BRIEF EXERCISES BE3-1 ‘The ledger of Dey Company includes the fll may requite adjustment (a) Prepaid Insurance (©) Uncarned Revenue (b) Depreciation Expense (a) Interest Payable BE3-2 Nunez Company accumulates the following adjustment data at December 3. Indicate (2) the type of adjustment (prepaid expense, accrued revenues and so on),and (b) the tats of accounts before adjustment (overstated or understated). 1. Supplies of $100 are on hand, E Services provided but not recorded total $90, Interest of $200 has accumblated ona note payable E. Rent collected in advance totaling $800 has been earned. sg accounts Explain why each account 82:3 Windsor Advensing Company's tral balance at December 31 shows Advertising Saris 36.10 and Advising Supplies Expense 0. On December 3, there ae $2.20 of up plies on hand. Prepare te adjusting enty at December 3, and using T accounts eniter the ba Sresin the accounts pos the adjusting etry. and inde he ajstd balance in each eum BEB-4 Ar the end ofits fist year the trl hance of Denton Company shows Equipment 31000 and vero balances in Accumulated DepreciationEquipment and Deptesation Expense, Depreciation forthe yer i esimatd 1 Be $5000. Prepare the adjusting ety for ‘zpeecaion nt December 3 pst the ajustments oT accounts and indicate he lace set presentation ofthe equipment st December 3 * B€35 On July 1.2010, spain Co.pays 18400 Randle Insurance Co fora 3-year insurance Eontact. Both compaics have fiscal years ending Decenber 31 For Span Co, jourralize and fost the enty on July Land the adjusting entry on December 31 E36 Using the datain BESS,jourmaliz and post the entry on Jl andthe ajesting etry fon December 3 for Randle Insurance Co. Randle wie the acounts Unearned Insurance RRevene and Insurance evens. BE3-7 The bookkeeper for Oglesby Company asks you to prepare the following acerued adjusting entries at December 31 1, Interest on notes payable of $400 accrued, 12. Services provided but aot recorded total $1500. 1X. Salaries earned by employees of $900 have not been recorded. Use the following aecount titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salties Expense, and Salaries Payable. BE3-8 The trial balance of Bair Company includes the following balance sheet accounts Memify the accounts that may require adjustment. Fr each account that requires adjustment, indieate (a the typeof adjusting entey (prepaid expenses uncarned revenues acrued revenues, dnd acerued expenses) and (b) the related account in the adjusting entry. “Accounts Receivable Interest Payable Prepaid Insurance [Uneatned Service Revenue “Accumulated Depreciation Equipment BE3-9 ‘The adjusted trial balance of Harmony Company at December 31.2010, incudes the following accounts: Harmony, Capital $15,600; S, Harmony. Drawing $6000; Service Revenue 13500, Safaries Expense $16.00; Insurance Expense $2,000; Rent Expense $4,000; Supplies Expence $1300; and Depreciation Expense $10, Prepare an income statement forthe year. {BE3-10 Partial adjusted tral balance data for Harmony Company is presented in BE3-9.The Balance in § Harmony. Capital is the balance as of Jnvary 1. Prepare an owner's equity st ‘met forthe year assuming net income is $10,600 forthe yer. +BE3-14._ Duncan Company records ll prepayments in income statement accounts At April 3, the tral balance shows Supplies Expense $2.00, Service Revenue $9,200. and zero balances in arated balance sheet accounts Prepare the adjusting entries at April 30 assuming (a) $1.000 of Gpplics on hand and (b) $3.000 of service revenue should be reported as unearned Indico why adjusting ees reece, soa) enify the major prof ajsing entries sow Prepare adjsing en for pps sos) Prepare adjasting ent for epreciaon 605) Prepare adjusting entry for rept expense sos) Prepare adjusting entry for teamed evenae sos) Prepare adsing eis for coat soo) Analy acount ian ‘adhe ial alae soa) Preparean income sstement roman edie tal blance son Prepare an owner equity sateen oman ested ial balance son Prepare easing ens under erative eset of defers sow4 Chapter 3 Adjusting the Accounts erpare 805.4) ising eis from Prepare djing emis from selected account dat (s05.6) Hen pes of asoments and acount eaionshipe so4s.6) 3S Pedro Sigala Company has the following balances in selected accounts on December 31, Ey Accounts Receivable $0 ‘Accumulated Depreciation—Equipment 0+ Equipment 7000 Interest Payable 0 Notes Payable 25.0 Prepaid Insurance 2520 Salaries Payable “o Supplies 2.650 Unearned Consulting Revenue 40,000 [Allthe accounts have normal balances The information below has been gathered at December 31,2010, 1. Pedeo Sigala Company borrowed $25,000 by signing a12%,one-year note on October 1.2010. 2. count of supplies on December 31,2010, indicates that supplies of $700 are on hand. 'X. Depreciation on the equipment for 2010 is 2.000 44. Pedro Sigala Company paid $2,520 for 12 months of insurance coverage on August 1.2010. 5. On December 1, 2010, Pedro Sigal collected $50,000 for consulting services to be performed {rom December 1,2010,through March 31,2011. 