The accounts of Gleneagles Company prior to the year-end adjustments follow on the next page….
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(Learning Objective 3, 4: Computing financial statement amounts) The accounts of Gleneagles Company prior to the year-end adjustments follow on the next page. Adjusting data at the end of the year include:
a. Unearned service revenue that has been earned, $1,000.
b. Accrued service revenue, $2,000.
c. Supplies used in operations, $3,000.
d. Accrued salary expense, $3,000.
e. Perpaid insurance expired, $1,000.
f. Depreciation expense—building, $2,000.
Cash
$ 4,000
Common stock
$ 10,000
Accounts receivable
7,000
Retained earnings
43,000
Supplies
4,000
Dividends
16,000
Prepaid insurance
3,000
Service revenue
155,000
Building
107,000
Salary expense
32,000
Accumulated depreciation building
14,000
Depreciation expense building
Land
51,000
Supplies expense
Accounts payable
6,000
Insurance expense
Salary payable
5,000
Advertising expense
7,000
Unearned service revenue
Utilities expense
2,000
Mack Shaughnessy, the principal stockholder, has received an offer to sell Gleneagles Company. He needs to know the following information within 1 hour:
a. Net income for the year covered by these data
b. Total assets
c. Total liabilities
d. Total stockholders’ equity
e. Proof that total assets = total liabilities + total stockholders’ equity after all items are updated.
Required
Without opening any accounts, making any journal entries, or using a work sheet, provide Mr. Shaughnessy with the requested information. The business is not subject to income tax. Show all computations.
Freddie Handel began a music business in July 20X4. Handel prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Handel Company’s only activities during January through April:
Jan. 14
Bought music on account for $10, with payment to the supplier due in 90 days.
Feb. 3
Performed a job on account for Joey Bach for $25, collectible from Bach in 30 days. Used up all the music purchased on Jan. 14.
Mar. 16
Collected the $25 receivable from Bach.
Apr. 22
Paid the $10 owed to the supplier from the January 14 transaction.