Flood Relief Inc. prepares monthly financial statements and therefore adjusts its accounts at the end of every month. The following information is available for June 2016: a. Flood received a $10,000, 4%, two-year note receivable from a customer for services rendered. The principal and interest are due on June 1, 2018. Flood expects to be able to collect the note and interest in full at that time. b. Office supplies totaling $5,600 were purchased during the month. The asset account Supplies is debited whenever a purchase is made. A count in the storeroom on June 30, 2016, indicates that supplies on hand amount to $507. The supplies on hand at the beginning of the month total $475. c. The company purchased machines last year for $170,000. The machines are expected to be used for four years and have an estimated salvage value of $2,000. d. On June 1, the company paid $4,650 for rent for June, July, and August. The asset Prepaid Rent was debited; it did not have a balance on June 1. e. The company operates seven days per week with a weekly payroll of $7,000. Wage earners are paid every Sunday. The last day of the month is Thursday, June 30. f. Based on its income for the month, Flood estimates that federal income taxes for June amount to $2,900. Required: For each of the preceding situations, prepare in general journal form the appropriate adjusting entry to be recorded on June 30, 2016. Prepare general journal, balance sheet, and income statement.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Flood Relief Inc. prepares monthly financial statements and therefore adjusts its accounts at the end of every month. The following information is available for June 2016:

a.	Flood received a $10,000, 4%, two-year note receivable from a customer for services rendered. The principal and interest are due on June 1, 2018. Flood expects to be able to collect the note and interest in full at that time.
b.	Office supplies totaling $5,600 were purchased during the month. The asset account Supplies is debited whenever a purchase is made. A count in the storeroom on June 30, 2016, indicates that supplies on hand amount to $507. The supplies on hand at the beginning of the month total $475.
c.	The company purchased machines last year for $170,000. The machines are expected to be used for four years and have an estimated salvage value of $2,000.
d.	On June 1, the company paid $4,650 for rent for June, July, and August. The asset Prepaid Rent was debited; it did not have a balance on June 1.
e.	The company operates seven days per week with a weekly payroll of $7,000. Wage earners are paid every Sunday. The last day of the month is Thursday, June 30.
f.	Based on its income for the month, Flood estimates that federal income taxes for June amount to $2,900.

Required:

For each of the preceding situations, prepare in general journal form the appropriate adjusting entry to be recorded on June 30, 2016. Prepare general journal, balance sheet, and income statement.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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