6, Pedto Sigla performed consulting services fora client in December 2010. The cient willbe billed $5300. Pedro Sigala Company pays its employees total salaries of $10,000 every Monday for the preceding Slay week (Monday through Friday)-On Monday, December 30, employees were paid for the week ending December 27, ll employees worked the last? days of 2010. Instructions Prepate adjusting entries for the seven items described above. 1 £36 The ledger of Piper Rental Agency on March 3 ofthe current year includes the folow~ ing selected accounts before adjusting entries have been prepared. Debit Credit repaid Insurance 53.000 Supplies 2s00) Equipment 25000) Accumulated Depreciation Equipment 5 8.400 Notes Payable 20000 Uncarned Rent Revenue 990 Rent Revenue 0.00) Interest Expense 0. ‘Wages Expense 100 Amanalysisof the accounts shows the following 1. The equipment depreciates $400 per month 2 One-third ofthe unearned tent revenue was earned during the quarter Interest of $500 is accrued on the notes payable. “£ Supplies on hand total $700, ' Insurance expires at the rate of $200 per month, Instructions Prepare the adjusting entries at March 31 assuming that adjsting entries are made quarterly. Additional accounts are: Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expense. 3-7 Aleck Company accumulates the following adjustment data at December 31. Services provided but not recorded total $750. Store supplies of S300 have been used. Utility expenses of $225 ate unpaid. Uncarned revenue of $260 has heen earned. Salaries of $900 are unpaid, Prepaid insurance totaling S380 has expired. Pe heeeExercises 127 (a) Determine the net income forthe quarter April Lo June 30, {) Determine the total assets snd total liabilities a June 30,2010 for Danks Company {€) Determine the amount that appears for John Danks, Capital at June 30,2010 EXERCISES 4 Es 3-1 Cosima San has prepated the following list of statements about the time period Explain she ime period assumption. ‘cunpion. §1. Adjusting entries ate necessary ony ia company has made accounting errors. son X 2 The IRS requites companies toile annual tax returns TA One transaction can alfect several accounting periods. ‘EA. Accounting time periods cannot be shorter than a quarter. S.A time period lasting less than one year i called an interim period {F&A seal years are calendar years, but no all alendar years ae fiscal years Instructions dentity each statement as tre of false. If fae indicate how to correct the statement, , £32 On numerous occasions proposals have surfaced to put the federal government on the Distinguish between cash and 7° aecrual basis of accounting. This is no small sue, I this basis were used it would mean that bil- accra bat of scouting. < ions in unrecorded liabilities would have to be booked, and the federal deficit would increase ($0 2) substantially. Instructions amma Ala) What isthe diference between acerua-basis accounting and cash-basis accounting? (b) Why would politicians prefer the eash bass over the acerval basis? ©) Write letter to your senator explaining why the federal government should adopt the acerual basis of accounting. 3.3. Onufer Industries collected $150,000 from customers in 2010. OF the amount collected, Compute cash and acral $30,000 was from revenue earned on account in 2009. In addition, Onufer earned $47,000 of accounting income. revenue in 2010, which wll not be collected until 2011 ‘son ‘Onufer industries also paid $100,000 for expenses in 2010. Of the amount paid, $30,000 was {for expenses incurred on account in 2009. In ddltion, Onuler incurred $44,000 of expenses in 2010, which will not be paid until 2011, Instructions 7, (4) Compute 2010 eash-basis net income. 2 (0) Compute 2010 accruat-basis net income. 3-4 _Linnik Corporation encounters the following situations: Henify he yp of ebjasing 1. Lagasse purchased $1,400 of supplies in 2010; yearend, $800 of supplies remain unused. W7 need. 2 Lagasse incurs wtlty expense whichis not yet pad in cash or recorded. sow 1. Lapasse’s employees worked 3 days in 2010, but will not be paid until 2011 4& Lagasse earned service revenue but has not yet received cash or recorded the transaction. 5. Lagasie received eash for future services to be performed in 2011 ‘ 7 [Lagasse paid $8,000 rent on October I for the 4 months starting October 1 [Lagasse performed consiting services fora client in December 2010. On December 3, tilled the elent $3300 &. Lagasee pad cash for an expense and recorded an asset until the item was used up. 9, Lagase collects $2,000 froma customer for services to be perfomed next year. 10, Lagasse purchased equipment on January 12010; the equipment will be used for 5 years 1, Lagasse borrowed $20,000 on October 1, 2010, signing a 10% one-year note payable. Instructions Identity what type of adjusting entry (prepaid expense, uncammed revenue, accrued expense, ac ‘rued revenue) needed in each situation, at December 31,2010.126 Chapter 3 Adjusting the Accounts PM review 1 Gis eras oingconerss ——-EEEI3-1-_ Numerous timing concepts are discussed on pages 96 and 97. ist of concept is 801.2 ‘rovied below, onthe left, wth a description ofthe coneept on the right. Tere are more de- t ctiptions provided than concepts Match the description of the concept to the concept. 