Case 1 ex 3.
1. Depreciation on the company's furniture for the year is computed to be $11,000.
2. The Prepaid Rent account had a $8,000 debit balance at December 31 before adjusting for the costs of any expired coverage. An analysis of the
company's rental agreement showed that $3,500 of unexpired rent remains.
3. The Supplies account had a $840 debit balance at the beginning of the year, and $2,500 of supplies were purchased during the year. The December
31 physical count showed $650 of supplies available.
4. One-half of the work related to $10,000 of cash received in advance was performed this period.
5. Wage expenses of $5,000 have been incurred but are not paid as of December 31.
Requirements:
Prepare adjusting journal entries for the year ended December 31 for each separate situation.
General Journal
Transaction Account Debit Credit
Accumulated dep- furniture 11,000
Depreciation expense 11,000 experied rent less unexpired rent
31-Dec Rent expenses 4,000
31-Dec Prepaid rent 4,000
Suplies expense 2,690
Expense 2,690
cash received 5,000 Beginning balance = $840
Unearned revenue 5,000 Purchases during year = $2,500
wages expense 5,000 Total available = $3,340
Wages payable 5,000 Ending balance = $650
Supplies used = $3,340 – $650 = $2,690
age. An analysis of the
ng the year. The December
Case 2 Hamman Company's annual accounting period ends on December 31. The following information concerns the adjusting entries to be recorded as of that
date.
1. The Office Supplies account started the year with a $5,800 balance. During the year, the company purchased supplies for $16,500, which was added to
the Office Supplies account. The inventory of supplies available at December 31 totaled $4,600.
2. The Prepaid Insurance account had a $20,500 debit balance at December 31 before adjusting for the costs of any expired coverage for the year. An
analysis of prepaid insurance shows that $18,100 of unexpired insurance coverage remains at year end.
3. The company has 10 employees, who earn a total of $1,250 in salaries each working day. They are paid each Monday for their work in the five-day
workweek ending on the previous Friday. Assuming that December 31 is a Tuesday, and all 10 employees worked the first two days of that week. Because
New Year's Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6 of next year.
4. The company purchased a building at the beginning of this year. It cost $1,700,000 and is expected to have a $200,000 salvage value at the end of it's
predicted 30-year life. Annual depreciation is $50,000.
5. Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $4,400 per month, starting on November 1.
The rent was paid on time on November 1, and the amount received was credited to Rent Revenue. However, the tenant has not paid the December rent.
The company has worked out an agreement with the tenant, who has promised to pay both December and January rent in full on January 31.
6. On November 1, the company rented space to another tenant for $5,000 per month. The tenant paid five months' rent in advance on that date. The
payment was recorded with a credit to the Unearned Revenue account. Assume no other adjusting entries are made during the year.
REQUIRED:
1. Use the information to prepare adjusting entries as of December 31.
2. Prepare journal entries to record the first subsequent cash transaction in January of the next year for transactions 3 and 5.
General Journal
Transaction Account Debit Credit
Adjusting Entries
31-Dec Supplies Expense 17,700
Office Supplies 17,700
31-Dec Insurance Expense 2,400
Prepaid Insurance 2,400
31-Dec Salaries Wages Espense 2,500
Salaries Wages Payable 2,500
31-Dec Dereciation Expenses Building 50,000
Accumulated Depreciation 50,000
31-Dec Account receoivable -Rent 44,000
Rent revenue 4,400
31-Dec Uneraned revenue 10,000
Rent revenue 10,000
6-Jan Salaries Wages payable 2,500
Salaries Wages Expense 2,500
31-Jan Cash 8,800 4, 400
Account Receivable
Rent revenue 4,400
ries to be recorded as of that
$16,500, which was added to
coverage for the year. An
their work in the five-day
wo days of that week. Because
vage value at the end of it's
nth, starting on November 1.
s not paid the December rent.
ull on January 31.
advance on that date. The
the year.
5.
Case 3 pr 3.3
Grimes Training (GT), a school owned by T. Wells, provides training to individuals who pay tuition directly to the sch
prepaid expenses and unearned revenues in balance sheet accounts. It's unadjusted trial balance as of December 3
entries on December 31.
Additional Information Items
a. An analysis of GT's insurance policies shows that $5,600 of coverage has expired.
b. An review of supplies shows that teaching supplies costing $4,680 are available at year-end.
c. Annual depreciation on the equipment is $12,600.
d. Annual depreciation on the professional library is $8,600.
e. On September 1, GT agreed to do four training courses for a client for $2,500 each. Three courses will start imme
next year. The client paid $10,000 cash in advance for all four training courses on September 1, and GT credited Un
f. On October 15, GT agreed to teach a four-month class (beginning immediately) for an executive with payment du
been earned by GT, but yet paid by the customer.
g. GT's four employees are paid weekly. As of the end of the year, three days' salaries have accrued at the rate of $
h. The balance in the Prepaid Rent account represents rent for December.
