Determine the amount that appears for Retained Earnings at June 30, 2011.

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Danks Co. was organized on April 1, 2011. The company prepares quarterly financial statements. The adjusted trial balance amounts at June 30 are shown below.

Debits

Cash

$ 5,360

Accounts Receivable

480

Prepaid Rent

720

Supplies

800

Equipment

12,000

Dividends

500

Salaries Expense

7,520

Rent Expense

1,200

Depreciation Expense

700

Supplies Expense

160

Utilities Expense

410

Interest Expense

40

Total debits

$29,890

Credits

Accumulated Depreciation—

Equipment

$ 700

Notes Payable

4,000

Accounts Payable

1,200

Salaries Payable

300

Interest Payable

40

Unearned Rent

400

Common Stock

11,200

Commission Revenue

11,360

Rent Revenue

690

Total credits

$29,890

(a) Determine the net income for the quarter April 1 to June 30.

(b) Determine the total assets and total liabilities at June 30, 2011, for Danks Company.

(c) Determine the amount that appears for Retained Earnings at June 30, 2011.

Why would politicians prefer the cash basis over the accrual basis?

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On numerous occasions, proposals have surfaced to put the federal government on the accrual basis of accounting.This is no small issue. If this basis were used, it would mean that billions in unrecorded liabilities would have to be booked, and the federal deficit would increase substantially.

Instructions

(a) What is the difference between accrual-basis accounting and cash-basis accounting?

(b)+B530:B531 Why would politicians prefer the cash basis over the accrual basis?

(c) Write a letter to your senator explaining why the federal government should adopt the accrual basis of accounting.

Compute 2011 accrual-basis net income.

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Conan Industries collected $100,000 from customers in 2011. Of the amount collected, $25,000 was from revenue earned on account in 2010. In addition, Conan earned $40,000 of revenue in 2011, which will not be collected until 2012. Conan Industries also paid $70,000 for expenses in 2011. Of the amount paid, $30,000 was for expenses incurred on account in 2010. In addition, Conan incurred $42,000 of expenses in 2011, which will not be paid until 2012.

Instructions

(a) Compute 2011 cash-basis net income.

(b) Compute 2011 accrual-basis net income.

Identify what type of adjusting entry (prepaid expense, unearned revenue, accrued expense, accrued…

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Emeril Corporation encountered the following situations:

1. Emeril collected $1,000 from a customer in 2011 for services to be performed in 2012.

2. Emeril incurred utility expense which is not yet paid in cash or recorded.

3. Emeril’s employees worked 3 days in 2011, but will not be paid until 2012.

4. Emeril earned service revenue but has not yet received cash or recorded the transaction.

5. Emeril paid $2,000 rent on December 1 for the 4 months starting December 1.

6. Emeril received cash for future services and recorded a liability until the revenue was earned.

7. Emeril performed consulting services for a client in December 2011. On December 31, it billed the client $1,200.

8. Emeril paid cash for an expense and recorded an asset until the item was used up.

9. Emeril purchased $900 of supplies in 2011; at year-end, $400 of supplies remain unused.

10. Emeril purchased equipment on January 1, 2011; the equipment will be used for 5 years.

11. Emeril borrowed $10,000 on October 1, 2011, signing an 8% one-year note payable.

Instructions

Identify what type of adjusting entry (prepaid expense, unearned revenue, accrued expense, accrued revenue) is needed in each situation, at December 31, 2011.

Prepare adjusting entries for the seven items described above. 1 answer below »

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Drew Carey Company has the following balances in selected accounts on December 31, 2011.

Accounts Receivable

$ _0_

Accumulated Depreciation—Equipment

_0_

Equipment

7,000

Interest Payable

_0_

Notes Payable

10,000

Prepaid Insurance

2,100

Salaries Payable

_0_

Supplies

2,450

Unearned Consulting Revenue

40,000

All the accounts have normal balances.The information below has been gathered at December 31, 2011.

1. Drew Carey Company borrowed $10,000 by signing a 12%, one-year note on September 1, 2011.

2. A count of supplies on December 31, 2011, indicates that supplies of $800 are on hand.

3. Depreciation on the equipment for 2011 is $1,000.

4. Drew Carey Company paid $2,100 for 12 months of insurance coverage on June 1, 2011.

5. On December 1, 2011, Drew Carey collected $40,000 for consulting services to be performed from December 1, 2011, through March 31, 2012.

6. Drew Carey performed consulting services for a client in December 2011.The client will be billed $4,200.

7. Drew Carey Company pays its employees total salaries of $9,000 every Monday for the preceding 5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last 3 days of 2011.

Instructions

Prepare adjusting entries for the seven items described above.

Affleck Company accumulates the following adjustment data at December 31.

