Problem 2.1 (Requirement 1) Prepare the necessary adjusting entries.

Debit Credit

a) Supplies expense 1,250.00

Office Supplies 1,250.00

b) Insurance expense 2,000.00

Prepaid Insurance 2,000.00

c) Depreciation expense 9,000.00

Accumulated Depreciation 9,000.00

d) Salaries expense 4,800.00

Accrued salaries 4,800.00

e) Fees Earned 4,500.00

Unearned Fees 4,500.00
Problem 2.2 (Requirement 1 )Prepare the necessary adjusting entries -
December 31, 2017
Debit Credit
a) Office Supplies expense 6,850.00
Office Supplies 6,850.00

b) Salaries expense 13,500.00

Salaries Payable 13,500.00

c) Advertising expense 1,600.00

Prepaid Advertisng 1,600.00

d) Unearned fees 2,500.00

Professional fees 2,500.00
 Problem 2.2 (Requirement 2) Determine the balances of the accounts

Cash 34,500.00 Office Supplies expense 6,850.00

Prepaid Advertising 3,200.00 Salaries expense 90,000.00
Office supplies 1,450.00 Advertising expense 1,600.00
Salaries Payable 13,500.00 Professional fees 258,300.00
Unearned fees 7,500.00
Problem 2.3 (Requirement 1) Prepare the necessary adjusting entries
Debit Credit
1) Supplies Expense 1,800.00
Supplies 1,800.00

2) Depreciation Expense (70,000/10) 7,000.00

Accumulated Deppreciation 7,000.00

3) Rent Expense 4,000.00

Prepaid Rent 4,000.00

4) Salaries expense 5,500.00

Salaries Payable 5,500.00

5) Unearned fees 21,000.00

Fees earned 21,000.00

6) Accounts Receivable 12,250.00

Fees Earned 12,250.00
 Problem 2.3 (Requirement 2) Determine the balances of the selected
accounts
Accounts Receivable 41,500.00 Unearned fees 5,500.00
Supplies 900.00 Fees earned 333,050.00
Prepaid rent 14,000.00 Salaries expense 65,500.00
Equipment 70,000.00 Rent expense 28,000.00
Accumulated depreciation 21,000.00 Supplies expense 1,800.00
Salaries Payable 5,500.00 Depreciation Expense 7,000.00
 Problem 2.4 (Requirement 1)Prepare the 6 necessary adjusting entries-
December 31 2017
Debit Credit

a) Supplies Expense 25,500.00

Supplies 25,500.00

b) Insurance Expense 12,000.00

Prepaid Insurance 12,000.00

c) Depreciation Expense 7,500.00

Accumulated Deppreciation 7,500.00

d) Salary Expense 6,400.00

Accrued Salaries 6,400.00

e) Unearned Service Fee 10,500.00

Service Fees Earned 10,500.00

f) Utilities Expense 1,600.00

Accounts Payable 1,600.00
 Problem 2.5 (Requirement 1)Prepare the nesessarry Adjusting entries.

Debit Credit
1,725.00
1) Supplies Expense 1,725.00
Supplies

2) Accounts Receivable 2,350.00

Service Income 2,350.00

3) Depreciation expense- Equipment 8,000.00

Accumulated Deppreciation 8,000.00

4) Salaries Expense 4,750.00

Salaries Payable 4,750.00

5) Unearned Income 2,500.00

Service Income 2,500.00
Problem 2.5 (Requirement 2) the effects (if adjustments were ommited)

Adjustment INCOME STATEMENT OF FINANCIAL POSITION

STATEMENT Assets Liabilities Owner's Equity
1) Overstated Overstated Overstated

2) Understated Understated Understated

3) Overstated Overstated Overstated

4) Overstated Understated Overstated

5) Understated Overstated Understated

Problem 2.6 (Requirement 1) Prepare the necessary Adjusting Entries
Debit Credit
a) Depreciation expense - Equipment 9,000
Accumulated Deppreciation- Equipment 9,000
( 120,000/10years x 9/12)

b) Accounts Receivable 6,000

Fees Earned 6,000

c) Prepaid Insurance 1,200

Insurance Expense 1,200

d) Salaries Expense 3,600

Accrued Salaries Payable 3,600

e) Unused Supplies 1,050

Supplies Expense 1,050
 Problem 2.6(Requirement 2) Determine the balances of the accounts

NET INCOME TOTAL ASSETS TOTAL LIABILITIES OWNER'S EQUITY

Unadjusted balances 152,450 489,800 120,500 369,300
a) Depreciation expense (9,000) (9,000) (9,000)
b) Accrued Income 6,000 6,000 6,000
c) Prepaid Insurance 1,200 1,200 1,200
d) Accrued Salaries Payable (3,600) 3,600 (3,600)
e) Unused Supplies 1,050 1,050 1,050
Adjusted Balances for 148,100 489,050 124,100 364,950
Problem 2.7 (Requirement 1) Prepare the necessary adjusting entries.

