Ex. 179
Before month-end adjustments are made, the February 28 trial balance of Alice’s Adventures contains revenue of $9,000 and expenses of $3,900. Adjustments are necessary for the following items:
Depreciation for February is $1,500.
Revenue earned but not yet billed is $2,300.
Accrued interest expense is $700.
Revenue collected in advance that is now earned is $3,500.
Portion of prepaid insurance expired during February is $400.
Instructions
Calculate the correct net income for Alice’s Income Statement for February.
Ex. 180
On December 31, 2011, Speedy Company prepared an income statement and balance sheet and failed to take into account three adjusting entries. The incorrect income statement showed net income of $40,000. The balance sheet showed total assets, $140,000; total liabilities, $45,000; and stockholders' equity, $95,000.
The data for the three adjusting entries were:
(1)Depreciation of $9,000 was not recorded on equipment.
(2)Wages amounting to $8,000 for the last two days in December were not paid and not recorded. The next payroll will be in January.
(3)Rent of $14,000 was paid for two months in advance on December 1. The entire amount was debited to Rent Expense when paid.
Ex. 180(cont.)
Instructions
Complete the following tabulation to correct the financial statement amounts shown (indicate deductions with parentheses):
Item Net IncomeTotal AssetsTotal LiabilitiesStockholders'
Equity
Incorrect balances$ 40,000$140,000$ 45,000$ 95,000
Effects of:
Depreciation
Wages
Rent
Correct Balances
Ex. 181
Indicate (a) the type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense), and (b) the accounts before adjustment (overstated or understated) for each of the following:
1.Supplies of $200 have been used.
2.Salaries of $600 are unpaid.
3.Rent received in advance totaling $300 has been earned.
4.Services provided but not recorded total $500.