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Question II.

The unadjusted trial balance on December 31,2010, appears as follows:

Computer Solution
Trial Balance
December 31,2010
Cash $ 20,480
Office Supplies 6,320
Prepaid insurance 7,400
Office equipment 13,700
Accumulate depreciation, office equipment $ 10,800
Account payable 10,720
Unearned service fees 11,750
Long-term note payable 12,300
Michael Cote, Capital 14,300
Michael Cote, withdrawals 49,040
Service fees earned 98,130
Salaries expense 33,100
Rent expense 18,500
Advertising expense 9,460
Total $ 158,000 $ 158,000

REQUIRED:

Uses the multi-purpose, 4-column paper provided. You may omit explanations but
show any supporting.

Part A: Using the following information relating to accounts in the trial balance,
prepare a December 31,2010 adjusting entry for each item.

1. An insurance policy examination showed $2,400of expired insurance.

2. An inventory count of office supplies at December 31,2010 shows that only


2,440 remain on hand.
3. The office equipment was purchase on January 1,2008. It’s being depreciated on
the basic of a 20 year service life and salvage value of $1,400. Proper depreciation
was record to December 31,2019.

4. Several clients have entered into contracts with computer Solutions for a flat fee
per month. These clients often pay for these services in advance. An examination
revealed that of the $ 11,750 received in advance during the year, $ 8,200 remains
unearned at December 31,2010.

5. One of Computer Solutions clients has entered into a contract for computer
services for a flat fee of $400 per month. At December 31, December services are
unpaid and unrecorded but the client promised to pay for December by January15,
2011. (Computer Solutions DID perform the service work for December. )

6. The one employee works a five-day workweek at $180 per day. The employee
was paid last week but has worked two days this week- December 30 and 31 for
which she has not been paid. The regular payday for the five-day workweek will be
January 3, 2011. She must work January 1, 2011 and will be paid for that day.

Par B:

With reference to the adjusting entry for part A, #6 (above), prepare the general
journal entry to record payment of the payroll on January 3, 2011. Computer
Solutions does not use reversing entries.

Question III:

The accounts listed below are the adjusted trial balance foe a single proprietorship
at the end of its fiscal year. The accounts have been alphabetized as follow:
Strongarm Moving Services
Adjusted Trial Balance
June 30,2010
Account Debit Credit
Account Payable $ 4,750
Account Receivable $ 12,000
Accumulated Depreciation, Building 30,000
Accumulated Depreciation, Moving Vans 24,750
Depreciation expense, Building 8,500
Depreciation expense, Moving Vans 12,750
Buiding 100,000
Cash 4,535
Interest Earned 3,200
Insurance expense 3,600
Interest expense 6,800
Investment in West Jet Common Share 5,500
Land 56,000
Long-term note payable (*) 135,900
Morris Strong, Capital (**) 98,605
Morris Strong, Withdrawals 32,000
Moving fee Earned 102,900
Moving Vans 112,000
Office supplies 2,450
Office supplies expense 5,220
Prepaid Insurance 2,800
Salaries Payable 6,500
Salaries expense 56,000
Short-term Note payable 5,250
Unearned Revenue 8,300
Total $ 420,155 $225,358
(*): a payment of $15,000 is due on this note on January 21, 2011

(**): the balance in the capital account consists of a beginning balance of $78,605
and a $ 20,000 investment made by the owner during the year.

REQUIRED: Using the 4-column paper provided:

1. Prepare an Income Statement in proper form.

2. Prepare a Statement of Changes in Equity in proper form.

3. Prepare a classified Balance Sheet in proper form.

Question IV:
Part A:
Forget Design Consultants
Adjusted Trial Balance
December 31, 2010

Account Debit Credit


Cash $ 12,925
Account Receivable 40,000
Office Supplies 2,200
Building 150,000
Accumulated Depreciation, Building 63,555
Land 36,000
Unearned service Fees 8,470
Notes Payable 102,000
Ed Forget, Capital 57,000
Ed Forget, Withdrawals 50,000
Services Fees earned 250,000
Salaries expense 142,200
Insurance expense 7,300
Interest expense 15,500
Utilities Expense 20,000
Rent Expense 9,500
Depreciation expense 10,400
Rent earned 15,000
Total $496,025 $496,025

REQUIRED:

Prepare closing entries for Forget Design Consultants. Use the 4-column paper
provided.
Part B:

While productions prepares annual financial statements for the fiscal year ending
December 31. The firm follows proper accounting procedures and utilizes
reversing entries.

The company has five employees who are paid every Friday for the days worked
from Monday to Friday. The employees are paid $200 per day ( total salary
expense $1,000 ). All of the employees worked 5 days from Monday, December
30, 2010 to Friday, January 3, 2011. They will be paid for these days on Friday,
January 3, 2011.

REQUIRED:

1. Prepare the year-end adjusting entry to record the salary expense up to


December 31, 2010.

2. Prepare the necessary reversing entry on January 1, 2011.

3. Prepare the entry on January 3, 2011 to pay the employees for the week.
Question V:

Mary Grant opened a transaction business on September 1, 2010. During the first
month of operations the business completed the following transaction:

Sept 1. The business received $ 10,000 cash from Mary Grant, which was
deposited into a bank account entitle Grant Transaction Services. Mary also gave
the business office equipment valued at $ 20,000.

2. Purchase supplies $ 1,000 and office equipment $ 8,200 on account.

3. Prepaid $ 3,600 cash for four months’ rent for an office.

6. Performed transaction services for a client and received cash, $ 2,500

8. Land for a future building site was purchased for $ 20,000. Half was paid in cash
and a note payable was issued for the balance.

11. Performed a work for client and billed the client $ 1,000

15. Paid the administrative assistant $1,100 for the first half of September.

18. Paid for supplies and equipment purchased on account.

22. Paid $500 for a radio advertisement announcing the opening of the new
business.

25. A new client, HUI Corporation, has paid in advance for overseas business
translations to be completed in October, November and December. Cash was
received in total for three months.

30. Received a bill for a fax machine that was leased for the month of September.
The $1,750 owing will be paid October 15.

30. Mary Grant, the owner withdrew $2,000 in cash for her personal use.

REQUIRED:

1. Prepare the general journal entries, in good form, to record the transactions.
2. Post cash and Account Payable transactions to the general ledger cash and A/P
account that are attached at the end of the exam. Follow proper posting procedures.

Question VI.

Unadjusted Adjustments Adjusted Income Bal. Sheet


Balance Balance Balance State. State.O.Equity

Cash $50
Supplies 100
Account Receivable 100
Prepaid Rent 100
Account Payable 80
Owner, Capital 200
Owner, Withdrawal 30
Services Revenue 150
Interest Expense 50
Rent Expense
Supplies expense 0
Salaries expense 0
Unearned Revenue 50
Total $480 $480

a. She counted supplies and found only $ 50 on hand.

b. Reviewed shows $ 10 remains unearned at December 31,2010.

c. Interest of $30 had accrued on the notes payable for the month of September.

d. Accrued salaries of $ 100 has not been recorded at year-end.

e. A review of the prepaid Rent account showed that $ 50 has been used.

REQUIRED:

a. Enter the adjusting entry on the above worksheet.


b. Complete the remaining column of the worksheet.