1. Cash bass acounting (a) Monthly and quarter time periods 2 Fiscal yer. {by Accountants divide the economic ife of a busi 4X —Cttevenve eceopnition principle. nes into artificial time periods 3 Matching principle. (eo Elforts (expenses) should be matched with ae- ‘complishments (revenues). (a) Companies record revenues when they receive cash and record expenses when they pay out cash, {«) An accounting time period that is one year in length. (8) An accounting time period that starts on January 1 ‘nd ends on December 31. (2) Companies record transactions in the period ia which the events occur (hy Recognize revenue in the accounting period in ‘which itis earned. Prepareadjusingnves for BEYN3-2 The tedger of Buethle, lnc on March 32010, includes the following selected ac~ seferate. counts before adjusting entries \sos) o Debit Credit Prepaid insurance 2.00 fice Supplies 0 | Office Equipment 3000 Unearned Revenue 100 An analysis ofthe accounts shows the following J+ Insurance expires atthe rate of $300 per month Supplies on hand total $90, ‘3X Tie office equipment depreciates $500 per month VA. 25 of the unearned revenue was earned in Match. Prepare the adjusting entties fo the month of Match. Prepare adjusingnviesfor — EEHN3:3_ Jose Contreras isthe new owner of Curveball Computer Services At the end of sera Jaly 2010, his fist month of ownership. Jose is teying 1 prepare monthly financial statements He \s06) has the following information forthe month 1. AUJuly 31,Contteras owed employees S110 in slates that the company wil payin August. 2 On July 1, Contreras borrowed $20,000 from a local bank on a 10-year note. The annual in- terest rate is 12%. 4 Service revenue unrecorded in July totaled $1.60. Prepare the adjusting entries needed at July 3, 2010. Catstewmounesortit —EEEG3-4 Danks Co. was organized on Api 1, 2010-The company prepares quarterly fnan- tole Gil tatements The ajsed tal alae amounts at Jone 30 ae shown below. son Debits Credits cob $530 Necumulated Depredation— + 70 “Accounts Receivable $30 “Equipment Prepaid Rent Tao Notes Payable 000 Supplies Sm Aecounts Payable 1200 Egupment 120m Salaries Payable 300 John Danks Drawing "S09 Interest Payable 0 Salaies Expense 7520. Uneained Rent om) Rent Expense 1200 John Danks Capita 11200 Depreciation Expense "70 Commission revenue 11360 Supplies Expense 1) Rentrevenue ‘on Uilties Expense 40 Yonleneat Interest Expense 40 aa span “Tal debits(by et income $3,090 Ending capital S190 ‘Toxlasets $28,180, Preparing ajusing envies (505.6) 1. Salaries expense $2,220 2, Rent revenue $75,000, ‘S.e00 PACE CO. Vial Balance September 30, 2010 Unadjusted Adjusted De Ce Dr. ce Cash $6,700 $6,700 ‘Accounts Resale ‘400 300) plies 1200 1000 Prepaid Rent 1300 90) Equipment 15100 15.000 Accumulated Depreciation—EEquipment $380 Notes Payable $ s000 000 Accounts Payable 1510 1510 Salaries Payable ‘wo Interest Payable 30 Uncarned Rent 900 500 Fran Pace, Capital 14000 14.000 Fran Pace, Drawing co oo ‘Commission Revenue 14000 14300 Rent Revenue 400 ‘00 Salaries Expense 9.000 9,600 Rent Expense 900 1500) Depreciation Expense 350 Supplies Expense 200 ilies Expense 510 Interest Expense ee S730 S710 Instructions (4 Journalize the adjusting entries that were made, {) Prepare an income statement and an owner's equity statement for the 3 months ending September 30 and a balance sheet at September 30. (e) Ifthe note bears interest at 12%, how many months has it been oustanding? P3.4A A review of the ledger of Remington Company at December 31,2010, produces the following data pertaining to the preparation of annual adjusting entries 4. Salaries Payable $0. There ae eight salaried employees Salaries ate paid every Friday for the curtent week. Five employees receive a salary of $800 each per week, and three employees arm $600 each per week. Assume December 31 isa Tuesday. Employees do not work week~ fends All employees worked the last 2 days of December. 2. Uncarned Rent $324,000. The company began subleasing office space in its new building on November L.At December 3. the company had the following renal contracts that are paid in full forthe entte term ofthe lease. Term Number of Date (inmonths) Monthly Rent —_Leases. Now! 6 $4000 5 Dect 6 $8500 4 1. Prepaid Advertising $15,000. This balance consist of payments on two advertising contracts. “The contracts provide for monthly advertising in two trade magazines The terms ofthe con- tacts areas follows,40 Chapter 3 Adjusting the Accounts Instructions Answer the following questions assuming the year begins January 1. (a) Ifthe amount i Supplies Expense isthe January 31 adjusting entry. and $500 of supplies was ‘purchased in January what was the balance in Supplies on January 1? (b) IT the amount in Insurance Expense i the January 31 adjusting entry andthe original insurance premium was for ane year what