Grimes Training
Unadjusted Trial Balance
31-Dec
Cash $26,189
Accounts receivable 0
Teaching supplies 10,071
Prepaid insurance 15,110
Prepaid rent 2,015
Professional library 30,217
Accumulated depreciation - Professional library $9,066
Equipment 104,000
Accumulated depreciation - Equipment 16,117
Accounts payable 24,000
Salaries payable 0
Unearned revenue 13,000
T. Wells, Capital 107,902
T. Wells, withdrawals 40,291
Tuition revenue 102,740
Training revenue 38,275
Depreciation expense - Professional library 0
Depreciation expense - Equipment 0
Salaries expense 48,350
Insurance expense 0
Rent expense 22,165
Teaching supplies expense 0
Advertising expense 7,051
Utilities Expense 5,641
Totals $311,100 $311,100
Requirements:
1
Post the balance from the unadjusted trial balance into the T-accounts. (It would be good for tracking your adjusti
Trial Balance. Enter each account and the calculated balance. For the balance, use a formula to refer to the T-Acct
2 Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only
3 Post the adjusting entries into the T-accounts.
3 Prepare an adjusted trial balance. (If you created the formulas in step 1, this will automatically be completed!)
pay tuition directly to the school. GT also offers training to groups in off-site locations. GT initially records
al balance as of December 31 follows, along with descriptions of items a through h that require adjusting
hree courses will start immediately and finish before the end of the year. One course will not begin until
mber 1, and GT credited Unearned Revenue.
n executive with payment due at the end of the class. At December 31, $16,000 of the tuition revenue has
ave accrued at the rate of $200 per day for each employee.
1. General Journal
Transaction Account Debit Credit
ood for tracking your adjusting entries to also start the
ormula to refer to the T-Acct calculated balance)
usting entries are made only at year-end.
matically be completed!)
2 & 3. General Ledger (T-Accounts)
Cash balance Accounts Receivable balance
- -
- -
- -
- -
- -
- -
- -
- -
- -
Teaching Supplies balance Prepaid Insurance balance
- -
- -
- -
Prepaid Rent balance Professional Library balance
- -
- -
- -
Accumulated Depreciation -
Library balance Equipment balance
- 104,000 104,000
- 104,000
- 104,000
Accumulated Depreciation -
Equipment balance Accounts Payable balance
- -
- -
- -
Salaries Payable balance Unearned Revenue balance
- -
- -
- -
T. Wells, Capital balance T. Wells Drawing balance
- -
- -
- -
Tuition Revenue balance Training Revenue balance
- -
- -
- -
Depreciation Expense - Depreciation Expense -
Library balance Equipment balance
- - - -
- -
- -
Salary Expense balance Insurance Expense balance
- -
- -
- -
Rent Expense balance Teaching Supplies Expense balance
- -
- -
- -
Advertising Expense balance Utilities Expense balance
- -
- -
- -
4. Grimes Training
Adjusted Trial Balance
12/31/2023
Account Debit Credit
Case 4 pr 3.4
The adjusted trial balance for Chiara Company as of December 31 follows 1
Income Statement
Debit Credit
Cash $118,200
Accounts receivable 53,500
Interest receivable 23,000
Notes receivable (due in 90 days) 170,500
Office supplies 16,500
Automobiles 174,000
Accumulated depreciation - Automobiles $50,000
Equipment 146,000
Accumulated depreciation - Equipment 18,000
Land 82,000
Accounts payable 101,000
Interest payable 15,000
Salaries payable 25,000
Unearned revenue 42,000
Long-term notes payable 142,000
R. Chiara, Capital 275,800
R. Chiara, withdrawals 47,000
Services revenue 574,000
Interest revenue 32,000
Depreciation expenses - Automobiles 28,000
Depreciation expenses - Equipment 22,500
Salaries expense 189,000
Wages expense 42,000
Interest expense 35,600
Office supplies expense 35,400
Advertising expense 61,000
Repairs expense - Automobiles 30,600
Totals $1,274,800 $1,274,800
Requirements: Using the trial balance information above, complete the following for the year ending
December 31.
1. Prepare an income statement.
2. Prepare a statement of owner's equity (Note: R. Chaira, Capital at Dec 31 of the prior year was
$275,800 and there were no owner investments in the current year).
3. Prepare a balance sheet.
2 3
ome Statement Statement of Owner's Equity Balance Sheet