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Affleck Company accumulates the following adjustment data at December 31.

1. Services provided but not recorded total $750.

2. Store supplies of $300 have been used.

3. Utility expenses of $225 are unpaid.

4. Unearned revenue of $260 has been earned.

5. Salaries of $900 are unpaid.

6. Prepaid insurance totaling $350 has expired.

Instructions

For each of the above items indicate the following.

(a) The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense).

(b) The status of accounts before adjustment (overstatement or understatement).

The ledger of Piper Rental Agency on March 31 of the current year includes the following selected…

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The ledger of Piper Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.

Debit

Credit

Prepaid Insurance

$ 3,600

Supplies

2,800

Equipment

25,000

Accumulated Depreciation—Equipment

$ 8,400

Notes Payable

20,000

Unearned Rent Revenue

9,900

Rent Revenue

60,000

Interest Expense

–0–

Wages Expense

14,000

An analysis of the accounts shows the following.

1. The equipment depreciates $400 per month.

2. One-third of the unearned rent revenue was earned during the quarter.

3. Interest of $500 is accrued on the notes payable.

4. Supplies on hand total $700.

5. Insurance expires at the rate of $200 per month.

Instructions Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are: Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expense.

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly…. 1 answer below »

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The trial balance for Pioneer Advertising Agency Inc. is shown in Illustration 3-3, p. 102. In lieu of the adjusting entries shown in the text at October 31, assume the following adjustment data.

1. Advertising supplies on hand at October 31 total $500.

2. Expired insurance for the month is $100.

3. Depreciation for the month is $50.

4. Unearned revenue earned in October totals $600.

5. Services provided but not recorded at October 31 are $300.

6. Interest accrued at October 31 is $70.

7. Accrued salaries at October 31 are $1,500.

An analysis of the accounts shows the following.

1. The equipment depreciates $400 per month.

2. One-third of the unearned rent revenue was earned during the quarter.

3. Interest of $500 is accrued on the notes payable.

4. Supplies on hand total $700.

5. Insurance expires at the rate of $200 per month.

Instructions

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are: Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expense.

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

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Deanna Nardelli started her own consulting firm, Nardelli Consulting, on May 1, 2014. The trial balance at May 31 is as follows. NARDELLI CONSULTING Trial Balance May 31, 2014

Account Number

Debit

Credit

101

Cash

$ 4,500

112

Accounts Receivable

6,000

126

Supplies

1,900

130

Prepaid Insurance

3,600

149

Equipment

11,400

201

Accounts Payable

$ 4,500

209

Unearned Service Revenue

2,000

301

Owner's Capital

17,700

400

Service Revenue

7,500

726

Salaries and Wages Expense

3,400

729

Rent Expense

900

$31,700

$31,700

In addition to those accounts listed on the trial balance, the chart of accounts for Nardelli Consulting also contains the following accounts and account numbers: No. 150 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense, No. 717 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense.

Other data:

1. $900 of supplies have been used during the month.

2. Utilities expense incurred but not paid on May 31, 2014, $250.

3. The insurance policy is for 2 years.

4. $400 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. Nardelli Consulting has two employees, who are paid $900 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 $190 per month for 60 months.

7. Invoices representing $1,700 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, 2014.

Prepare an income statement and an owner’s equity statement for the month of May and a balance sheet…

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The Skyline Motel opened for business on May 1, 2014. Its trial balance before adjustment on May 31 is as follows. SKYLINE MOTEL Trial Balance May 31, 2014

Account Number

Debit

Credit

101

Cash

$ 3,500

126

Supplies

2,080

130

Prepaid Insurance

2,400

140

Land

12,000

141

Buildings

60,000

149

Equipment

15,000

201

Accounts Payable

$ 4,800

208

Unearned Rent Revenue

3,300

275

Mortgage Payable

40,000

301

Owner's Capital

41,380

429

Rent Revenue

10,300

610

Advertising Expense

600

726

Salaries and Wages Expense

3,300

732

Utilities Expense

900

$99,780

$99,780

In addition to those accounts listed on the trial balance, the chart of accounts for Skyline Motel also contains the following accounts and account numbers: No. 142 Accumulated Depreciation—Buildings, No. 150 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 619 Depreciation Expense, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.

1. Prepaid insurance is a 1-year policy starting May 1, 2014.

2. A count of supplies shows $750 of unused supplies on May 31.

3. Annual depreciation is $3,000 on the buildings and $1,500 on equipment.

4. The mortgage interest rate is 12%. (The mortgage was taken out on May 1.)

5. Two-thirds of the unearned rent revenue has been earned.

6. Salaries of $750 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 an owner's equity statement for the month of May and a balance sheet at May 31.