was the total premium and when was the policy purchased? (6) If $3,500 of salaries was paid in January, what was the balance in Salaries Payable at December 31,2009? {€) 111,600 was received in January for services performed in January, what was the balance in Uneamned Revenve at December 31,2009? Journalie basic wansacons EB Selected accounts of Root Company are shown below. sind adjusting emi Supplies Expense (805, 6,7) 7 as Supplies Salaries Payable Bal 1.400 | 731 1,900 73 850 mo 1500 Receivable Unearned Revenue 734 iar soo] 71 Bal. 1500 70 120 Salaries Expense Service Revenue ins 100 7a 3300 7 ‘350 zt 1.300) 7 ‘900 Instructions ‘After analyzing the accounts, journaize (a) the July transactions and (b) the adjusting entries that were made on July 3, (Hint: July transactions were for cash) ‘Prepare atusing enries from EBA The tial lances before and after adjustment for Garcia Company a the end ofits fiscal analysis oft beancen year ae presented below. 505.6.7) , GARCIA COMPANY x “ial Balance ‘August 31,2010 Before Adjustment Cr cash $10,300 ‘Accounts Receivable 8300 Oifice Supplies 2300 Prepaid tnsurance $000 Ofce Equipment 1000 Accumulated Depreciation —Orfice Equipment $300 $4500 ‘Accounts Payable 5300 $300 Salaries Payable 5 1,100 Uncamed Rent Revenve 1500 oo T.Garcia, Capital, 1400 15400 Service Revenue 34000 35,000 Rent Revenue 11000 11900) Salaries Expense 17900 18,100 Office Supplies Expense -o- 100. Rent Expense 15000 15000 Insurance Expense - 1500 Depreciation Expense +o ‘900 SS TSH SASH T4500Exercises 129 Instruction Far each ofthe abune items indicate the following (a) The type of ay expense). (0) The satus of acounts before adjustment (oversta E38 Rachol Ward, DDS practice on January ‘operations the fllowing transactions occurred. cnt (prepaid expense, uncatned revenue, acer or understatement) 1010, Daring the frst month Prepare adjusting enris 505.6) 1. Petformed services for patients who had dental plan insurance, AUJanuaty 31, $1280 of such ices was carne ut not yot recorded, uility expenses incurte but Hol paid poe to January 3 totaled $368 ised dental equipment on January 1 for $8000, paying $20.0) in cash and signing a note payable The equipment depreciates $800 per month Interests SN per Prepare the adjusting entries on January M, Account titles ae: Aecumlated Depreciation— Dental Equipment, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance ypense, terest Payable, Prepaid Insurance, Supplies, Supplies Expense, os Expense and Uilities Payable, J £39 The trial balance fr ioneer Advertising Agency shown in Mlstation 33.p.100.Inliew Prepare adn eres ‘ofthe adjusting entries shown in the text at October 3T,assume the following adjustment data. (G05, 4) Advertising supplies on hand at October 31 total $500 2 Expired insurance forthe month i S100 3. Depreciation for the month is $50. 4 Unearned revenuc earned in October totals S40, §, Services provided but not recotded at October 31 are $300, G Interest accrued at October 31 i $70. 7. Accrued salaries at October 31 ate S1.S00. Instructions pare the adjusting entries fr the items above 3-10 The income statement of Henning Co.for the month of July shows nt income of SLA00 Prepare crrectincome freed on Seniee Revenoe 500 Wages Espen $230, Suis Exper SLAM, and Utes Soe agone Sn i evcwing the atement, ou disoer the lowing 60256 1 Tasuranse expired during lof $4 was oie. 2 Supieseapemenclas $00 of spies tat ae tlm and at ay 3 eR 4X Deprei om cquipment of SSb was omit 4X Accrued but unpaid wages at July 31 of $300 were not included. 5. Services provided but unrecorded totaled $500 Instructions pate correct income statement for July 2010. 3-11 A partial adjusted tial balance of Sila Company at January 31,2010,shows the following. Anayee add data SILA COMPANY 6045.6.7) Adjusted Tial Balance January 31, 2010, Supties Prepaid Insurance Salaries Payable ss Uncarned Revenue 780 Supplies Expense 950 Tasurance Expense 400 Salaries Expense sno Service Revenue 2.00)once dat 1. $s of supplies have been used during the month eapense incurred but not paid on May 31,2010, 8200, ance poy s for 2 ‘4 S100 ofthe balance in the unearned service revenue ascount remains unearned atthe end of the month. & May 31 is a Wednesday, and employees are paid on Fridays Stone Consulting fas two em ployees who are paid $700 each for a S-day work week. {6 The olfice furniture has a $year life with no salvage value, I is being depreciated at $160 per svonth for 0 months 7. Invoices representing $1,000 of services performed during the month have not been recorded asof May 1. Instructions {a Prepare the adjusting entries for the month of May. Use J4 asthe page number for your journal (by Post the adjusting entries tothe ledger accounts Enter the totals from the tral balance 3s ‘beginning account balances and place a check mark in the posting reference column. (6) Prepare an adjusted ral balance at May 31,2010 3.28 _ Neosho River Resort opened for business on June I with eight air-conditioned units 7 Astral balance before adjustment on August 31 is 38 follows S NEOSHO RIVER RESORT ? 