Debit Credit
a) Accounts Receivable 4,200.00
Service Income 4,200.00

b) Insurance Expense 2,400.00

Prepaid Insurance 2,400.00

c) Prepaid Advertising 1,200.00

Advertisng Expense 1,200.00

d) Supplies Expense 1,500.00

Office Supplies 1,500.00

e) Depreciation expense- Office supplies 3,200.00

Accumulated Depreciation- Office supplies 3,200.00

f) Unearned Rent 1,800.00

Rent Income 1,800.00

g) Salaries Expense 3,600.00

Salaries Payable 3,600.00
Problem 2.8 (Requirement a) Statement of Comprehensive Income
Manila Realty Agency
Statement of Comprehensive Income
For the Year Ended December 31, 2017

Fees Earned 287,220.00

Less: Expenses:
Depreciation Expense 18,300.00
Insurance Expense 7,800.00
Miscellaneous Expense 4,500.00
Rent Expense 60,000.00
Supplies Expense 6,200.00
Salaries Expense 113,600.00
Utilities Expense 17,000.00 227,400.00
Net Profit 59,820.00

Problem 2.8 (Requirement b) Statement of Changes in Owner's Equity

Manila Realty Agency
Statement of Owner's Equity
For the Year Ended December 31, 2017

Beginning Capital 195,640.00

Add: Net Profit 59,820.00
Total 255,460.00
Less: Withdrawals/Drawing account 48,000.00
Ending Capital 207,460.00

*Assume the beginning capital is 195, 640

 Problem 2.8 (Requirement c) Statement of Financial Position
Manila Realty Agency
Statement of Financial Position
As of December 31, 2017

ASSETS
Current Assets
Cash 21,120.00
Accounts Receivable 57,840.00
Prepaid Insurance 8,000.00
Prepaid Rent 15,000.00
Office Supplies 2,500.00 104,460.00
Noncurrent Assets
Property, Plant and Equipment
Equipment 183,000.00
Accumulated Depreciation 42,000.00 141,000.00
TOTAL ASSETS 245,460.00

LIABILITIES AND OWNER'S EQUITY

Current Liabilities
Accounts Payable 25,500
Salaries Payable 7,500
Unearned Fees 5,000 38,000.00
Owner's Equity
Mario Flores Capital 207,460.00
TOTAL LIABILITIES AND OWNER'S EQUITY 245,460.00
 Problem 2.8 (Requirement d) Closing Entries

Debit Credit
Dec. 31 Fees Earned 287,220.00
Income and Expense Summary 287,220.00

Income and Expense Summary 227,400.00

Depreciation Expense 18,300.00
Insurance Expense 7,800.00
Miscellaneous Expense 4,500.00
Rent Expense 60,000.00
Supplies Expense 6,200.00
Salaries Expense 113,600.00
Utilities Expense 17,000.00

Income and Expense Summary 59,820.00

Mario Flores,Drawing 59,820.00

Mario Flores, Drawing 11,820.00

Mario Flores ,Capital 11,820.00
 Problem 2.8 (Requirement e) Post-Closing Trial Balance
Manila Realty Agency
Post-Closing Trial Balance
December. 31, 2017

ACCOUNT TITLE Debit Credit

Cash 21,120.00
Accounts Receivable 57,840.00
Prepaid Insurance 8,000.00
Prepaid Rent 15,000.00
Office Supplies 2,500.00
Equipment 183,000.00
Accumulated Depreciation 42,000.00
Accounts Payable 25,500.00
Salaries Payable 7,500.00
Unearned Fees 5,000.00
Mario Flores Capital 207,460.00
TOTAL 287,460.00 287,460.00
 Problem 2.9 (Requirement a) Prepare the necessary adjusting entries

