FOR review

This homework is to be done individually.

Word-process solutions within this template. Copy and paste tables from Excel as needed.

Show all steps used in arriving at the final answers. Incomplete solutions not accepted

   

Problem 1

Shown below is a tentative income statement after the first year of operations.

 

Statement

 

   

 

 

 

 

Income  

	Income Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper
December 31
Rental revenue	$89, 900
Expenses
Salaries and wages expense	$2 2,000
Maintenance expense	8,000
Rent expense	9,200
Utilities expense	5,200
	Other expenses	2,000
Total expenses	$46,400
$43,500

 

Suppose there are additional transactions shown below, that were not recorded or paid.

(a)   

The Unearned Rental Revenue account includes $6,300 of revenue to be earned in the next year.

(b)  

There were additional wages for the last five days of the year amounting to $650.

(c)   

Maintenance expense excludes $2,300 representing the cost of maintenance supplies during the year

(d)  

The company estimated additional utilities for the last month amounting to $550.

(e)  

Depreciation on equipment amounted to

$

16,000

for the year.

(f)    
There is interest on a $10,000, one-year, 6 percent note payable dated November 1st of the year. The interest is payable on the maturity date of the note.

(g)   
The income tax expense is $3,900 and payment of the income tax will be made the following year.

 

Find an adjusting entry for each transaction. If none is required, explain why. Prepare a corrected income statement for the year, including earnings per share. Assume that

5,000

shares of stock are outstanding all year. Compute the net profit margin based on the corrected information. Problem 2

The adjusted trial balance of a company at the end of the accounting year, December 31, showed the following.

 

 

$16,000    

   

   

   

   

   

   

   

   

   

  $113,600

	Account Titles		Debit		Credit
	Cash
Machinery	72,000
	Accumulated depreciation	$12,800
	Accounts payable	5,600
Capital Stock		16,000
	Retained earnings	47,200
	Service revenue	32,000
Interest expense	3,200
Operating expenses	13,600
Depreciation expense	8,800
	Totals		$113,600

Prepare all the required closing entries for the company at December 31. Calculate the year ending balance in retained earnings.
Problem 3          

Suppose a company prepares the following unadjusted trial balance as of December 31.

 

Account Titles Debit   Credit

Cash

   

   

   

   

   

Accumulated depreciation    

   

Accounts payable    

     

     

  5,000

    16,000

Retained earnings    

Service revenue    

Other expenses

   

     

Totals

  $93,800

$19,600
Accounts receivable	7,000
Supplies	1,300
Prepaid insurance	900
Equipment	27,000
$12,000
Other assets	5,100
2,500
Wages payable
Income taxes payable
Note payable
Contributed Capital (3,000 shares outstanding all year)
10,300
48,000
32,900
Income tax expenses
	$93,800

   

The following data has not been recorded at December 31.

(a)    Depreciation expense for the year, $3,000.

(b)   Wages earned by employees but not yet paid amount to $2,100.

(c)    The supplies count on December 31 reflected $800 remaining supplies on hand to be used the following year.

(d)   Insurance expired during the year, $450.

(e)   Income tax expense was $3,150.

 

Record the adjusting entries. Prepare an income statement with earnings per share assuming there are 3,000 shares. Prepare a classified balance sheet for the year. For the income statement and balance sheet, include the effects of the preceding five data items.