5 ‘ial Balance ‘august 31,2010 Account Number Debi Credit im Cash $19.0 126 Supplies 3300 130 Prepaid Insurance 6000 10 Land 25,000 18 Cottages 12500 19 Furniture 26.00 . 201 Accounts Payable $6500 209 Uneaened Rent Revenue 7300 25 Mortgage Payable 000 sol PHarder. Capital 100,000 306 P Harder. Deawing 5000 2 Rent Revenue so000 2 Repair Expense 3.600 . 76 Salaries Expense 51,000 m Uilties Expense 9800 : 3273900 90 {1m aultion to those accounts listed on the trial balance, the chart of accounts for Neosho River Resort alo contains the following accounts and account numbers: No. 12 Accounts Receivable, ‘No. H44 Accumulated Depreciation—Cottages No. 180 Accumulated Depreciation—Furniture, 'No.212 Salaries Payable, No230 Interest Payable, No.620 Depreciation Expense—CottagesNo. {21 Depreciation Expense—Furniture, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense. 1. Insurance expres atthe rate of $400 pet month, 2. count on August 31 shows $600 of supplies on hand |X. Annual depreciation is $600 on cottages and $2400 on furniture, 4 Uneared rent revenue of $4,100 was earned prior to August 31 '. Safatcs of $40 were unpaid at August 3, G Rentals of $1,000 were due from tenants at August 31, (Use Accounts Receivable.) 7. The mortgage intrest rate is 9% per year. (The mortgage was taken out on August 1.) Problems: Set 137 (0) Ad til balance $33,800, Frepreaditng csp. nd prop to aba See on tone 605.67) ow Reditreechapter 3 Adjusting the Accounts Debits cr Cash $9500 Notes Payable $s 20,000 Accounts Receivable 14,000 Accounts Payable 9,000 Equipment 45000 Sue Givens. Capital 22.000 Insurance Expense 1.800 Graphic Revenue 52.100 Salaries Expense 30.000 Consulting Revenue 6.000 Supplies Expense 3,700 Advertsing Expense 1.900 Rent Expense 1300 Usilities Expense. 15300 : $109,100 $109,100 “Analysis reveals the following additionat data 1. The $3,700 balance in Supplies Expense represents supplies purchased in January. At June 30, $1,300 of supplies was on hand.» 2. The note payable was issued on February 1. It isa 9%%,six-month note. . |X Thebalance in Insurance Expense isthe premium oh a one-year policy, dated March 1,2010. Consulting fees are eredited to revenue when received. At June 30, consulting fees of 1.500 ate unearned. ‘5. Graphie revenue eared but unrecorded at June 30 totals $2,000 (6. Depreciation i $2,000 per year. Instructions (2) Jouralize the adjusting entries at June 30, (Assume adjustments are recorded every 6 months) (b) Aj wa balance $112,880 (b) Prepare an adjusted trial balance. (6) Net income $18,750, {6 Prepare an income statement and owner's equity staternent forthe 6 months ended June 30, Ending capital $40,750 anda balance sheet at June 30. Total asets $72,000, PROBLEMS: SET B : i ‘repre alsin evict 7 PB Sharon Stone sated her own contin im, Stone Consulting, on May 1,2010.The to tedger account. and prepare/_ fal balance at May 313s follows ‘vatpined al olnce 505,67) S STONE CONSULTING 7 “al Balance May31, 2010 cash Accounts Receivable Supplies Prepaid tnsurance Office Furniture ‘Accounts Payable 3500 Uncarned Service Revenue 300 S Stone, Capit | Service Revenue 6.000 Salaries Expense 3.000 Rent Expense In addition to those accounts listed on the trial balance, the chart of accounts for Modine ‘Consulting also contains the following accounts and account numbers: No. 150 Accumulated Depreciation—Offce Furniture? No. 229 Travel Payable, No. 212 Salaries Payable, No. 717, Depreciation Expense, No. 722 Insurance Expense, No. 736 Travel Expense, and No. 63! Supplies Expense.Number of Magazine Date Amount Issues A650 May! $5,400 2 pov Oct. 9.600 m4 “The fist advertise ent runs in the month in which the contrast is signed. 4. Notes Payable $120,000. This balance consists ofa note for one year at an annual interest rate ‘of 9%, dated June 1 Instructions Prepare the adjusting entries at December 31,2010, (Show all computations) P3.SA On November 1, 2010, the account balances of Morelli Equipment Repair were 35 Cred ‘Recumulated Depreciation § ‘Accounts Payable Unearned Service Revenue Salaries Payable V. Morelli, Capital, follows, No Debits No. To Cash $2400 1S 112 Accounts Receivable 4250201 126 Supplies 1800 209 153. Store Equipment 200 212 301 520.850 During November the following summary transactions were completed. Now. 8 15 Purchased store equipment on account $2,000. 17 Parehased supplies on account $700, 20. Paid creditors on account $2,700. 22. Paid November rent $400. 25 Paid salaries $1,700. Paid $1,700 for salaries due employees, of which $700 is for October salaries. 10. Received $3.420 cash from customers on account. 12. Received $3,100 cash for services performed in November. 27 Performed services on account and billed customers for services provided $900. 29. Received $600 from customers for future service. Adjustment data consist of: 1, Supplies on hand $1.200. 2. Accrued salaries payable $400, 13 Depreciation for the month is $200. 