Debit Credit

Dec. 31Accounts Receivable 8,600.00

Laundry Expense 8,600.00

Rent Expense 6,000.00

Prepaid Rent 6,000.00

Supplies Expense 17,500.00

Laundry Supplies 17,500.00

Depreciation expense 19,000.00

Accumulated Depreciation 19,000.00

Salaries Expense 2,700.00

Salaries Payable 2,700.00

Prepaid Insurance 4,800.00

Insurance Expense 4,800.00

Taxes and Licenses Expense 2,400.00

Taxes and Licenses Payable 2,400.00
 Problem 2.9(Requirement b) Prepare a 10-Column Worksheet
Lucky Lanudry Shop
Worksheet
For the Year Ended December 31, 2017
Statement of
Adjusted Trial Statement of
Trial Balance Adjustments Comprehensive
Balance Financial Position
Income
ACCOUNT TITLE Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 26,200 26,200 26,200
Account Receivable 15,200 8,600 23,800 23,800
Prepaid Rent 18,000 6,000 12,000 12,000
Laundry Supplies 23,120 17,500 5,620 5,620
Laundry Equipment 190,000 190,000 190,000
Accumulated Depreciation 57,000 19,000 76,000 76,000
Accounts Payable 25,750 25,750 25,750
Lucky Santos, Capital 127,320 127,320 127,320
Lucky Santos, Drawing 60,000 60,000 60,000
Laundry Income 340,900 8,600 349,500 349,500
Salaries Expense 102,800 2,700 105,500 105,500
Insurance Expense 18,000 4,800 13,200 13,200
Rent Expense 66,000 6,000 72,000 72,000
Utilities Expense 26,250 26,250 26,250
Miscellaneous Expense 5,400 5,400 5,400
TOTALS 550,970 550,970
Supplies Expense 17,500 17,500 17,500
Depreciation expense 19,000 19,000 19,000
Salaries Payable 2,700 2,700 2,700
Prepaid Insurance 4,800 4,800 4,800
Taxes and Licenses expense 2,400 2,400 2,400 2,400
Taxes and Licenses Payable 2,400 2,400
TOTALS 61,000 61,000 583,670 583,670 261,250 349,500 322,420 234,170
Net Profit 88,250 88,250
TOTALS 349,500 349,500 322,420 322,420
Problem 2.9 (Requirement c) Statement of Comprehensive Income

Lucky Laundry Shop

Statement of Comprehensive Income
For the Year Ended December 31, 2017

Laundry Income 349,500.00

Less: Expenses
Salaries Expense 105,500.00
Insurance Expense 13,200.00
Rent Expense 72,000.00
Utilities Expense 26,250.00
Miscellaneous Expense 5,400.00
Depreciation Expense 19,000.00
Taxes and Licenses Expense 2,400.00
Supplies Expense 17,500.00 261,250.00
Net Profit 88,250.00

Problem 2.9 (Requirement d) Statement of Owner's Equity

Lucky Laundry Shop
Statement of Owner's Equity
For the Year Ended December 31, 2017

Beginning Capital 107,320.00

Add: Net Profit 88,250.00
Additional Investment 20,000.00 108,250.00
Total 215,570.00
Less: Drawings 60,000.00
Ending Capital 155,570.00
 Problem 2.9 (Requirement e) Statement of Financial Position
Lucky Laundry Shop
Statement of Financial Position
As of December 31, 2017

ASSETS
Current Assets
Cash 26,200.00
Accounts Receivable 23,800.00
Prepaid Rent 12,000.00
Laundry Supplies 5,620.00
Prepaid Insurance 4,800.00 72,420.00
Noncurrent Assets
Property, Plant and Equipment
Laundry Equipment 190,000.00
Accumulated Depreciation (76,000.00) 114,000.00
TOTAL ASSETS 186,420.00

LIABILITIES AND OWNER'S EQUITY

Current Liabilities
Accounts Payable 25,750.00
Salaries Payable 2,700.00
Taxes and Licenses Payable 2,400.00 30,850.00
Owner's Equity
Lucky Santos Capital 155,570.00
TOTAL LIABILITIES AND OWNER'S EQUITY 186,420.00
 Problem 2.9 (Requirement f) Closing Entries
Debit Credit
Laundry Income 349,500.00
Income and Expense summary 349,500.00

Income and Expense Summary 261,250.00

Salaries Expense 105,500.00
Insurance Expense 13,200.00
Rent Expense 72,000.00
Utilities Expense 26,250.00
Miscellaneous Expense 5,400.00
Supplies Expense 17,500.00
Depreciation Expense 19,000.00
Taxes and Licenses 2,400.00

Income and Expense Summary 88,250.00

L. Santos Drawing 88,250.00

L. Santos Drawing 28,250.00

L. Santos Capital 28,250.00
 Problem 2.9 (Requirement g) Post-Closing Trial Balance
Lucky Laundry Shop
Post-Closing Trial Balance
December. 31, 2017

