ACCT 211 Homework 3 Adjusting Accounts Problems Assignment solutions complete answers

ACCT 211 Homework 3 Adjusting Accounts Problems Assignment solutions complete answers 

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Arnez Company’s annual accounting period ends on December 31. The following information concerns the adjusting entries to be recorded as of that date.

a.   The Office Supplies account started the year with a $3,100 balance. During the year, the company purchased supplies for $12,803, which was added to the Office Supplies account. The inventory of supplies available at December 31 totaled $2,728.

b.   The Prepaid Insurance account had a $31,848 debit balance at December 31 before adjusting for the costs of any expired coverage for the year. An analysis of prepaid insurance shows that $22,911 of unexpired insurance coverage remains at year-end.

c.   The company has 15 employees, who earn a total of $2,900 in salaries each working day. They are paid each Monday for their work in the five-day workweek ending on the previous Friday. Assume that December 31 is a Tuesday, and all 15 employees worked the first two days of that week. Because New Year’s Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6 of next year.

d.   The company purchased a building at the beginning of this year. It cost $905,000 and is expected to have a $45,000 salvage value at the end of its predicted 40-year life. Annual depreciation is $21,500.

e.   Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $2,400 per month, starting on November 1. The rent was paid on time on November 1, and the amount received was credited to Rent Revenue. However, the tenant has not paid the December rent. The company has worked out an agreement with the tenant, who has promised to pay both December and January rent in full on January 31.

f.     On November 1, the company rented space to another tenant for $2,174 per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Revenue account.
Assume no other adjusting entries are made during the year.

 
Required:
1. Use the information to prepare adjusting entries as of December 31.
2. Prepare journal entries to record the first subsequent cash transaction in January of the next year for parts c and e.

 

Wells Technical Institute (WTI) provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Its unadjusted trial balance as of December 31 follows, along with descriptions of items a through h that require adjusting entries on December 31.
 
Additional Information Items

a.     An analysis of WTI's insurance policies shows that $3,600 of coverage has expired.

b.   An inventory count shows that teaching supplies costing $3,120 are available at year-end.

c.   Annual depreciation on the equipment is $14,400.

d.   Annual depreciation on the professional library is $7,200.

e.   On September 1, WTI agreed to do five training courses for a client for $2,300 each. Two courses will start immediately and finish before the end of the year. Three courses will not begin until next year. The client paid $11,500 cash in advance for all five training courses on September 1, and WTI credited Unearned Revenue.

f.     On October 15, WTI agreed to teach a four-month class (beginning immediately) for an executive with payment due at the end of the class. At December 31, $11,950 of the tuition revenue has been earned by WTI.

g.   WTI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $100 per day for each employee.

h.   The balance in the Prepaid Rent account represents rent for December.
 

 

WELLS TECHNICAL INSTITUTE
Unadjusted Trial Balance
December 31
 
Debit
Credit
Cash
$ 26,642
 
Accounts receivable
0
 
Teaching supplies
10,245
 
Prepaid insurance
15,371
 
Prepaid rent
2,050
 
Professional library
30,739
 
Accumulated depreciation—Professional library
 
$ 9,223
Equipment
102,000
 
Accumulated depreciation—Equipment
 
16,396
Accounts payable
 
 24,000
Salaries payable
 
0
Unearned revenue
 
11,500
Common stock
 
31,110
Retained earnings
 
77,000
Dividends
40,988
 
Tuition revenue
 
104,516
Training revenue
 
38,937
Depreciation expense—Professional library
0
 
Depreciation expense—Equipment
0
 
Salaries expense
49,186
 
Insurance expense
0
 
Rent expense
22,550
 
Teaching supplies expense
0
 
Advertising expense
7,173
 
Utilities expense
5,738
 
Totals
$ 312,682
$ 312,682
Required:
1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.

 

2-a. Post the balance from the unadjusted trial balance and the adjusting entries into the T-accounts.
2-b. Prepare an adjusted trial balance.

 

3-a. Prepare Wells Technical Institute's income statement for the year.
3-b. Prepare Wells Technical Institute's statement of retained earnings for the year. The Retained Earnings account balance was $77,000 on December 31 of the prior year.
3-c. Prepare Wells Technical Institute's balance sheet as of December 31.

