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Horngren'S Financial And Managerial Accounting
Found in: Page 238

Short Answer

The unadjusted trial balance of Fleming Investment Advisers at December 31, 2018, follows: Adjustment data at December 31, 2018: a. Unearned Revenue earned during the year, $700. b. Office Supplies on hand, $3,000. c. Depreciation for the year, $3,000. d. Accrued Salaries Expense, $4,500. e. Accrued Service Revenue, $9,000. Account Title Office Supplies Cash Debit Credit Accounts Receivable Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Service Revenue Insurance Expense Salaries Expense Supplies Expense Interest Expense Rent Expense Depreciation Expense—Equipment Total Balance $ 25,000 $ 183,000 $ 183,000 26,000 4,500 15,000 Retained Earnings 5,500 28,000 99,000 51,000 7,500 26,000 $ 19,000 14,000 2,500 33,000 3,000 7,000 FLEMING INVESTMENT ADVISERS Unadjusted Trial Balance December 31, 2018 Requirements 1. Prepare a worksheet for Fleming Investment Advisers at December 31, 2018. 2. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in account format. 3. Prepare closing entries.

(1) Worksheet is mentioned in Step 1.

(2) Net income is $51,200, ending balance of retained earnings equals $28,700 and total assets and total liabilities & stockholders’ equity equals $92,000.

(3) Closing entries are mentioned in Step 3.

See the step by step solution

Step by Step Solution

Step-by-Step-SolutionStep 1: Worksheet

(1) Worksheet is shown as follows:

FLEMING INVESTMENT ADVISERS
Worksheet
December 31, 2018

Unadjusted Trial BalanceAdjustmentsAdjusted Trial BalanceIncome StatementBalance Sheet

Account Names

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Cash

$25,000

$25,000

$25,000

Accounts Receivable

51,000

(e)

$9,000

60,000

60,000

Office

Supplies

7,500

$4,500

(b)

3,000

3,000

Equipment

26,000

26,000

26,000

Accumulated Depreciation—Equipment

$19,000

3,000

(c)

22,000

22,000

Accounts Payable

14,000

14,000

14,000

Salaries Payable

4,500

(d)

4,500

4,500

Unearned Revenue

4,500

(a)

700

3,800

3,800

Notes Payable

26,000

26,000

26,000

Common Stock

15,000

15,000

15,000

Retained Earnings

5,500

5,500

5,500

Dividends

28,000

28,000

28,000

Service Revenue

99,000

9700

(e,a)

108,700

108,700

Insurance Expense

2,500

2,500

2,500

Salaries Expense

33,000

(d)

4,500

37,500

37,500

Supplies Expense

(b)

4,500

4,500

4,500

Interest Expense

3,000

3,000

3,000

Rent Expense

7,000

7,000

7,000

Depreciation Expense—Equipment

(c)

3,000

3,000

3,000

Total

$183,000

$183,000

$21,700

$21,700

$199,500

$199,500

$57,500

$108,700

$142,000

$90,800

Net Income

51,200

51,200

Total

$108,700

$108,700

$149,000

$142,000

Step 2: Income statement, Statement of retained earnings, and Classified balance sheet

Income statement is shown as follows:

FLEMING INVESTMENT ADVISERS
Income Statement
Year Ended December 31, 2018

Revenues

Service Revenue

$108,700

Expenses

Insurance Expense

$2,500

Salaries Expense

37,500

Supplies Expense

4,500

Interest Expense

3,000

Rent Expense

7,000

Depreciation Expense—Equipment

3,000

Total Expenses

57,500

Net Income

$51,200

Statement of retained earnings is shown as follows:

FLEMING INVESTMENT ADVISERS
Statement of Retained Earnings
Year Ended December 31, 2018

Retained Earnings, Beginning Balance

$5,500

Net Income for the year

51,200

56,700

Dividends

(28,000)

Retained Earnings, November 30, 2018

$28,700

Balance Sheet is shown as follows:

FLEMING INVESTMENT ADVISERS
Balance Sheet
December 31, 2018
Assets

Current Assets:

Cash

$25,000

Accounts Receivable

60,000

Office Supplies

3,000

Total Current Assets

$88,000

Property, Plant, and Equipment:

Equipment

$26,000

Less: Accumulated Depreciation- Equipment

(22,000)

4,000

Total Property, Plant, and Equipment:

4,000

Total Assets

$92,000

Liabilities

Current Liabilities:

Accounts Payable

14,000

Salaries Payable

4,500

Unearned revenue

3,800

Total Current Liabilities:

$22,300

Long-term Liabilities

Notes Payable

26,000

Total Liabilities

48,300

Stockholders’ Equity

Common Stock

15,000

Retained Earnings

28,700

Total Stockholders’ Equity

43,700

Total Liabilities and Stockholders’ Equity

$92,000

Step 3: Closing entries

(3) Closing entries are as follows:

Date

Accounts and Explanation

Debit

Credit

Dec. 31

Service Revenue

$108,700

Income Summary

$108,700

To close revenue.

Dec. 31

Income Summary

$57,500

Insurance Expense

$2,500

Salaries Expense

$37,500

Supplies Expense

$4,500

Interest Expense

$3,000

Rent Expense

$7,000

Depreciation Expense—Equipment

$3,000

To close expenses.

Dec. 31

Income Summary

$51,200

Retained Earnings

$51,200

To close Income Summary

Dec. 31

Retained Earnings

$28,000

Dividends

$28,000

To close Dividends

Most popular questions for Business-studies Textbooks

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.

This comprehensive problem is a continuation of Comprehensive Problem 1. Murphy Delivery Service has completed closing entries and the accounting cycle for 2018. The business is now ready to record January 2019 transactions. Jan. 3 Collected $200 cash from customer on account. 5 Purchased office supplies on account, $1,000. 12 Performed delivery services for a customer and received $3,000 cash. 15 Paid employee salary, including the amount owed on December 31, $4,100. 18 Performed delivery services on account, $1,350. 20 Paid $300 on account. 24 Purchased fuel for the truck, paying $200 cash. 27 Completed the remaining work due for Unearned Revenue. 28 Paid office rent, $2,200, for the month of January. 30 Collected $3,000 in advance for delivery service to be performed later. 31 Cash dividends of $1,500 were paid to stockholders. Requirements 1. Record each January transaction in the journal. Explanations are not required. 2. Post the transactions in the T-accounts. Don’t forget to use the December 31, 2018, ending balances as appropriate. 3. Prepare an unadjusted trial balance as of January 31, 2019. 4. Prepare a worksheet as of January 31, 2019 (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 4 246 chapter 4 Adjustment data: a. Office Supplies on hand, $600. b. Accrued Service Revenue, $1,800. c. Accrued Salaries Expense, $500. d. Prepaid Insurance for the month has expired. e. Depreciation was recorded on the truck for the month. 6. Prepare an adjusted trial balance as of January 31, 2019. 7. Prepare Murphy Delivery Service’s income statement and statement of retained earnings for the month ended January 31, 2019, 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. Calculate the following ratios as of January 31, 2019, for Murphy Delivery Service: return on assets, debt ratio, and current ratio.

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