The following trial balance and additional data are for Best-Friend Pet Hospital, Inc.
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BEST-FRIEND PET HOSPITAL, INC. |
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Debits |
Credits |
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|
Cash |
$16,490 |
|
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Accounts Receivable |
54,390 |
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Supplies on Hand |
900 |
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Prepaid Fire Insurance |
1,800 |
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Prepaid Rent |
21,600 |
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Equipment |
125,000 |
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Accumulated Depreciation —Equipment |
$25,000 |
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Accounts Payable |
29,550 |
|
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Notes Payable |
9,000 |
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Capital Stock |
150,000 |
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Retained Earnings, 2010 January 1 |
20,685 |
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Service Revenue |
179,010 |
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Interest Expense |
225 |
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Salaries Expense |
142,200 |
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Advertising Expense |
29,250 |
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Supplies Expense |
2,135 |
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Miscellaneous Expense |
3,705 |
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Legal and Accounting Expense |
13,750 |
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Utilities Expense |
1,800 |
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$413,245 |
$413,245 |
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The company consistently followed the policy of initially debiting all prepaid items to asset accounts.
Prepaid fire insurance is USD 600 as of the end of the year.
Supplies on hand are USD 638 as of the end of the year.
Prepaid rent is USD 2,625 as of the end of the year.
The equipment is expected to last 10 years with no salvage value.
Accrued salaries are USD 2,625.
a. Prepare a 12-column work sheet for the year ended 2010 December 31. You need not include account numbers. Briefly explain the entries in the Adjustments columns at the bottom of the work sheet, as was done in Exhibit 20.
b. Prepare the 2010 December 31, closing entries.