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Salaries expense Income summary__________________________ __________________________ 1/1 Bal. 0 100,000 Closing d. 41,000 Closing 69,000 Adjusting 1,000 42,000 Closing Closing 31,000 _______________ _______________ 12/31 Bal. 0 12/31 Bal. 0 Problem 2-6 (concluded) Requirement 9
Problem 2-7 Requirement 1 a. Interest receivable ................................................ 600 Interest revenue ($10,000 x 12% x 1/2)................... 600 b. Depreciation expense ($30,000 x 1/5)....................... 6,000 Accumulated depreciation................................ 6,000 c. Unearned rent revenue.......................................... 2,000 Rent revenue ($6,000 x 2/6).................................. 2,000 d. Prepaid insurance ................................................ 1,500 Insurance expense ($2,400 x 15/24)...................... 1,500 e. Interest expense ($20,000 x 12% x 3/12)..................... 600 Interest payable................................................ 600 f. Supplies expense ($1,800 - 700)............................... 1,100 Supplies............................................................ 1,100 Requirement 2 Income overstated (understated) Adjustments to revenues: Understatement of interest revenue $ (600) Understatement of rent revenue (2,000)
Adjustments to expenses:
Overstatement of insurance expense (1,500) Understatement of depreciation expense 6,000 Understatement of interest expense 600 Understatement of supplies expense 1,100 Overstatement of net income $3,600 Problem 2-8 1. Depreciation expense ($75,000 ÷ 8 years).................. 9,375 Accumulated depreciation................................ 9,375 2. Wage expense ($4,500 - 3,000)................................. 1,500 Wages payable.................................................. 1,500 3. Bad debt expense ................................................ 550 Allowance for uncollectible accounts................ 550 [($32,500 x 2%) - $100].......................................... 4. Interest expense ($30,000 x 10% x 4/12)..................... 1,000 Interest payable................................................ 1,000 5. Supplies............................................................... 500 Supplies expense.............................................. 500 6. Prepaid rent.......................................................... 1,000 Rent expense.................................................... 1,000 Problem 2-9 Requirements 1 and 2 a. Depreciation expense ($50,000 ÷ 50 years)................ 1,000 Accumulated depreciation - buildings............... 1,000 b. Depreciation expense ($100,000 x 10%)................... 10,000 Accumulated depreciation - equipment............. 10,000 c. Insurance expense................................................ 1,500 Prepaid insurance ............................................ 1,500 d. Bad debt expense ................................................ 850 Allowance for uncollectible accounts................ 850 e. Salaries expense................................................... 1,500 Salaries payable................................................ 1,500 f. Rent revenue......................................................... 1,200 Unearned rent revenue...................................... 1,200 Problem 2-9 (continued) Balance sheet Accounts Cash Accounts receivable __________________________ __________________________ Bal. 8,000 Bal. 9,000 _______________ _______________ 12/31 Bal. 8,000 12/31 Bal. 9,000
Prepaid insurance Allow. for uncollectible accounts __________________________ __________________________ Bal. 3,000 50 Bal. 1,500 Adjusting 850 Adjusting _______________ _______________ Bal. 1,500 900 12/31 Bal.
Land Buildings __________________________ __________________________ Bal. 200,000 Bal. 50,000 _______________ _______________ 12/31 Bal. 200,000 12/31 Bal. 50,000
Equipment Accumulated depreciation-bldg. __________________________ __________________________ Bal. 100,000 20,000 Bal. 1,000 Adjusting _______________ _______________ Bal. 100,000 21,000 12/31 Bal.
Accumulated depreciation-equip. Accounts payable __________________________ __________________________ 40,000 Bal. 35,000 Bal. 10,000 Adjusting _______________ _______________ 50,000 12/31 Bal. 35,000 12/31 Bal. Problem 2-9 (continued)
Salaries payable Unearned rent revenue __________________________ __________________________ 0 Bal. 0 Bal. 1,500 Adjusting 1,200 Adjusting _______________ _______________ 1,500 12/31 Bal. 1,200 12/31 Bal.
Common stock Retained earnings __________________________ __________________________ 200,000 Bal. 56,450 Bal. _______________ _______________ 200,000 12/31 Bal. 56,450 12/31 Bal.
InCOME STATEMENT Accounts Sales revenue Interest revenue __________________________ __________________________ 90,000 Bal. 3,000 Bal. _______________ _______________ 90,000 12/31 Bal. 3,000 12/31 Bal.
Rent revenue Salaries expense __________________________ __________________________ 7,500 Bal. Bal. 37,000 Adjusting 1,200 Adjusting 1,500 _______________ _______________ 6,300 12/31 Bal. 12/31 Bal. 38,500
Bad debt expense Depreciation expense __________________________ __________________________ Bal. 0 Bal. 0 Adjusting 850 Adjusting 1,000 Adjusting 10,000 _______________ _______________ 12/31 Bal. 850 12/31 Bal. 11,000 Problem 2-9 (continued)
Insurance expense Utility expense __________________________ __________________________ Bal. 0 Bal. 30,000 Adjusting 1,500 _______________ _______________ 12/31 Bal. 1,500 12/31 Bal. 30,000
Date: 2015-12-11; view: 645
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