Question 1. Affleck Company accumulates the following adjustment data at December 31.
1. Services provided but not recorded total $750.
2. Store supplies of $300 have been used.
3. Utility expenses of $225 are unpaid.
4. Unearned revenue of $260 has been earned.
5. Salaries of $900 are unpaid.
6. Prepaid insurance totaling $350 has expired.
Instructions: For each of the above items indicate the following.
A. The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense).
B. The status of accounts before adjustment (overstatement or understatement).
Question 2. The income statement of Benning Co. For the month of July shows net income of $1,400 based on Service Revenue $5,500, Wages Expense $2,300, Supplies Expense $1,200, and Utility Expense $600. In reviewing the statement, you discover the following.
1. Insurance expired during July of $400 was omitted.
2. Supplies expense includes $200 of supplies that are still on hand at July31.
3. Depreciation on equipment of $150 was omitted.
4. Accrued but unpaid wages at July 31 of $300 were not include.
5. Services provided but unrecorded totaled $500.
Instructions: Prepare a correct income statement for July2010.
Question 3. Neosho River Resort opened for business on June 1 with eight air-conditioned units. Its trial balances before adjustment on August 31 is as follows.
Neosho River Resort
Trial Balance
August 31, 2010
Account Number Debit Credit
101 Cash $19,600
126 Supplies 3,300
130 Prepaid Insurance 6,000
140 Land 25,000
143 Cottages 125,000
149 Furniture 26,000
201 Accounts Payable $6,500
209 Unearned Rent Revenue 7,400
275 Mortgage Payable 80,000
301 P. Harder, Capital 100,000
306 P. Harder, Drawing 5,000
429 Rent Revenue 80,000
622 Repair Expense 3,600
726 Salaries Expense 51,000
732 Utilities Expense 9,400
$273900 $273,900
In addition t those account listed on the trial balance, the chart of accounts for Neosho River Resort also contains the following accounts and account numbers: No. 112 Account Receivable, No. 144 Accumulated Deprecaion-Cottages, No. 150 Accumulated Depreciated-Furniture, No. 212 Salaries Payable, No. 230 Interest Payable, No. 620 Depreciation Expense-Cottages, No. 621 Depreciation Expense-Furniture, NO. 631 Supplies Expense, No 718 Interest Expense, and No. 722 Insurance Expense. Others data: 1. Insurance expires at the rate of $400 per month. 2. A count on August 31 shows $600 of supplies on hand. 3. Annual depreciation is $6,000 on cottage and $2,400 on furniture. 4. Unearned rent revenue of $4,100 was earned prior ot August 31. 5. Salaries of $400 were unpaid at August 31. 6. Rentals of $1,000 were due from tenants at August 31. (Use Account Receivable.) 7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)
Instructions: a. Journalize the adjusting entries on August 31 for the 3-Month period Jun 1-August 31.
B. Prepare a ledger using the three-column form on account. Enter the trial balance accounts and post the adjusting entries. (Use J1 as the posting reference.) c. Prepare an adjusting trial balance on August 31. D. Prepare and income statement and an owner’s equity statement for the 3 Months ending August 31 and a balance sheet as of August 31