Question 1Suppose you have been given a job as an Accounting Clerk in a retail store and have been asked by the manager for advice on an accounting issue. You were told that most of the companies customers pay immediately for services rendered while a few pay sometime later. As at December 31st, 2013 the company collected $30,000 from its cash customers, while $25,000 is owed by other customers for services rendered within the same period. Advice the manager how much should be recorded as service revenue under the cash basis and accrual basis of accounting for the period in question. Question 2Complete the missing information in the various columns of the worksheet below: Unadjusted trial balanceAdjustmentAdjusted Trial Balance Account titleDebitCreditDebitCreditDebitCreditCash2,065 Accounts receivable2,220 500 Supplies2,000 760 Furniture14,200 14,200 Prepaid Insurance985 100 Accounts payable 1,260 1,260Salary payable 4,000 Owner, Capital 11,000 11,000Owner, Withdrawal 2,000 Service revenue 14,340 14,840Salary expense8,275 Supplies Expense1,600 1,240 Insurance expense800 900 Utilities Expense 455 - 32,60032,600 AccumulatedDepreciationFurniture 360Depreciation Expense 360 2,200 - -33,460 Question 3Blum Services has the following unadjusted balances at year-end. Cash$12,900Prepaid insurance2,000Office supplies1,300Office equipment10,500Accumulated depreciation–office equipment3,500Accounts payable2,900Salaries payable-0-Unearned service revenue4,500A.L.Blum, capital11,750A.L.Blum, drawing5,600Service revenue13,350Salary expense3,700Depreciation expense-0-Supplies expense-0-Insurance expense -0- The following information is available to use in making adjusting entries.Office supplies on hand at year-end: $250Prepaid insurance expired during the year: $325Unearned revenue remaining at year-end: $2,500Depreciation expense for the year: $1,800Accrued salaries at year-end: $900 From the above information prepare the adjusted trial balance for the company (NB. Worksheet must include unadjusted trial balance, adjustments, and the adjusted trial balance. Question 4 Prepare an income statement, balance sheet and statement of owner’s equity for the year ended December 31, 2012 from the following adjusted trial balance: Deavours Photography Adjusted Trial Balance December 31, 2012 Accounts Debit Credit Cash$2,000 Prepaid insurance2,000 Office supplies600 Office equipment16,000 Accumulated depreciation $3,000Accounts payable 5,000Salaries payable 900Unearned service revenue 2,500C. Devours, capital 7,450C. Devours, drawing5,600 Service revenue 15,350Salaries expense4,600 Depreciation expense1,000 Supplies expense400 Insurance expense2,000 Totals$34,200 $34,200 Question 5Selected accounts of Noteworthy Communications at December 31, 20X6, follow:Accounts payable$15,100Lori Stone, capital$67,100Accounts receivable6,600Note payable, long-term27,800Accumulated depreciation - equipment37,800Other assets3,600Accumulated depreciation- computers11,600Other current liabilities4,700Equipment114,400Prepaid insurance1,100Cash16,500Prepaid rent6,600Service revenue93,500Salary expense24,600Computers22,700Salary payable3,900Interest payable600Supplies2,500 Unearned service revenue5,400Required: i) Prepare Noteworthy’s classified balance sheet in report form as atDecember 31, 20X6. Show totals for total assets, total liabilities and owner’s equity. Question 6The trial balance of Lane’s Interiors at May 31, 20X8, follows.Lane’s Interiors Trial Balance May 31, 20X8 Cash$ 4,300 Notes Receivable10,300 Interest Receivable Supplies500 Prepaid Insurance1,700 Furniture27,400 Accumulated Depreciation: Furniture 1,400Building53,900 Accumulated Depreciation: Building 34,500Land18,700 Accounts Payable 14,700Interest Payable Salary Payable Unearned Service Revenue 8,800Note Payable, Long-Term 18,700K. Lane, Capital 29,900K. Lane, Withdrawals3,800 Service Revenue 16,800Interest Revenue Salary Expense2,100 Insurance Expense Interest Expense Utilities Expense1,100 Advertising Expense1,000 Supplies Expense Depreciation Expense – Furniture Depreciation Expense – Building Total $124,800 $124,800 Additional data at May 31, 20X8: Depreciation: furniture, $500; building, $400.Accrued salary expense, $600Supplies on hand, $400.Prepaid insurance expired, $300.Accrued interest expense, $200.Unearned service revenue earned during May, $4,400. g. Accrued advertising expense, $100 (credit Accounts Payable).Accrued interest revenue, $200.Required: Complete the Lane’s accounting work sheet for May 31, 20X8 (Note that the worksheet should show the following columns unadjusted trial balance the, adjustments, and the adjusted trail balance.

