Exercise 4-8

Apachi Company ended its fiscal year on July 31, 2010. The company's adjusted trial balance as of the end of its fiscal year is as shown below.

APACHI COMPANY
Adjusted Trial Balance
July 31, 2010
No.	Account Titles	Debits	Credits
101	Cash	$14,840
112	Accounts Receivable	8,780
157	Equipment	15,900
167	Accumulated Depreciation		$7,400
201	Accounts Payable		4,220
208	Unearned Rent Revenue		1,800
301	B. J. Apachi, Capital		45,200
306	B. J. Apachi, Drawing	16,000
404	Commission Revenue		65,000
429	Rent Revenue		6,500
711	Depreciation Expense	4,000
720	Salaries Expense	55,700
732	Utilities Expense	14,900
		$130,120	$130,120

Instructions

(a) Prepare the closing entries. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)

(b) Post to B.J. Apachi, Capital and No. 350 Income Summary accounts. (If answer is zero, please enter 0. Do not leave any fields blank. If balance is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45).)

(c) Prepare a post-closing trial balance at July 31. (If answer is zero, please enter 0. Do not leave any fields blank.)

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Exercise 4-7

Emil Skoda Company had the following adjusted trial balance.

                                        EMIL SKODA COMPANY

                                        Adjusted Trial Balance

                                             June 30, 2008

                                                         Adjusted Trial Balance

Account Titles                                     Debits            Credits

Cash                                                  $3,712 

Accounts Receivable                             3,904 

Supplies                                                  480 

Accounts Payable                                                      $1,792

Unearned Revenue                                                         160

Emil Skoda, Capital                                                      5,760

Emil Skoda, Drawing                                300

Service Revenue                                                          4,064

Salaries Expense                                   1,344 

Miscellaneous Expense                             256 

Supplies Expense                                  2,228 

Salaries Payable                                                             448

                                                          $12,224          $12,224

Instructions

(a) Prepare closing entries at June 30, 2008. 

(b) Prepare a post-closing trial balance.

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Exercise 4-6 


Selected worksheet data for Nicholson Company are presented below.
Account Titles Trial Balance Trial Balance

Dr. Cr. Dr. Cr.
Accounts Receivable ? 34,000
Prepaid Insurance 26,000 20,000
Supplies 7,000 ?
Accumulated Depreciation 12,000 ?
Salaries Payable ? 5,000
Service Revenue 88,000 97,000
Insurance Expense ?
Depreciation Expense 10,000
Supplies Expense 5,000
Salaries Expense ? 49,000

Instructions
(a) Fill in the missing amounts.

(b) Prepare the adjusting entries that were made


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Exercise 4-5 


The adjustments columns of the worksheet for Mears Company are shown below.

Adjustments
Account Titles Debit Credit
Accounts Receivable 600
Prepaid Insurance 400
Accumulated Depreciation 900
Salaries Payable 500
Service Revenue 600
Salaries Expense 500
Insurance Expense 400
Depreciation Expense 900
2,400 2,400

Instructions

(a) Prepare the adjusting entries.

(b) Assuming the adjusted trial balance amount for each account is normal, indicate the financial
statement column to which each balance should be extended


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Exercise 4-2

The adjusted trial balance columns of the worksheet for Goode Company are as follows

GOODE COMPANY

Worksheet (partial)

For the Month Ended April 30, 2008

Adjusted Trial Income

Balance Statement Balance Sheet

Account Titles Dr. Cr. Dr. Cr. Dr. Cr.

Cash 13,752

Accounts Receivable 7,840

Prepaid Rent 2,280

Equipment 23,050

Accumulated Depreciation 4,921

Notes Payable 5,700

Accounts Payable 5,672

Common Stock 25,000

Retained Earnings 5,960

Dividends 3,650

Service Revenue 15,590

Salaries Expense 10,840

Rent Expense 760

Depreciation Expense 671

Interest Expense 57

Interest Payable 57

Totals 62,900 62,900

Instructions

Complete the worksheet.

Exercise 4-3

Worksheet data for Goode Company are presented in E4-2. No common stock was issued

during April.

Instructions

Prepare an income statement, an owner's equity statement, and a classified balance sheet.