4 Unearned service revenue of $1,250 is earned. Instruetions (a) Enter the November I balances in the edger accounts, (b) Journalize the November transactions. {6) Post to the ledger accounts Use J] forthe posting reference. Use the following aitional ac- counts: No. 407 Service Revenue, No.615 Depreciation Expens No, 726 Salaries Expense, and No.729 Rent Expense (a) Prepare atrial balance at Novernber 30 {@) Journalize and post adjusting entries (0) Prepare an adjusted trial balance 'No. 631 Supplies Expense, {q) Prepare an income statement and an owner's equity statement for November and a bal: ance sheet at November 30. *P3.6A Givens Graphics Company was organized on January 1, 2010, by Sue Givens. ‘At the end of the fist 6 months of operations, the tral balance contained the accounts on the next page, Problems: Set A 138 dournalize transactions and follow trough accounting tele to preparation of finan lal statements 605,67) Ss (d) Tal balance $28,380 (0) Adj ral balance $24,950 {) Net income $250; Ending at $18 200 Prepare adjusting emis, adjusted tal Blance, ond financial staveert sing ‘pendix. 505,8.7.8)Instructions / Prepare the adjusting entries that were made. 3-14 The adjusted til balance for Garcia Company is given in E313, fram ated vial blnce Instructions ‘son Prepare the income and owner's equity statements for the year and the balance sheet at August 3 E345 The following data are taken from the comparative balance sheets of Girard Bilids Record mansions on acral ‘Club, which prepate is financial statements using the acerual basis of accounting bas convertrevenueto ath recep 20102009 05.0 Feesteceivable from members $14.00 $9,000, neared fees revenue 17000 25,000 Fees are billed to members bated upon theie use of the club's facilities. Uncarned fees arise fom the sale of git certificates which members can apply to their future use of lub facilites. “The 2010 income statement forthe club showed that fes even of $153,000 was earned during the year Instructions (Gn: You wll probably find it helpful 1 ws T ecounts to analyze these data.) (2) Prepare journal entries foreach of the following events that took place during 2010. (A) Fees receivable from 2009 were all collected (2) Gift certificates outstanding at the end of 2009 were al redeemed. {G) Am additional $35,000 worth of gift certificates wete sold during 2010.A portion ofthese ‘vas used bythe recipient during the year:the remainder was still outstanding at the end of 20K (4) Fees fr 2010 for services provided to members were billed to members (5) Fees receivable for 2010 (he. those billed in item [3] above) were partially collected. () Determine the amount of cash received by the clu with respect fees during 2010, +£3.16 Colin Mochrie Company has the following balanees in selected accounts on Decembet Jouralte aug emis sow iS) Consulting Revenue 40000 Insurance Expense 2.100 Supplies Expense 2480 [Allthe accounts have normal balances. Coin Mochrie Company debits prepayments to expense accounts when paid and credits unearned revenues to revenue accounts when received. The fol Towing information below has been gathered at December 31,2010. Colin Mochrie Company pai §2,10 for 12 months of insurance coverage on June 1.2010. 2 On December 1,2010, olin Mochrie Company collected $40,00 for consulting services to ‘ne performed from December 1, 2010, through March 31,2011 13. A count of supplies on December 31, 2010, indicates that supplies of $900 are om hand. Instructions Prepare the adjusting enries needed at December 31,2010, +£3.17 At Bota Company, prepayments are debited to expense when paid, and unearned Joule vansactions and revenues are credited to revenve when received. During January of the current year.the following, edusing enies transactions occurred. soe, Jan, 2 Paid $2,700 fr fire insurance protection forthe yea 10 Paid $3,100 for supplies. 15 Received $7,000 for services tobe performed inthe future. (On January 31.its determined that $4,500 of the services fees have been earned and that there are $900 of supplies on hand.138 Chapter 3 Adjusting the Accounts, {0 Ad, il btn 37, (a) Net income $14,100 * Ending eal ance Stow 00 Tout ase $19 500 Prepare adysingerivies ad financial sstemena 08.6.7) by) Ne income $4,825 Ending capital $2522 Total sets $39,600, Prepare austin cntes \s05.6) {insurance expense $3,800 2. Subzeiption revenue $.000 Instructions. {a) Journalize the adjusting entries on August 31 for the 3-month period June 1~August 31. {h) Prepare a ledger using the three-column form of aecount, Enter the tial balance amounts an post the adjusting entries. (Use J asthe posting reference.) (6) Prepare an adjusted tral balance on August 31. () Prepare an income statement and an owner's equity statement for the 3 months ending August 31 anda balance sheet as of August 31 3.38 Poblano Co. was organized on July 1,2010, Quarterly financial statements are prepared. ‘he tnadjusted and adjusted tril balances as of September 30 are shown below. POBLANO CO. ‘ial Balance: September 30, 2010 Unadjusted Den ce nee Cash 5 8,700 $8700 Accounts Receivable 10,300 11200 Supplies 1300 500 Prepaid Rent 200 1300 Equipme 18,000 18,000 ‘Accumulated Depreciation —Equipment sso Notes Payable S 10,000 10,000 Accounts Payable 2.500 2.500 Salaries Payable 75 Interest Payable 100 Uneamed Rent Revenue 1.900 1050 Rikki Poblano, Capital 22.000 22000 Rikki Poblano, Drawing 1.600 1.600 ‘Commission Revenue 16.000 16800 Rent Revenue 110 22260 Salaries Expense 8000 ans Rent Expense 1,900 21800 Depreciation Expense ‘300 00 1310 1510 Interest Expense 100 Sar | SSSI SSS Instructions entries that were made {(h) Prepate an income statement and an ovener’s equity statement for the 3 months ending September 30 and a balance sheet at September 30. {) Ifthe note bears interest at 12%, how many months has i been outstanding? 