- (0.5 point each) Prepare the AJEs that should be made on 09-30-13, the end of the accounting year, for each of the following situations. If no AJE is required, indicate “none.” Assume the firm only makes AJEs at the end of the accounting year.
- On December 1, 2012, the firm collected $4,800 of rent for 12 months in advance. The journal entry to record the receipt included a credit to a balance sheet account.
- On August 1, 2013, the firm collected $12,000 of rent for 12 months in advance. The journal entry to record the receipt included a credit to an income statement account.
- On June 30, 2013, the firm collected $1,200 of rent for 3 months in advance. The journal entry to record the receipt included a credit to a temporary account.
- On October 1, 2012, the company borrowed $120,000 for 1 year at 3%. Interest and principle are due and payable on October 1, 2013.
- On February 1, 2013, the company borrowed $60,000 at 3%. The principle is due on February 1, 2017. The interest is due every six months and the first interest payment took place on August 1, 2013.
- On June 1, 2010, the company borrowed $2,000,000 for five years at 6%. Interest is due and payable every quarter and the first interest payment took place on September 1, 2010. The principle is payable in five equal installments and the first principle payment took place on June 1, 2011.
- On June 1, 2013 the firm paid $800 for an 8-month equipment rental. The journal entry to record the payment included a debit to a real account.
- On May 1, 2013, the firm paid $900 for a 3-month photocopy machine rental. The journal entry to record the payment included a debit to a temporary account.
- (4 points) The adjusted trial balance of Z Financial Planners appears below. Using the information from the adjusted trial balance, prepare the following for the month ending December 31:
- (2 points) Presented below are selected account balances for C Company as of 12-31-13:
- (8 points) A worksheet with a trial balance for W is reproduced below. The additional items below (a through f) are relevant to the AJEs needed to both properly match revenues and expenses for the period and reflect the proper balances in the real and nominal accounts.
- (4 points) On October 1, 2014 Y borrowed $1,800,000 at 4%. Y pays interest every 6 months with interest payments every April 1 and October 1. Y will repay $600,000 of the principal on October 1, 2015 and the remaining $1,200,000 on October 1, 2016. Assume Y only makes AJEs every December 31 AND does NOT make reversing entries. Prepare the entries Y should make on:
- October 1, 2014
- December 31, 2014
- April 1, 2015
- October 1, 2015
- December 31, 2015
- April 1, 2016
- October 1, 2016
1. an income statement.
2. a balance sheet.
Z FINANCIAL PLANNERS
Adjusted Trial Balance
December 31, 2017
Debit Credit
Cash …………………………………………………………………………………………………………….. $ 3,900
Accounts Receivable………………………………………………………………………………………… 2,200
Supplies…………………………………………………………………………………………………………. 1,800
Equipment …………………………………………………………………………………………………. 18,000
Accumulated Depreciation—Equipment……………………………………………………………….. $ 4,000
Accounts Payable…………………………………………………………………………………………….. 3,800
Unearned Service Revenue………………………………………………………………………………… 5,000
Common Stock………………………………………………………………………………………………… 1,000
Additional Paid-in-Capital…………………………………………………………………………………. 9,000
Retained Earnings…………………………………………………………………………………………….. 4,400
Service Revenue………………………………………………………………………………………………. 4,700
Supplies Expense……………………………………………………………………………………………… 600
Depreciation Expense……………………………………………………………………………………….. 2,500
Rent Expense …………………………………………………………………………………………………. 2,900 ______
$31,900 $31,900
Cash $700,000
Accounts payable $115,000
Retained earnings $650,000
Sales revenues $925,000
Gain on the sale of a stock investment $ 45,000
Cost of goods sold $300,000
Selling and administrative expenses $215,000
Miscellaneous expense $ 25,000
Income tax expense $120,000
- Prepare the entry C should make to close out the temporary accounts. Do NOT use an “income summary” account – close the temporary accounts directly into retained earnings.
- What is C’s retained earnings balance AFTER making the closing entry?
a.W recorded the following for bad debts:
EX Bad debts expense $3,600
A Allowance for doubtful accounts $3,600
b.W recorded the following for depreciation:
EX Depreciation expense $6,000
A Accumulated depreciation $6,000
c.Salesmen are paid commissions of 15% of sales. Commissions on sales for December have not been paid.
d.The note was issued on October 1, bearing interest at 8%, due Feb. 1, 2018.
e.A physical inventory of supplies indicated $440 of supplies currently in stock.
f.The terms of a rental agreement specify W must make payments one month in advance; the monthly payments are $800. W has complied with the agreement as of Dec. 31, 2017.
Perform the following:
- Recreate the worksheet in an Excel spreadsheet.
- Prepare and/or post the AJEs for items a. through f.
- Enter the AJEs on the work sheet
- Complete the additional columns with respect to the income statement and balance sheet. Round computations, as necessary, to the nearest dollar.
W Corporation
Work Sheet
For the Year Ended December 31, 2017
Trial Balance Adjustments Income Statement Balance Sheet
Accounts Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 12,400
Equity Invest. 14,050
Accounts Rec. 30,000
Allow. for D. A. 420
Inventory 16,800
Supplies 1,040
Equipment 65,000
Accum. Depr.-Equip. 9,500
Accounts Payable 4,400
Notes Payable 10,000
Common Stock 40,000
Ret. Earnings 29,690
Sales Revenue 360,000
Cost of Goods Sold 245,520
Salaries and
Wages Exp. 20,800
Sales Comm. Exp. 39,000
Rent Expense 7,200
Misc. Expense 2,200
Totals 454,010 454,010
- (2 points) Beach keeps her accounting records on a cash basis. During 2014, Beach collected $250,000 from customers. At December 31, 2013, Beach had accounts receivable of $26,000 while at December 31, 2014, Beach had accounts receivable of $30,000. At December 31, 2013, Beach had unearned revenues of $9,000 while at December 31, 2014, Beach had unearned revenues of $11,000. On an accrual basis, how much was Beach’s revenue for 2014?