Exercise 4-4

Worksheet data for Goode Company are presented in E4-2.

Instructions

(a) Prepare a post-closing trial balance at April 30

(b)Post the closing entries to Income Summary and Retained Earnings. Use T accounts

(c)Journalize the closing entries at April 30.

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Exercise 4-2

The adjusted trial balance columns of the worksheet for Goode Company are as follows

GOODE COMPANY

Worksheet (partial)

For the Month Ended April 30, 2008

Adjusted Trial Income

Balance Statement Balance Sheet

Account Titles Dr. Cr. Dr. Cr. Dr. Cr.

Cash 13,752

Accounts Receivable 7,840

Prepaid Rent 2,280

Equipment 23,050

Accumulated Depreciation 4,921

Notes Payable 5,700

Accounts Payable 5,672

Common Stock 25,000

Retained Earnings 5,960

Dividends 3,650

Service Revenue 15,590

Salaries Expense 10,840

Rent Expense 760

Depreciation Expense 671

Interest Expense 57

Interest Payable 57

Totals 62,900 62,900

Instructions

Complete the worksheet.

Exercise 4-3

Worksheet data for Goode Company are presented in E4-2. No common stock was issued

during April.

Instructions

Prepare an income statement, an owner's equity statement, and a classified balance sheet.

Exercise 4-4

Worksheet data for Goode Company are presented in E4-2.

Instructions

(a) Prepare a post-closing trial balance at April 30

(b)Post the closing entries to Income Summary and Retained Earnings. Use T accounts

(c)Journalize the closing entries at April 30.

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Breif Exercise 4-10

The balance sheet debit column of the worksheet for Diaz Company includes the following accounts:Accounts Receivable $12,500; Prepaid Insurance $3,600; Cash $15,400; Supplies $5,200, and Short-term Investments $6,700. Prepare the current assets section of the balance sheet, listing the accounts in proper sequence.


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Breif Exercise 4-9

At Batavia Company, the following errors were discovered after the transactions had been journalized and posted. Prepare the correcting entries.

1. A collection on account from a customer for $780 was recorded as a debit to Cash $780 and a credit to Service Revenue $780.

2. The purchase of store supplies on account for $1,570 was recorded as a debit to Store Supplies $1,750 and a credit to Accounts Payable $1,750.
.

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Breif Exercise 4-6

 The income statement for Crestwood Golf Club for the month ending July 31 shows Green Fee Revenue $13,600, Salaries Expense $8,200, Maintenance Expense $2,500, and Net Income $2,900. Prepare the entries to close the revenue and expense accounts. Post the entries to the revenue and expense accounts, and complete the closing process for these accounts using the three-column form of account.


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Breif Exercise 4-5

 Using the data in BE 4-4, enter the balances in T accounts post the closing entries, and rule and balance the accounts.

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Breif Exercise 4-4

The ledger of Swann Company contains the following balances: Retained Earnings $30,000; Dividends $2,000; Service Revenue $50,000; Salaries Expense $27,000; and Supplies Expense $4,000. Prepare the closing entries at December 31. 

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Breif Exercise 4-3

The following selected accounts appear in the adjusted trial balance columns of the worksheet for Batan Company: Accumulated Depreciation; Depreciation Expense; Common Stock; Dividends; Service Revenue; Supplies; and Accounts Payable. Indicate the financial statement column (income statement Dr., balance sheet Cr., etc.) to which each balance should be extended.


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Breif Exercise 4-2

The ledger of Ley Company includes the following unadjusted balances: Prepaid Insurance $3,000, Service Revenue $58,000, and Salaries Expense $25,000. Adjusting entries are required for (a) expired insurance $1,200; (b) services provided $1,100, but unbilled and uncollected; and (c) accrued salaries payable $800. Enter the unadjusted balances and adjustments into a worksheet and complete the worksheet for all accounts. Note:You will need to add the following accounts: Accounts Receivable, Salaries Payable, and Insurance Expense.

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Problem 3-5A

On September 1, 2010, the account balances of Rand Equipment Repair were as follows.