3-48 A review of the ledger of Skywalker Company at December 31,2010, produces the fl- lowing data pertaining to the preparation of annual adjusting entries. 1. Prepaid Insurance $8,600, The company has separate insurance policies on its buildings and its motor vehicles Policy 4364 on the building was purchased on July 1,2009. for $6,000. The policy has aterm of 3 years Policy A29S8 on the vehicles was purchased on January 1,2010, for $3,600. This policy has aterm of2 years 2. Unearned Subscriptions $49,000. The company began selling magazine subscriptions in 2010 ‘on an annual basis The magazine is published monthly. The seling price ofa subscription is $50. review of subscription contracts reveal the following. Subscription Number of Oaobert 20 November t x0 Devembe 38) oo382 chapter 8 Fraud, Internal Control, and Cash repre ban reconctaion SZ 8. and adjusting entries. (son Desermine oustanding checks (507 Prepare bank reconciliation cnledpanng ones oS son) S Preparcbnkrcoston fp ind adjsing ete son) aS +9 Anna Peois unable toreconie the bank balance at Jnuary 31m’ reconelation ‘Cash balance per bank |Add: NSF check. Less: Bank service charge Adjusted balance per bank Cash balance per books Less: Deposits in transit ‘Add: Outstanding checks Adjusted balance per books Instructions (a) Prepate a correct bank reconciliation. {(b) Jourmalize the entries requted by the reconciliation. 8-10 On April 30, the bank reconciliation of Galena Company shows three outstanding checks: no, 254, 650,no.285, $820, and no. 257, $410.The May bank statement and the May cash payments journal show the following. Bank Statement ‘Cash Payments Journal Checks Paid ‘Checks Issued Date CheckNo. Amount Check No. Amount ws 254 60 258, 159 sn 27 410 29 7s sn7 258 139 sno 20 S90 siz 239 2s sis 261 500 370 261 500 a2 202 750 529 263 480 ns 263 80 $30 202 70 $29 264 So) Instructions Using step 2a the reconciliation procedure list the outstanding checks at May 31 8-11. The following information pertains to Family Video Company. 1. Cash balance per bank, July 3, $7.63. 2 July bank service charge not recorded by the depositor $28. 2. Cath balance per books, July 3, $7.28 “Deposits in transit aly 31, $1,500. §. Bank collected $900 note for Family in July, plus interest $36 less fee $20. The collection has not been recorded by Family, and no interest has been scerued, 6 Outstanding checks July 31, $591 Instructions (a) Prepare a bank reconciliation at July 31. (©) Journalize the adjusting entries at July 31 on the books of Family Video Company. 8-12 The information below relates to the Cash account in the ledger of Robertson Company. Balance September 1—$17,150; Cash deposited $64,000. Balance September 30—$17.404; Checks written —$63,746, “The September bank statement shows a balance of $16,422 on September 30 and the following memoranda. Credits Debits Collection of $1500 note plusinterest $30 $1530 NSF check: Hoover $425 Interest earned on checking account S45 Safety deposit borrent $65 At September 30, deposits in transit were $4450, and outstanding checks totaled $2383.32 Chapter.3 Adjusting the Accounts Instructions {a Journalize and post th {) ourmalize and post the {e) Determine the ending balance ines sty transactions (Use Paccounts) adjusting entries at January 31 hof the accounts, PROBLEMS: SET A y 3 | is Prepare adjusing envies post, PRA Ken Ham started bis own consulting frm, Hambone Consulting. on May 1,2010.The roller accounts and propre asa ance at May 31 iss follows ‘Sued al balance sos.e.7 / HAMBONE CONSULTING “rial Balance ay 31, 2010 Cash Accounts Receivable upplies Prepaid Insurance Office Furniture ‘Accounts Payable 4500 Unearned Service Revenue 2.000 K-Ham, Capital 17370 Service Revenue 7300 ies Expense 300 ‘0 Siz S700 In addition to those accounts listed on the tral balance, the chart of accounts for Hambone Consulting aso contains the following accounts and aecount numbers: No. 150 Accumulated Depreciation Office Furniture, No. 212 Salaries Payable, No, 229 Travel Payable, No. 631 Supplies Expense, No. 717 Depreciation Expense, No. 722 Insurance Expense, and No. 736, ‘Travel Expense. ‘Other data $900 of supplies have been used during the month Travel expense incurred but not paid on May 31,2010,$250. “The insurance policy is for2 years ‘S400 of the balance in the unearned service revenve account remains unearned