The adjusted trial balance of Melanie O’Mallie Dance Studio Company follows:MELANIE O'MALLIE DANCE STUDIO COMPANY Trial Balance August 31, 2018 Account Title Prepaid Rent Cash Debit Credit Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Dividends Common Stock Retained Earnings Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Supplies Expense Utilities Expense Balance $ 16,000 $ 76,100 $ 76,100 100 $ 5,700 4,800 49,000 5,400 18,100 5,000 18,000 19,000 1,100 1,100 3,600 1,800 1,500 500 400 1,100 Requirements 1. Prepare the classified balance sheet of Melanie O’Mallie Dance Studio Company at August 31, 2018. Use the report form. You must compute the ending balance of Retained Earnings. 2. Compute O’Mallie’s current ratio at August 31, 2018. One year ago, the current ratio was 1.76. Indicate whether O’Mallie’s ability to pay current debts has improved, deteriorated, or remained the same.
(1) Balance Sheet is shown as follows:
MELANIE O'MALLIE DANCE STUDIO COMPANY
August 31, 2018
Total Current Assets
Property, Plant, and Equipment:
Less: Accumulated Depreciation- Equipment
Total Property, Plant, and Equipment:
Total Current Liabilities:
Long term Liabilities
Total Long-term Liabilities
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity
(2) Current ratio has improved, as it gets increased from 1.76 times to 1.95 times.
Net income is calculated as follows
Statement of retained earnings is shown as follows:
MELANIE O'MALLIE DANCE STUDIO COMPANY
Statement of Retained Earnings
Year Ended August 31, 2018
Retained Earnings, Beginning Balance
Net income for the year
Retained Earnings, Ending Balance
Current ratio is calculated as follows:
For each account listed, identify the category in which it would appear on a classified balance sheet. a. Office Supplies b. Interest Payable c. Retained Earnings d. Copyrights e. Land f. Accumulated Depreciation—Furniture g. Land (held for long-term investment purposes) h. Unearned Revenue i. Notes Payable (due in six years)
The adjusted trial balance of Boston Irrigation System at December 31, 2018, follows BOSTON IRRIGATION SYSTEM Adjusted Trial Balance December 31, 2018 0 Account Title Office Supplies Cash Debit Credit Accounts Receivable Prepaid Insurance Building Accumulated Depreciation—Building Equipment Accumulated Depreciation—Equipment Accounts Payable Interest Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Retained Earnings Service Revenue Insurance Expense Salaries Expense Supplies Expense Balance $ 11,800 $ 211,900 $ 211,900 28,000 $ 25,000 63,000 32,100 2,600 2,200 2,100 12,000 21,000 46,000 29,500 6,300 7,700 32,700 2,200 74,500 1,100 16,400 1,100 2,200 2,500 1,800 Interest Expense Depreciation Expense—Equipment Depreciation Expense—Building Tota June 30, 2018. : Requirements 1. Prepare the company’s income statement for the year ended December 31, 2018. 2. Prepare the company’s statement of retained earnings for the year ended December 31, 2018. 3. Prepare the company’s classified balance sheet in report form at December 31, 2018. 4. Journalize the closing entries for Boston Irrigation System. 5. Compute the company’s current ratio at December 31, 2018. At December 31, 2017, the current ratio was 2.3. Did the company’s ability to pay current debts improve or deteriorate, or did it remain the same?
This problem continues the Canyon Canoe Company situation from Chapter 3.
1. Complete the worksheet at December 31, 2018 (optional). Use the unadjusted trial balance from Chapter 2 and the adjusting entries from Chapter 3.
2. Prepare an income statement for the two months ended December 31, 2018. Use the worksheet prepared in Requirement 1 or the adjusted trial balance from Chapter 3.
3. Prepare a statement of retained earnings for the two months ended December 31, 2018.
4. Prepare a classified balance sheet (report form) at December 31, 2018. Assume the note payable is long-term.
5. Journalize and post the closing entries at December 31, 2018. Open T-accounts for Income Summary and Retained earnings. Determine the ending balance for each account. Denote each closing amount as Clos. and each account balance as Balance.
6. Prepare a post-closing trial balance at December 31, 2018.
Murphy Delivery Service completed the following transactions during December 2018: Dec. 1 Murphy Delivery Service began operations by receiving $13,000 cash and a truck with a fair value of $9,000 from Russ Murphy. The business issued Murphy shares of common stock in exchange for this contribution. 1 Paid $600 cash for a six-month insurance policy. The policy begins December 1. 4 Paid $750 cash for office supplies. 12 Performed delivery services for a customer and received $2,200 cash. 15 Completed a large delivery job, billed the customer, $3,300, and received a promise to collect the $3,300 within one week. 18 Paid employee salary, $800. 20 Received $7,000 cash for performing delivery services. 22 Collected $2,200 in advance for delivery service to be performed later. 25 Collected $3,300 cash from customer on account. 27 Purchased fuel for the truck, paying $150 on account. (Credit Accounts Payable) 28 Performed delivery services on account, $1,400. 29 Paid office rent, $1,400, for the month of December. 30 Paid $150 on account. 31 Cash dividends of $2,500 were paid to stockholders. Requirements
1. Record each transaction in the journal using the following chart of accounts. Explanations are not required. Cash Retained Earnings Accounts Receivable Dividends Office Supplies Income Summary Prepaid Insurance Service Revenue Truck Salaries Expense Accumulated Depreciation—Truck Depreciation Expense—Truck Accounts Payable Insurance Expense Salaries Payable Fuel Expense Unearned Revenue Rent Expense Common Stock Supplies Expense
2. Post the transactions in the T-accounts.
3. Prepare an unadjusted trial balance as of December 31, 2018.
4. Prepare a worksheet as of December 31, 2018 (optional).
5. Journalize the adjusting entries using the following adjustment data and also by reviewing the journal entries prepared in Requirement 1. Post adjusting entries to the T-accounts. CHAPTER 4 Completing the Accounting Cycle 245 Adjustment data: a. Accrued Salaries Expense, $800. b. Depreciation was recorded on the truck using the straight-line method. Assume a useful life of five years and a salvage value of $3,000. c. Prepaid Insurance for the month has expired. d. Office Supplies on hand, $450. e. Unearned Revenue earned during the month, $700. f. Accrued Service Revenue, $450.
6. Prepare an adjusted trial balance as of December 31, 2018.
7. Prepare Murphy Delivery Service’s income statement and statement of retained earnings for the month ended December 31, 2018, and the classified balance sheet on that date. On the income statement, list expenses in decreasing order by amount—that is, the largest expense first, the smallest expense last.
8. Journalize the closing entries, and post to the T-accounts.
9. Prepare a post-closing trial balance as of December 31, 2018.
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