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Problem 5.4A (Algo) Preparing a worksheet and financial statements, journalizing adjusting entries, and posting to ledger accounts. LO 5-2, 5-3, 5-4, 5-5 Angela Mosley owns Innovative Designs. The trial balance of the firm for January 31, 20X1, the first month of operations, is shown below. End-of-the-month adjustments must account for the following items: a. Supplies were purchased on January 1, 20X1; inventory of supplies on January 31, 20X1, is $600. b. The prepaid advertising contract was signed on January 1, 20X1, and covers a four-month period. c. Rent of $1,100 expired during the month. d. Depreciation is computed using the straight-line method. The equipment has an estimated useful life of 10 years with no salvage value. Required: 1. Complete the worksheet for the month. 2. Prepare an income statement, statement of owner's equity, and balance sheet. No additional investments were made by the owner during the month. 3. Journalize and post the adjusting entries. Analyze If the adjusting entries had not been made for the month, by what amount would net income be overstated or understated? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Income Chatr Req 2 Statement of Req 2 Balance Req 3 General Req 3 Ledgers Analyze

Problem 5.4A (Algo) Preparing a worksheet and financial statements, journalizing adjusting entries, and posting to ledger accounts. LO 5-2, 5-3, 5-4, 5-5 Angela Mosley owns Innovative Designs. The trial balance of the firm for January 31, 20X1, the first month of operations, is shown below. End-of-the-month adjustments must account for the following items: a. Supplies were purchased on January 1, 20X1; inventory of supplies on January 31, 20X1, is $600. b. The prepaid advertising contract was signed on January 1, 20X1, and covers a four-month period. c. Rent of $1,100 expired during the month. d. Depreciation is computed using the straight-line method. The equipment has an estimated useful life of 10 years with no salvage value. Required: 1. Complete the worksheet for the month. 2. Prepare an income statement, statement of owner's equity, and balance sheet. No additional investments were made by the owner during the month. 3. Journalize and post the adjusting entries. Analyze If the adjusting entries had not been made for the month, by what amount would net income be overstated or understated? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Income Chatr Req 2 Statement of Req 2 Balance Req 3 General Req 3 Ledgers Analyze

FINANCIAL ACCOUNTING
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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Complete the worksheet for the month. Account Name Cash Accounts receivable Supplies Prepaid advertising Prepaid rent Equipment Accumulated depreciation-Equipment Accounts payable Angela Mosley, Capital Angela Mosley, Drawing Fees income Advertising expense Depreciation expense-Equipment Rent expense Salaries expense Supplies expense Utilities expense Sub-totals Net income Totals $ $ Trial Balance Debit 34,500 11,600 5,750 4,400 13,200 45,600 6,000 8,700 Credit 14,550 59,000 57,100 900 130,650 $ 130,650 $ INNOVATIVE DESIGNS Worksheet Month Ended January 31, 20X1 Adjustments Debit 0 $ Credit 5,150 1,100 1,100 7,350 $ $ Adjusted Trial Balance Debit Credit 34,500 11,600 600 3,300 12,100 45,600 6,000 8,700 900 123,300 $ 14,550 59,000 57,100 130,650 $ $ Income Statement Debit 8,700 900 9,600 47,500 57,100 $ $ Credit 57,100 57,100 $ $ 57,100 $ Balance Sheet Debit 34,500 11,600 600 3,300 12,100 45,600 6,000 113,700 $ 113,700 $ Credit 14,55 59,00 73,55 57,10 130,65
Transcribed Image Text:Complete the worksheet for the month. Account Name Cash Accounts receivable Supplies Prepaid advertising Prepaid rent Equipment Accumulated depreciation-Equipment Accounts payable Angela Mosley, Capital Angela Mosley, Drawing Fees income Advertising expense Depreciation expense-Equipment Rent expense Salaries expense Supplies expense Utilities expense Sub-totals Net income Totals $ $ Trial Balance Debit 34,500 11,600 5,750 4,400 13,200 45,600 6,000 8,700 Credit 14,550 59,000 57,100 900 130,650 $ 130,650 $ INNOVATIVE DESIGNS Worksheet Month Ended January 31, 20X1 Adjustments Debit 0 $ Credit 5,150 1,100 1,100 7,350 $ $ Adjusted Trial Balance Debit Credit 34,500 11,600 600 3,300 12,100 45,600 6,000 8,700 900 123,300 $ 14,550 59,000 57,100 130,650 $ $ Income Statement Debit 8,700 900 9,600 47,500 57,100 $ $ Credit 57,100 57,100 $ $ 57,100 $ Balance Sheet Debit 34,500 11,600 600 3,300 12,100 45,600 6,000 113,700 $ 113,700 $ Credit 14,55 59,00 73,55 57,10 130,65
Problem 5.4A (Algo) Preparing a worksheet and financial statements, journalizing adjusting entries, and posting to ledger accounts. LO 5-2, 5-3, 5-4, 5-5 Angela Mosley owns Innovative Designs. The trial balance of the firm for January 31, 20X1, the first month of operations, is shown below. End-of-the-month adjustments must account for the following items: a. Supplies were purchased on January 1, 20X1; inventory of supplies on January 31, 20X1, is $600. b. The prepaid advertising contract was signed on January 1, 20X1, and covers a four-month period. c. Rent of $1,100 expired during the month. d. Depreciation is computed using the straight-line method. The equipment has an estimated useful life of 10 years with no salvage value. Required: 1. Complete the worksheet for the month. 2. Prepare an income statement, statement of owner's equity, and balance sheet. No additional investments were made by the owner during the month. 3. Journalize and post the adjusting entries. Analyze If the adjusting entries had not been made for the month, by what amount would net income be overstated or understated? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Income Statement Req 2 Statement of Owner Equity Req 2 Balance Req 3 General Sheet Journal Req 3 Ledgers Analyze
Transcribed Image Text:Problem 5.4A (Algo) Preparing a worksheet and financial statements, journalizing adjusting entries, and posting to ledger accounts. LO 5-2, 5-3, 5-4, 5-5 Angela Mosley owns Innovative Designs. The trial balance of the firm for January 31, 20X1, the first month of operations, is shown below. End-of-the-month adjustments must account for the following items: a. Supplies were purchased on January 1, 20X1; inventory of supplies on January 31, 20X1, is $600. b. The prepaid advertising contract was signed on January 1, 20X1, and covers a four-month period. c. Rent of $1,100 expired during the month. d. Depreciation is computed using the straight-line method. The equipment has an estimated useful life of 10 years with no salvage value. Required: 1. Complete the worksheet for the month. 2. Prepare an income statement, statement of owner's equity, and balance sheet. No additional investments were made by the owner during the month. 3. Journalize and post the adjusting entries. Analyze If the adjusting entries had not been made for the month, by what amount would net income be overstated or understated? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Income Statement Req 2 Statement of Owner Equity Req 2 Balance Req 3 General Sheet Journal Req 3 Ledgers Analyze
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