No.		Debits		No.		Credits
101		Cash	$4,880		154		Accumulated Depreciation	$1,500
112		Accounts Receivable	3,520		201		Accounts Payable	3,400
126		Supplies	2,000		209		Unearned Service Revenue	1,400
153		Store Equipment	15,000		212		Salaries Payable	500
					301		J. Rand, Capital	18,600
			$25,400					$25,400

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 $650 from customers for future service.

Adjustment data consist of:

1. Supplies on hand $1,200.
2. Accrued salaries payable $400.
3. Depreciation is $100 per month.
4. Unearned service revenue of $1,450 is earned.

Instructions

(a)	Enter the September 1 balances in the ledger accounts.
(b)	Journalize the September transactions.
(c)	Post to the ledger accounts. Use J1 for the posting reference. Use the following accounts: No. 407 Service Revenue, No. 615 Depreciation Expense, No. 631 Supplies Expense, No. 726 Salaries Expense, and No. 729 Rent Expense.
(d)	Prepare a trial balance at September 30.
(e)	Journalize and post adjusting entries.
(f)	Prepare an adjusted trial balance.
	(g) Prepare an income statement and an owner’s equity statement for September and a balance sheet at September 30. FOLLOW THE LINK TO GET THE ANSWER!!

Problem 3-4B

A review of the ledger of Yoda Company at December 31, 2008, produces the following 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 B4564 on the building was purchased on July 1, 2007, for $6,000.The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2008, for $3,600.This policy has a term of 2 years.

2. Unearned Subscriptions $49,000.The company began selling magazine subscriptions in 2008 on an annual basis. The magazine is published monthly. The selling price of a subscription is $50. A review of subscription contracts reveals the following. 

Subscription Date -----Number oSubscriptions

October 1 ---------------------200

November 1 -------------------300

December 1 -------------------480

    --------------------------------980

3. Notes Payable $60,000.This balance consists of a note for 6 months at an annual interest rate of 9%, dated September 1. 

4. Salaries Payable $0.There are eight salaried employees. Salaries are paid every Friday for the current week. Five employees receive a salary of $500 each per week, and three employees earn $750 each per week. December 31 is a Wednesday. Employees do not work weekends.Allemployees worked the last 3 days of December. 

Instructions

Prepare the adjusting entries at Dec 31, 2008

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Problem 3-4A

 A review of the ledger of Remington Company at December 31, 2010, produces the

following data pertaining to the preparation of annual adjusting entries.

1. Salaries Payable $0.There are eight salaried employees. Salaries are paid every Friday for the

current week. Five employees receive a salary of $800 each per week, and three employees

earn $600 each per week. Assume December 31 is a Tuesday. Employees do not work weekends.

All employees worked the last 2 days of December.

2. Unearned Rent $324,000. The company began subleasing office space in its new building on

November 1. At December 31, the company had the following rental contracts that are paid

in full for the entire term of the lease.

Term Number of

Date (in months) Monthly Rent Leases

Nov. 1 6 $4,000 5

Dec. 1 6 $8,500 4

3. Prepaid Advertising $15,000.This balance consists of payments on two advertising contracts.

The contracts provide for monthly advertising in two trade magazines.The terms of the contracts

are as follows.

Number of

Magazine

Contract Date Amount Issues

A650 May 1 $5,400 12

B974 Oct. 1 9,600 24

The first advertisement runs in the month in which the contract is signed.

4. Notes Payable $120,000.This balance consists of a 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.)

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Problem 3-3B


Ortega Co., Inc. was organized on July 1, 2008. Quarterly financial statements are prepared. The unadjusted and adjusted trial balances as of September 30 are shown below



Instructions 
(a) Journalize the adjusting entries that were made. 
(b) Prepare an income statement and a retained earnings statement for the 3 months ending September 30 and a balance sheet at September 30. 
(c) If the note bears interest at 12%, how many months has it been outstanding?


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Problem 3-3A

Fernetti Advertising Agency was founded by John Fernetti in January of 2009. Presented

on page 134 are both the adjusted and unadjusted trial balances as of December 31, 2010.

FERNETTI ADVERTISING AGENCY

Trial Balance

December 31, 2010

Unadjusted Adjusted

Dr. Cr. Dr. Cr.

