E3 8 adjusting entries

"E3-5 (Adjusting Entries) The ledger of Duggan Rental Agency on March 31 of the current year includes

the following selected accounts before adjusting entries have been prepared."

                Debit Credit

    Prepaid Insurance $3,600

    Supplies 2,800

    Equipment 25,000

    Accumulated Depreciation - Equipment $8,400

    Notes Payable 20,000

    Unearned Rent Revenue 9,300

    Rent Revenue 60,000

    Interest Expense 0

    Salaries and Wage Expense 14,000

    Totals: $45,400 $97,700

An analysis of the accounts shows the following:

1. The equipment depreciation per month is: $250

2. One-third of the unearned rent was earned during the quarter.

3. Interest accrued for the month on notes payable is: $500

4. Supplies on hand total: $650

5. The monthly insurance expiration rate is: $300

"Instructions:

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are: (Omit explanations.)"

    Depreciation Expense Interest Payable

    Insurance Expense Supplies Expense

1 Account Title Amount

    Account Title Amount

    Text / Memo Line - Optional

2 Account Title Amount

    Account Title Amount

    Text / Memo Line - Optional

3 Account Title Amount

    Account Title Amount

    Text / Memo Line - Optional

4 Account Title Amount

    Account Title Amount

    Text / Memo Line - Optional

5 Account Title Amount

    Account Title Amount

    Text / Memo Line - Optional

E3-8 (Adjusting Entries) Andy Roddick is the new owner of Ace Computer Services. At the end of August 2014, his first month of ownership, Roddick is trying to prepare monthly financial statements. Below is some information related to unrecorded expenses that the business incurred during August.

1. At August 31, Roddick owed his employees salaries $1,900 in wages that will be paid on September 1.

$1,900

2. At the end of the month he had not yet received the month's utility bill. Based on past experience, he

estimated the bill would be approximately: $600

3. On August 1, Bryant borrowed $60,000 from a local bank on a 15

-year mortgage. The annual interest rate is 8%

4. A telephone bill in the amount of $117 covering August charges is unpaid at

August 31.

"Instructions:

Prepare the adjusting journal entries as of August 31, 2014."

1 Account Title Amount

    Account Title Amount

    Text / Memo line

2 Account Title Amount

    Account Title Amount

    Text / Memo line

3 Account Title Amount

    Account Title Amount

    Text / Memo line

4 Account Title Amount

    Account Title Amount

    Text / Memo line

"P3-2 (Adjusting Entries and Financial Statements) Mason Advertising Agency was founded in January

2008. Presented below are adjusted and unadjusted trial balances as of December 31, 2012."

MASON ADVERTISING AGENCY

Trial Balance

December 31, 2014

            Unadjusted Adjusted

            Debit Credit Debit Credit

Cash $11,000 $11,000

Accounts Receivable 20,000 23,500

Supplies 8,400 3,000

Prepaid Insurance 3,350 2,500

Equipment 60,000 60,000

Accumulated Depreciation - Equipment $28,000 $33,000

Accounts Payable 5,000 5,000

Interest Payable 0 150

Notes Payable 5,000 5,000

Unearned Service Revenue 7,000 5,600

Salaries and Wages Payable 0 1,300

Common Stock 10,000 10,000

Retained Earnings 3,500 3,500

Service Revenue 58,600 63,500

Salaries and Wages Expense 10,000 11,300

Insurance Expense 850

Interest Expense 350 500

Depreciation Expense 5,000

Supplies Expense 5,400

Rent Expense 4,000 4,000

Totals: $117,100 $117,100 $127,050 $127,050

Instructions:

(a) Journalize the annual adjusting entries that were made. (Omit explanations.)

Dec 31 Account Title Amount

    Account Title Amount

Dec 31 Account Title Amount

    Account Title Amount

Dec 31 Account Title Amount

    Account Title Amount

Dec 31 Account Title Amount

    Account Title Amount

Dec 31 Account Title Amount

    Account Title Amount

Dec 31 Account Title Amount

    Account Title Amount

Dec 31 Account Title Amount

    Account Title Amount

(b) Prepare an income statement and a statement of retained earnings for the year ending December 31, 2014 and an unclassified balance sheet at December 31.

    MASON ADVERTISING AGENCY

    Income Statement

    For the Year Ended December 31, 2014

    Revenues

    Account Title Amount

    Expenses

    Account Title Amount

    Account Title Amount

    Account Title Amount

    Account Title Amount

    Account Title Amount

    Account Title Amount

    Total expenses Formula

    Net income Formula

    MASON ADVERTISING AGENCY

    Statement of Retained Earnings

    For the Year Ended December 31, 2014

    Retained Earnings, Jan 1 Amount

    Add: Title Amount

    Retained Earnings, Dec 31 Formula

    MASON ADVERTISING AGENCY

    Balance Sheet

    December 31, 2014

    Assets

    Account Title Amount

    Account Title Amount

    Account Title Amount

    Account Title Amount

    Account Title Amount

    Account Title Amount Formula

    Total Assets Formula

    Liabilities and Stockholders' Equity

    Liabilities

    Account Title Amount

    Account Title Amount

    Account Title Amount

    Account Title Amount

    Account Title Amount

    Total Liabilities Formula

    Stockholders' Equity

    Account Title Amount

    Account Title Amount Formula

    Total liabilities and stockholders' equity Formula

(c) Answer the following questions:

(1) If the note has been outstanding 3 months, what is the annual interest rate on that note?

Enter text answer here.

  (2) If the company paid $12,500 in salaries and wages in 2014, what was the balance in Salaries and

       Wages Payable on December 31, 2013

Enter text answer here.