For each account listed, identify the category in which it would appear on a classified balance sheet.
7. Accumulated Depreciation—Furniture
Accumulated Depreciation—Furniture are classified as Property, plant, and equipment.
Step 1: Explanation on Property, Plant and Equipment
Property, plant and equipment are the long term assets of the business. It includes the land, buildings, furniture and equipment, which are used in the operation of business. .
Accumulated depreciation refers the total depreciation claimed on the furniture till date. It is shown under property, plant and equipment as a deduction to the related fixed asset.
Mountain View Services had the following unadjusted balances at December 31, 2018:
Salaries Payable, $0; and Salaries Expense, $1,900. The following transactions havetaken place at the end of 2018 and beginning of 2019:
Dec. 31 Accrued Salaries Expense at December 31, $8,000.
31 Closed the Salaries Expense account.
Jan. 1 Reversed the accrued salaries. (Requirement 3 only)
4 Paid salaries of $8,500. This payment included the Salaries Payable amount,
plus $500 for the first few days of January.
1. Open T-accounts for Salaries Payable and Salaries Expense using their unadjustedbalances at December 31, 2018.
2. Journalize the entries assuming Mountain View Services does not use reversing entries. Do not record the reversing entry on Jan. 1. Post to the accounts.
3. Open new T-accounts for Salaries Payable and Salaries Expense using their unadjusted balances at December 31, 2018. Journalize the entries assuming Mountain
View Services uses reversing entries. Don’t forget to record the reversing entry on Jan. 1. Post to the accounts. Compare the balances on January 4, 2019 with Requirement 2 balances on January 4, 2019.
Benson Auto Repair had the following account balances after adjustments. Assume all accounts had normal balances.
Cash $ 4,000 Common Stock $ 20,000
Accounts Receivable 3,200 Retained Earnings, January 1 15,700
Prepaid Rent 1,900 Dividends 2,100
Office Supplies 3,000 Service Revenue 1,600
Equipment 34,800 Depreciation Expense—Equipment 300
Accumulated Depreciation—Equipment 1,600 Salaries Expense 800
Accounts Payable 5,400 Rent Expense 500
Notes Payable (long-term) 7,000 Utilities Expense 600
Supplies Expense 100
14. Prepare the closing entries for Benson at December 31.
15. What is the balance of Retained Earnings after closing entries have been recorded? (Use a T-account to determine the balance.)
Kathy Wintz formed a lawn service business as a summer job. To start the corporationon May 1, 2018, she deposited $1,000 in a new bank account in the name of the business. The $1,000 consisted of a $600 loan from Bank One to her company, Wintz Lawn Service, and $400 of her own money. The company issued $400 of common stock to Wintz. Wintz rented lawn equipment, purchased supplies, and hired other students to mow and trim customers’ lawns.
At the end of each month, Wintz mailed bills to the customers. On August 31, she was ready to dissolve the corporation and return to college. Because she was so busy, she kept few records other than the checkbook and a list of receivables from customers.
At August 31, the business’s checkbook shows a balance of $2,000, and customers still owe $750. During the summer, the business collected $5,500 from customers. The business checkbook lists payments for supplies totaling $400, and it still has gasoline, weed trimmer cord, and other supplies that cost a total of $50.
The business paid employees $1,800 and still owes them $300 for the final week of the summer. Wintz rented some equipment from Ludwig’s Machine Shop. On May 1, the business signed a six-month rental agreement on mowers and paid $600 for the full rental period in advance. Ludwig’s will refund the unused portion of the prepayment if the equipment is returned in good shape. In order to get the refund, Wintz has kept the mowers in excellent condition. In fact, the business had to pay $300 to repair a mower.To transport employees and equipment to jobs, Wintz used a trailer that the business bought for $300. The business estimates that the summer’s work used up one-third of the trailer’s service potential. The business checkbook lists a payment of $500 for cash dividends paid during the summer. The business paid the loan back during August. (For simplicity, ignore any interest expense associated with the loan.)
1. As a team, prepare the income statement and the statement of retained earnings of Wintz Lawn Service for the four months May 1 through August 31, 2018.
2. Prepare the classified balance sheet (report form) of Wintz Lawn Service at August 31, 2018.
3. Was Wintz’s summer work successful? Give your team’s reason for your answer.
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