Cash $ 11,000 $ 11,000

Accounts Receivable 20,000 22,500

Art Supplies 8,600 5,000

Prepaid Insurance 3,350 2,500

Printing Equipment 60,000 60,000

Accumulated Depreciation $ 28,000 $ 34,000

Accounts Payable 5,000 5,000

Interest Payable –0– 150

Notes Payable 5,000 5,000

Unearned Advertising Fees 7,200 5,600

Salaries Payable –0– 1,300

J. Fernetti, Capital 25,500 25,500

J. Fernetti, Drawing 12,000 12,000

Advertising Revenue 58,600 62,700

Salaries Expense 10,000 11,300

Insurance Expense 850

Interest Expense 350 500

Depreciation Expense 6,000

Art Supplies Expense 3,600

Rent Expense 4,000 4,000

$129,300 $129,300 $139,250 $139,250

Instructions

(a) Journalize the annual adjusting entries that were made.

(b) Prepare an income statement and a statement of owner’s equity for the year ending

December 31, 2010, and a balance sheet at December 31.

(c) Answer the following questions.

(1) If the note has been outstanding 6 months, what is the annual interest rate on that note?

(2) If the company paid $12,500 in salaries in 2010, what was the balance in Salaries Payable

on December 31, 2009?

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Problem 3-2B


The Elston Motel, Inc. opened for business on May 1, 2008. Its trial balance before adjustment on May 31 is as follows. 



In addition to those accounts listed on the trial balance, the chart of accounts for Elston 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 Interest Payable,No. 320 Retained Earnings,No. 619 Depreciation Expense- Lodge, No. 621 Depreciation Expense-Furniture, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.

Other data: 

1. Insurance expires at the 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.) 

5. Unearned rent of $2,500 has been earned. 

6. Salaries of $800 are accrued and unpaid at May 31. 

Instructions 
(a) Journalize the adjusting entries on May 31.
(b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Use J1 as the posting reference.)
(c) Prepare an adjusted trial balance on May 31.
(d) Prepare an income statement and a retained earnings statement for the month of May and a balance sheet at May 31. 


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Problem 3-2A

Neosho River Resort opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is as follows.

NEOSHO RIVER RESORT
Trial Balance
August 31, 2010
Account Number			Debit		Credit
101		Cash	$19,600
126		Supplies	3,300
130		Prepaid Insurance	6,000
140		Land	25,000
143		Cottages	125,000
149		Furniture	26,000
201		Accounts Payable			$6,500
209		Unearned Rent			7,400
275		Mortgage Payable			80,000
301		P. Harder, Capital			100,000
306		P. Harder, Drawing	5,000
429		Rent Revenue			80,000
622		Repair Expense	3,600
726		Salaries Expense	51,000
732		Utilities Expense	9,400
			$273,900		$273,900

In addition to those accounts listed on the trial balance, the chart of accounts for Neosho River Resort also contains the following accounts and account numbers: No. 112 Accounts Receivable, No. 144 Accumulated Depreciation-Cottages, No. 150 Accumulated Depreciation-Furniture, No. 212 Salaries Payable, No. 230 Interest Payable, No. 620 Depreciation Expense-Cottages, No. 621 Depreciation Expense-Furniture, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.

Other data:

1. Insurance expires at the rate of $400 per month.
2. A count on August 31 shows $600 of supplies on hand.
3. Annual depreciation is $6,000 on cottages and $2,400 on furniture.
4. Unearned rent of $4,100 was earned prior to August 31.
5. Salaries of $400 were unpaid at August 31.
6. Rentals of $1,000 were due from tenants at August 31. (Use Accounts Receivable.)
7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)

Instructions

(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.

(b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Use J1 as the posting reference.)  (If an amount should be blank, enter a zero. All boxes must be filled to be correct.)

(c) Prepare an adjusted trial balance on August 31. (If an amount should be blank, enter a zero. All boxes must be filled to be correct.)

(d) Prepare an income statement and an owner’s equity statement for the 3 months ending August 31 and a balance sheet as of August 31. (List multiple entries from largest to smallest eg 10, 5, 3, 2. If amounts are the same, list alphabetically.  For the balance sheet, list assets in order of liquidity and liabilities from largest to smallest eg 10, 5, 3, 2, with accounts payable listed first.)