atthe end of the month §& May 31 is a Wednesday. and employees are pad on Fridays Hambone Consulting has two “employees. who ate paid $800 each fora Slay work week. 6. The office funiture has. 5-year life with no salvage value. tis being depreciated at $170 per month for 60 months. . Invoices representing $1,200 of services performed during the month have not been recorded asof May 31.the adjusting entries forthe month of May. Use J as the page number for your journal () Post the adjusting entries to the ledger aecounts Enter the totals from the trial balance as ‘beginning account balances and place a check ath inthe posting reference column. (6) Prepare an adjusted trial balance at May 31,2010, P32A The Anniston Motel opened for business on May 1, 2010. Is trial balance before ad” 7 justmment on May 31 iss follows. ANNISTON MOTEL ‘Tal Balance: May 31, 2010 Cash S200 Supplies 1.900 Prepaid lnsurance 2.400 Land 15,000 Lodge 70.00 Furniture 16800 [Accounts Payable Ss s300 Unearned Rent 3.600 ‘Mortgage Payable 40,000 Anniston, Capital 55,000 Rent Revenue 9200 Advertising Expense $00 Safaties Expense 3000 1.000 S300 315100 {In addition to those accounts listed on the trial balance, the chart of aecounts for Anniston Motel also contains the following accounts and account numbers: No. 142 Accumulated Depreciation—Lodge, No. 150 Accumulated Depreciation—Furniture, No. 212 Salaries Payable, No.230 Intetest Payable. No. 619 Depreciation Expense—Lodge, No.621 Depreciation ‘spense—Furnitute, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense, Other data Isurance expires atthe rate of $200 per month, 2 A count of supplies shows $500 of unused supplies on May 31. ‘3. Annual depreciation is $3,600 on the lodge and $3,000 on furniture. 4 The mortgage interest rate is 12%. (The mortgage was taken out on May 1.) 'S. Unearned ret of $2500 has been earned. G. Salaries of $50 ate secrued and unpaid at May 3, Instructions (4) Journalze the adjusting enties on May 31 (h) Prepare a ledger using the thee-column form of account. Enter the tral balance amounts and cs 1 adjusting entries. (Used as the posting reference.) (6) Prepife an adjusted trial balance on May 31 (4) Prepare an income statement and an owner's equity statement for the month of May and a hale sheet at May 31 P3.3A Pace Co. was organized on July 1, 2010, Quarterly financial statements ate prepared, The unadjusted and adjusted Wal balances as of September 30 ae shown below. Problems: Set A 133 (0) A, wil balance $38,280, Prepare adjusting ens post land prepare adjsed ral balance wd financial 805.6.) a (Ad wis balance $114,850 (GI Net income $3,850 a stance Total assets $106,850 Prepare ajnsting entries and [financial temente 805,6.7)Problems: SetB 139 A. Notes Payable $60,000. This halance consists of a note for 6 months at an annual interest rate 3. Interest expense $1,800 ‘of 9%, dated September I jaties Payable $0. There are eight salaried empl ies are paid every Friday forthe 4. Sa. current week. Five employees receive a salary of $500 each per week, and three employees «earn $750 each per week, December 3 isa Wednesday. Employees do not work weekends. All employees worked the last 3 days of Decemb ios expense $2,850 Instructions Prepare the adjusting entries at December 31,2010, P3-SB On September 1, 2010, the account balances of Rand Equipment Repair were as Journaize transactions and fans faoaa neem ere senpecio aon * cial statements. jso5.an Na et Na cx oa 101 Cash 154 Accumulated Depreciation $1,500 Peachtree 112. Aerounts Receivable 201 Accounts Payable 330 126 Suples 20) UnenmedSrviceRevense 100 153 Store Equipment 212 Salaries Payable 301 J.Rand, Capital During September the following summary transactions were completed. ‘Sept. 8 Paid $1,400 for salaries due employees, of which $900 is for September. 10 Received $1,200 cash from customers on account. 12. Received $3,400 cash for services performed in September. 15 Purchased store equipment on account $3,000, 17 Purchased supplies on account $1,200. 20 Paid creditors $4,500 on account. 22. Paid September rent $500. 25 Paid salaries $1,250. 27 Performed services on account and billed customers for services provided $1,500. 29 Received $680 from customers for future service. ‘Agjustment data consist 1. Supplies on hand $1,200, 2. Accrued salaries payable $400. 3. Depreciation is $100 per month. 4. Uneamed service revenue of $1,450 is earned. Instructions {a) Enter the September I balances in he ledger accounts {0) Journalize the September ansactions {6) Posttothe ledger accounts Use J forthe posting reference. Use the folowing nitiona e- ous: No. 407 Servie Revenue, No 61S Depreciation Expense, No 63 Supplies Expense, No. 726 Salaries Expense, and No, 729 Ren Expense. (a Prepare a il balance at September 30, wn (6) Jouralze and post adjusting entries (0) Prepare an adjusted wal balance. dere snes (g) Prepare an income statement and an owner's equity statement for September and a balance "> Enting eapital $19,800 sheet at September 30 onthe ext page Tou es $23900, balance $30,150