 

The adjusted trial balance for Chiara Company as of December 31 follows.
 

 
Debit
Credit
Cash
$ 209,900
 
Accounts receivable
53,500
 
Interest receivable
19,800
 
Notes receivable (due in 90 days)
173,000
 
Office supplies
16,000
 
Automobiles
165,000
 
Accumulated depreciation—Automobiles
 
$ 90,000
Equipment
140,000
 
Accumulated depreciation—Equipment
 
28,000
Land
79,000
 
Accounts payable
 
100,000
Interest payable
 
30,000
Salaries payable
 
16,000
Unearned revenue
 
30,000
Long-term notes payable
 
140,000
Common stock
 
30,580
Retained earnings
 
275,220
Dividends
50,000
 
Services revenue
 
574,000
Interest revenue
 
38,000
Depreciation expense—Automobiles
26,500
 
Depreciation expense—Equipment
21,000
 
Salaries expense
192,000
 
Wages expense
46,000
 
Interest expense
33,200
 
Office supplies expense
33,200
 
Advertising expense
61,500
 
Repairs expense—Automobiles
32,200
 
Totals
$ 1,351,800
$ 1,351,800

Required:
Use the information in the adjusted trial balance to prepare (a) the income statement for the year ended December 31; (b) the statement of retained earnings for the year ended December 31 [Note: Retained Earnings at December 31 of the prior year was $275,220.]; and (c) the balance sheet as of December 31.

 

On April 1, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company’s first month.

 

April 2
Nozomi invested $49,000 cash and computer equipment worth $25,000 in the company in exchange for its common stock.
April 3
The company rented furnished office space by paying $1,900 cash for the first month’s (April) rent.
April 4
The company purchased $1,600 of office supplies for cash.
April 10
The company paid $2,880 cash for a 12-month insurance policy. Coverage begins on April 11.
April 14
The company paid $800 cash for two weeks' salaries earned by employees.
April 24
The company collected $13,000 cash for commissions revenue.
April 28
The company paid $800 cash for two weeks' salaries earned by employees.
April 29
The company paid $350 cash for minor repairs to computer equipment.
April 30
The company paid $1,300 cash for this month's telephone bill.
April 30
The company paid $1,520 cash in dividends.
 

The company's chart of accounts follows:
 

101
Cash
403
Commissions Revenue
106
Accounts Receivable
612
Depreciation Expense—Computer Equipment
124
Office Supplies
622
Salaries Expense
128
Prepaid Insurance
637
Insurance Expense
167
Computer Equipment
640
Rent Expense
168
Accumulated Depreciation—Computer Equipment
650
Office Supplies Expense
209
Salaries Payable
684
Repairs Expense
307
Common Stock
688
Telephone Expense
318
Retained Earnings
901
Income Summary
319
Dividends
 
 

Use the following information to prepare adjusting entries:

a.   Prepaid insurance of $160 expired this month.

b.   At the end of the month, $600 of office supplies are still available.

c.   This month’s depreciation on computer equipment is $300.

d.   Employees earned $510 of unpaid and unrecorded salaries as of month-end.

e.   The company earned $2,150 of commissions revenue that is not yet recorded at month-end.


Required:
1. & 2. Prepare journal entries to record the transactions for April and post them to ledger accounts in Requirement 6B GL tab. The company records prepaid and unearned items in balance sheet accounts.
3. Using account balances from Requirement 6B GL tab, prepare an unadjusted trial balance as of April 30.
4. Journalize the adjusting entries for the month, and then post to the ledger on Requirement 6B GL tab, using April 30 Adjusted as the date.
5a. Using adjusted account balances from Requirement 6B GL tab, prepare an adjusted trial balance as of April 30.
5b. Prepare the income statement for the month of April 30.
5c. Prepare the statement of retained earnings for the month of April 30.
5d. Prepare the balance sheet at April 30.
6a. Prepare journal entries to close the temporary accounts and then post to Requirement 6B GL tab, using April 30 Close as the date.
6b. Post the journal entries to the ledger.
7. Prepare a post-closing trial balance.