46) Miss Hap, the inexperienced accountant, made the following adjustments to the accounting system of Bank, Rupp, & Baroque, Inc. The adjustments were made based on the information below the accounting equation worksheet.
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Assets
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Liabilities
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Shareholders’ equity
|
|
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CC
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Retained earnings
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a.
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30,000 Accounts receivable
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30,000 Revenue
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b.
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(200) Supplies
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(200) Supplies expense
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c.
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(20,000) Equipment
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(20,000) Equipment expense
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d.
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(200) Interest receivable
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(200) Interest expense
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e.
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(4,000) Cash
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(4,000) Salaries expense
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a. Unearned revenue has a December 31 balance of $50,000
before
adjustment. Sixty percent of the unearned revenue has been earned by the end of the year.
b.
before
adjustment the office supplies account is $600. Only $200 of the supplies remain as of the end of the year.
c. Depreciated the $100,000 equipment purchased two years ago. The estimated useful life is ten years, and it has $0 residual value.
d. Interest accrues on a $2,000, 10% note receivable that has been outstanding the whole year.
e. Salaries and wages earned by employees but unpaid are $4,000.
Required:
Cross out any incorrect account titles or dollar amounts in the worksheet shown above. Write in the correct account titles and dollar amounts where needed.
47) The records of Adam’s Apple, Inc. revealed the following amounts at December 31, 2011
before
adjustments:
1.
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Accumulated depreciation
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$ 0
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9.
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Prepaid advertising
|
$ 2,000
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2.
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Advertising expense
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0
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10.
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Prepaid insurance
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2,400
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3.
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Depreciation expense
|
0
|
|
11.
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Service revenue
|
60,000
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4.
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Equipment
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10,000
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12.
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Unearned revenue
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10,000
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5.
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Insurance expense
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0
|
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13.
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Utilities expense
|
11,000
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6.
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Interest expense
|
0
|
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14.
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Salaries expense
|
30,000
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7.
|
Interest payable
|
0
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15.
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Salaries payable
|
0
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8.
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Notes payable
|
20,000
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Part A:
In the worksheet below, record the effect of these six adjustments on the accounting equation. Show the correct dollar amounts, and write in the titles of the accounts affected.
a.$400 of the advertising paid in advance remained unused.
b.The equipment, purchased on January 1, has a useful life of 5 years with no residual value. Record the depreciation for the year.
c.Four months of the month insurance policy have
NOT
expired.
d.Interest is owed on the 6%, 9-month note issued on November 1, 2011.
e.$6,000 was earned of the amounts collected in advance from customers.
f.$4,000 was owed to employees for work done in December.
Assets
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Liabilities
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Shareholders’ equity
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CC
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Retained earnings
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a
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b
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c
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d
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e
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f
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Part B:
Fill in the adjusted balances as of December 31, 2011:
1.
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Accumulated depreciation
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$
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9.
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Prepaid advertising
|
$
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2.
|
Advertising expense
|
$
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10.
|
Prepaid insurance
|
$
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3.
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Depreciation expense
|
$
|
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11.
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Service revenue
|
$
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4.
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Equipment
|
$
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12.
|
Unearned revenue
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$
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5.
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Insurance expense
|
$
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13.
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Utilities expense
|
$
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6.
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Interest expense
|
$
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14.
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Salaries expense
|
$
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7.
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Interest payable
|
$
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15.
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Salaries payable
|
$
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8.
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Notes payable
|
$
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Part C:
Calculate Adam’s Apple’s net income for the year ended December 31, 2011. $________