Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Textbook Question
Chapter 3, Problem 71PB
Following is a partial list of financial statement items from the records of Starnes Company at December 31, 2012, before adjustments:
Additional information includes the following:
- The insurance policy indicates that on December 31, 2012, only five months remain on the 12-month policy that originally cost $12,000.
- Starnes has a note payable with $2,500 of interest that must be paid on January 1, 2013. No interest expense has been recorded for this note.
- The accounting records show that two-thirds of the service revenue paid in advance by a customer on March 1 has now been earned.
- On August 1, the company paid $20,000 for rent for 10 months beginning on August 1.
- At year end, Starnes Company owed $500 worth of salaries to employees for work done in December. This has not been recorded or paid. The next payday is January 3, 2013.
Requirements
- 1. Use an
accounting equation worksheet to record the adjustments that must be made prior to the preparation of the financial statements for the year ended December 31, 2012. - 2. For the accounts shown, calculate the account balances that would be shown on Starnes’ financial statements for the year ended December 31, 2012;
balance sheet at December 31, 2012.
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Chapter 3 Solutions
Financial Accounting
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