balances for each account and calculate all subtotals and totals. (When completing the non-current asset portion of the classified balance sheet, enter plant assets first, beginning with the equipment account.)

Balance sheet, Dec. 31, 2011, for the month ended Dec. 31, 2011, for the year ended Dec. 31, 2011,

OR Blue Irrigation Systems Balance sheet, Dec. 31, 2011, for the month ended

Dec. 31, 2011, for the year ended Dec. 31,2011, OR Blue Irrigation Systems

Balance sheet, Dec. 31, 2011, for the month ended Dec. 31, 2011, for the year ended Dec. 31, 2011,

OR Blue Irrigation Systems

I Insurance expense $ 900 Accounts payable $ 33,700

Note payable, long-term 3,000 Accounts receivable 40,200

Other assets 1,900 Accumulated depreclation=-buildinq 44,200

Building 53,600 Accumulated depreciatlon->

Prepaid insurance 4,600 equipment 7,400

Salary expense 16,900 Cash 12,500

Salary payable 3,800 Interest payable 400

Service revenue 70,200 A. Tedesco, Capital, Dec 31, 2011 46,100

Supplies 3,900 Equipment 23,100

Unearned service revenue 1,200

Selected accounts of Blue Irrigation Systems at December 31,2011, follow. See chart #9 Requirements 1. Prepare the company's classified balance sheet in report form at December 31, 2011. 2. Compute the company's current ratio and debt ratio at December 31, 2011. At December 31, 2010, the

current ratio was 1.83 and the debt ratio was 0.39.

Did its ability to pay debts improve or deteriorate, or did it remain the same during 2011 ?