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Problem 3-1B


Linda Ace started her own consulting firm, Modine Consulting, Inc. on May 1, 2008. The trial balance at May 31 is as follows. 



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—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:

1. $500 of supplies have been used during the month. 

2. Travel expense incurred but not paid on May 31, 2008, $200. 

3. The insurance policy is for 2 years. 

4. $1,000 of the balance in the unearned service revenue account remains unearned at the end of the month. 

5. May 31 is a Wednesday, and employees are paid on Fridays. Modine Consulting has two employees, who are paid $700 each for a 5-day work week. 

6. The office furniture has a 5-year life with no salvage value. It is being depreciated at $160 per month for 60 months. 

7. Invoices representing $1,000 of services performed during the month have not been recorded as of May 31. 

Instructions 

(a) Prepare the adjusting entries for the month of May. Use J4 as the page number for your journal.

(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column.

(c) Prepare an adjusted trial balance at May 31, 2008. 


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Problem 3-1A

Tony Masasi started his own consulting firm, Masasi Company, on June 1, 2010. The trial balance at June 30 is as follows.

MASASI COMPANY
Trial Balance
June 30, 2010
Account Number			Debit		Credit
101		Cash	$7,150
112		Accounts Receivable	6,000
126		Prepaid Insurance	3,000
130		Supplies	2,000
157		Office Equipment	15,000
201		Accounts Payable			$4,500
209		Unearned Service Revenue			4,000
301		J. Masasi, Capital			21,750
400		Service Revenue			7,900
726		Salaries Expense	4,000
729		Rent Expense	1,000
			$38,150		$38,150

In addition to those accounts listed on the trial balance, the chart of accounts for Masasi Company also contains the following accounts and account numbers: No. 158 Accumulated Depreciation-Office Equipment, No. 212 Salaries Payable,  No. 244 Utilities Payable, No. 631 Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense.

Other data:

1. Supplies on hand at June 30 are $600.
2. A utility bill for $150 has not been recorded and will not be paid until next month.
3. The insurance policy is for a year.
4. $2,500 of unearned service revenue has been earned at the end of the month.
5. Salaries of $2,000 are accrued at June 30.
6. The office equipment has a 5-year life with no salvage value. It is being depreciated at $250 per month for 60 months.
7. Invoices representing $1,000 of services performed during the month have not been recorded as of June 30.

Instructions

(a) Prepare the adjusting entries for the month of June. Use J3 as the page number for your journal.

(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances.  (If an amount should be blank, enter a zero. All boxes must be filled to be correct.)

(c) Complete the adjusted trial balance at June 30,2010.

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Exercise 3-17

At Natasha Company, prepayments are debited to expense when paid, and unearned revenues are credited to revenue when received. During January of the current year, the following transactions occurred.

Jan. 2 Paid $1,800 for fire insurance protection for the year.

       10 Paid $1,700 for supplies.

       15 Received $6,100 for services to be performed in the future.

On January 31, it is determined that $2,500 of the services fees have been earned and that there are $800 of supplies on hand.

Instructions

(a) Journalize and post the January transactions. (Use T accounts.)

(b) Journalize and post the adjusting entries at January 31.

(c) Determine the ending balance in each of the accounts.

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Exercise 3-16

Colin Mochrie Company has the following balances in selected accounts on December 31, 2010.

Consulting Revenue              $40,000

Insurance Expense                   2,100

Supplies Expense                     2,450

All the accounts have normal balances. Colin Mochrie Company debits prepayments to expense accounts when paid, and credits unearned revenues to revenue accounts when received.The following information below has been gathered at December 31, 2010.

1. Colin Mochrie Company paid $2,100 for 12 months of insurance coverage on June 1, 2010.

2. On December 1, 2010, Colin Mochrie Company collected $40,000 for consulting services to be performed from December 1, 2010, through March 31, 2011.

3. A count of supplies on December 31, 2010, indicates that supplies of $800 are on hand.

Instructions

Prepare the adjusting entries needed at December 31, 2010

Prepare a correct income statement for July 2010.

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