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Answered: Question 1 Suppose you have been given…

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 1

Suppose you have been given a job as an Accounting Clerk in a retail store and have been asked by the manager for advice on an accounting issue. You were told that most of the companies customers pay immediately for services rendered while a few pay sometime later. As at December 31^st, 2013 the company collected $30,000 from its cash customers, while $25,000 is owed by other customers for services rendered within the same period. Advice the manager how much should be recorded as service revenue under the cash basis and accrual basis of accounting for the period in question.

Question 2

Complete the missing information in the various columns of the worksheet below:

	Unadjusted trial balance	Adjustment	Adjusted Trial Balance
Account title	Debit	Credit	Debit	Credit	Debit	Credit
Cash	2,065
Accounts receivable	2,220		500
Supplies	2,000				760
Furniture	14,200				14,200
Prepaid Insurance	985			100
Accounts payable		1,260				1,260
Salary payable		4,000
Owner, Capital		11,000				11,000
Owner, Withdrawal		2,000
Service revenue		14,340				14,840
Salary expense	8,275
Supplies Expense	1,600		1,240
Insurance expense	800				900
Utilities Expense	455	-
	32,600	32,600
Accumulated DepreciationFurniture						360
Depreciation Expense			360
			2,200	-	-	33,460

Question 3

Blum Services has the following unadjusted balances at year-end.

Cash	$12,900
Prepaid insurance	2,000
Office supplies	1,300
Office equipment	10,500
Accumulated depreciation–office equipment	3,500
Accounts payable	2,900
Salaries payable	-0-
Unearned service revenue	4,500
A.L.Blum, capital	11,750
A.L.Blum, drawing	5,600
Service revenue	13,350
Salary expense	3,700
Depreciation expense	-0-
Supplies expense	-0-
Insurance expense	-0-

The following information is available to use in making adjusting entries.

Office supplies on hand at year-end: $250
Prepaid insurance expired during the year: $325
Unearned revenue remaining at year-end: $2,500
Depreciation expense for the year: $1,800
Accrued salaries at year-end: $900

From the above information prepare the adjusted trial balance for the company (NB. Worksheet must include unadjusted trial balance, adjustments, and the adjusted trial balance.

Question 4

Prepare an income statement, balance sheet and statement of owner’s equity for the year ended December 31, 2012 from the following adjusted trial balance:

Deavours Photography

Adjusted Trial Balance

December 31, 2012

Accounts	Debit	Credit
Cash	$2,000
Prepaid insurance	2,000
Office supplies	600
Office equipment	16,000
Accumulated depreciation			$3,000
Accounts payable			5,000
Salaries payable			900
Unearned service revenue			2,500
C. Devours, capital			7,450
C. Devours, drawing	5,600
Service revenue			15,350
Salaries expense	4,600
Depreciation expense	1,000
Supplies expense	400
Insurance expense	2,000
Totals	$34,200		$34,200

Question 5

Selected accounts of Noteworthy Communications at December 31, 20X6, follow:

Accounts payable	$15,100	Lori Stone, capital	$67,100
Accounts receivable	6,600	Note payable, long-term	27,800
Accumulated depreciation - equipment	37,800	Other assets	3,600
Accumulated depreciation- computers	11,600	Other current liabilities	4,700
Equipment	114,400	Prepaid insurance	1,100
Cash	16,500	Prepaid rent	6,600
Service revenue	93,500	Salary expense	24,600
Computers	22,700	Salary payable	3,900
Interest payable	600	Supplies	2,500
		Unearned service revenue	5,400

Required:

i) Prepare Noteworthy’s classified balance sheet in report form as at

December 31, 20X6. Show totals for total assets, total liabilities and owner’s equity.

Question 6

The trial balance of Lane’s Interiors at May 31, 20X8, follows.

Lane’s Interiors Trial

Balance May 31, 20X8

Cash	$ 4,300
Notes Receivable	10,300
Interest Receivable
Supplies	500
Prepaid Insurance	1,700
Furniture	27,400
Accumulated Depreciation: Furniture		1,400
Building	53,900
Accumulated Depreciation: Building		34,500
Land	18,700
Accounts Payable		14,700
Interest Payable
Salary Payable
Unearned Service Revenue		8,800
Note Payable, Long-Term		18,700
K. Lane, Capital		29,900
K. Lane, Withdrawals	3,800
Service Revenue		16,800
Interest Revenue
Salary Expense	2,100
Insurance Expense
Interest Expense
Utilities Expense	1,100
Advertising Expense	1,000
Supplies Expense
Depreciation Expense – Furniture
Depreciation Expense – Building
Total	$124,800	$124,800

Additional data at May 31, 20X8:

Depreciation: furniture, $500; building, $400.
Accrued salary expense, $600
Supplies on hand, $400.
Prepaid insurance expired, $300.
Accrued interest expense, $200.

Unearned service revenue earned during May, $4,400. g.

Accrued advertising expense, $100 (credit Accounts Payable).

Accrued interest revenue, $200.

Required:

Complete the Lane’s accounting work sheet for May 31, 20X8 (Note that the worksheet should show the following columns unadjusted trial balance the, adjustments, and the adjusted trail balance.

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