Expert Answers

1) The ledger of Ley Company includes the following unadjusted balances: Prepaid Insurance $3,000, Service Revenue $58,000, and Salaries Expense $25,000. Adjusting entries are required for (a) expired insurance $1,200; (b) services provided $1,100, but unbilled and uncollected; and (c) accrued salaries payable $800. Enter the unadjusted balances and adjustments into a worksheet and complete the worksheet for all accounts. Note:You will need to add the following accounts: Accounts Receivable, Salaries Payable, and Insurance Expense.

Trial Balance                   Adjustments
——–
Account Titles                                   Dr.                 Cr.                      Dr.                Cr.
Prepaid Insurance                         3,000                                                           a) 1,200
Service Revenue                                                  58,000                                   b)1,100
Salaries Expense                         25,000                                         (c) 800
Accounts Receivable                                                                      b)1,100
Salaries Payable                                                                                                    (c) 800
Insurance Expense                                                                       (a) 1,200

2) The following selected accounts appear in the adjusted trial balance columns of the worksheet for Batan Company: Accumulated Depreciation; Depreciation Expense; Common Stock; Dividends; Service Revenue; Supplies; and Accounts Payable. Indicate the financial statement column (income statement Dr., balance sheet Cr., etc.) to which each balance should be extended.

Account
Accumulated Depreciation
Depreciation Expense
Common Stock
Dividends
Service Revenue
Supplies
Accounts Payable

3) The ledger of Swann Company contains the following balances: Retained Earnings $30,000; Dividends $2,000; Service Revenue $50,000; Salaries Expense $27,000; and Supplies Expense $4,000. Prepare the closing entries at December 31.

4) The adjusted trial balance columns of the worksheet for Porter Company are as follows. PORTER COMPANY Worksheet For the Year Ended December 31, 2008 ACCOUNT NO. Account Titles Adjusted trial balance DR. CR. ——— 101 cash 18,800 112 accounts receivable 16,200 126 supplies 2,300 130 prepaid Insurance 4,400 151 office Equipment 44,000 152 Accumulated Depreciation-Office Equipment 20,000 200 Notes Payable 20,000 201 Accounts Payable 8,000 212 Salaries payable 2,600 230 Interest Payable 1,000 311 Common stock 30,000 320 Retained Earnings 6,000 332 Dividends 12,000 400 service revenue 77,800 610 Advertising Expenses 12,000 631 supplies expense 3,700 711 Depreciation Expensese 8,000 722 Insurance Expense 4,000 726 Salaries Expense 39,000 905 Interest Expense 1,000 Totals 165,400 165,400 Instructions (a) Complete the worksheet by extending the balances to the financial statement columns. (b) Prepare an income statement, a retained earnings statement, and a classified balance sheet. $10,000 of the notes payable become due in 2009. No additional issuance of common stock occurred during 2008. (c) Prepare the closing entries. Use J14 for the journal page. (d) Post the closing entries. Use the three-column form of account. Income Summary is account No. 350. (e) Prepare a post-closing trial balance.