ACCOUNT TITLE Debit Credit

Cash 26,200.00
Accounts Receivable 23,800.00
Prepaid Rent 12,000.00
Laundry Supplies 5,620.00
Prepaid Insurance 4,800.00
Laundry Equipment 190,000.00
Accumulated Depreciaton 76,000.00
Accounts Payable 25,750.00
Salaries Payable 2,700.00
Taxes and Licenses Payable 2,400.00
L. Santos Capital 155,570.00
TOTALS 262,420.00 262,420.00
 Problem 2.10 (Requirement a) Prepare the necessary adjusting entries

1 Rent Expense 10,000.00

Accrued Rent 10,000.00

2 Insurance Expense 3,600.00

Prepaid Insurance 3,600.00

3 Advertising Expense 1,000.00

Accrued Advertising 1,000.00

4 Consulting Fees 4,800.00

Unearned Consulting Fees 4,800.00

5 Supplies Expense 6,000.00

Office Supplies 6,000.00

6 Depreciation Expense(150000/10) 15,000.00

Accumulated Depreciation 15,000.00
 Problem 2.10 (Requirement b) Worksheet

Statement of Statement of Financial

Trial Balance Adjustments Adjusted Trial Balance
Comprehensive Income Position

ACCOUNT TITLE Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 152,360 152,360 152,360
Accounts Receivable 70,500 70,500 70,500
Office Supplies 12,400 6,000 6,400 6,400
Prepaid Insurance 7,200 3,600 3,600 3,600
Furniture and equipment 150,000 150,000 150,000
Accumulated Deprecation 30,000 15,000 45,000 45,000
Accounts Payable 66,080 66,080 66,080
UnearnedConsulting Fees 9,600 3,600 13,200 13,200
R. Harris Capital 247,350 247,350 247,350
R. Harris Drawing 72,000 72,000 72,000
Consulting Fees 383,880 3,600 380,280 380,280
Salaries Expense 139,600 139,600 139,600
Advertising Expense 11,000 1,000 12,000 12,000
Insurance Expense 3,600 3,600 7,200 7,200
Rent Expense 50,000 10,000 60,000 60,000
Supplies expense 6,450 6,000 12,450 12,450
Taxes and Licenses 16,900 16,900 16,900
Utilities Expense 31,250 31,250 31,250
Miscelaneous Expense 13,650 13,650 13,650
TOTALS 736,910 736,910
Accrued Rent 10,000 10,000 10,000
Accrued Advertising 1,000 1,000 1,000
Depreciation expense 15,000 15,000 15,000
TOTALS 39,200 39,200 762,910 762,910 308,050 380,280 454,860 382,630
Net Profit 72,230 72,230
TOTALS 380,280 380,280 454,860 454,860
 Problem 2.10 (Requirement c) Statement of Comprehensive Income

Lucky Laundry Shop

Statement of Comprehensive Income
For the Year Ended June 30, 2017

Laundry Income 380,280.00

Less: Expenses
Salaries Expense 139,600.00
Advertising Expense 12,000.00
Insurance Expense 7,200.00
Rent Expense 60,000.00
Supplies expense 12,450.00
Taxes and Licenses 16,900.00
Utilities Expense 31,250.00
Miscelaneous Expense 13,650.00
Depreciation expense 15,000.00 308,050.00
Net Income 72,230.00
Problem 2.10 (Requirement d) Statement of Owner's Equity
Lucky Laundry Shop
Statement of Owner's Equity
For the Year Ended December 31, 2017

Beginning Capital 207,350.00

Add: Net Profit 72,230
Owner's Investment 50,200 122,430.00
Total 329,780.00
Less: Drawing 72,000.00
Ending Capital 257,780.00
 Problem 2.10 (Requirement e) Statement of Financial Position

Manila Realty Agency

Statement of Financial Position
As of June 30, 2017

ASSETS
Current Assets
Cash 152,360.00
Accounts Receivable 70,500.00
Office Supplies 6,400.00
Prepaid Insurance 3,600.00 232,860.00
Noncurrent Assets
Owner's Investment 10,200.00
Property, Plant and Equipment
Furniture and equipment 150,000.00
Accumulated Deprecation 45,000.00 105,000.00
TOTAL ASSETS 348,060.00

LIABILITIES AND OWNER'S EQUITY

Current Liabilities
Accounts Payable 66,080.00
UnearnedConsulting Fees 13,200.00
Accrued Rent 10,000
Accrued Advertising 1,000 90,280.00
Owner's Equity
R. Harris Capital 257,780.00
TOTAL LIABILITIES AND OWNER'S EQUITY 348,060.00
 Problem 2.10 (Requirement f) Closing Entries

CLOSING ENTRIES

1 Consulting Fees 388,680.00

Income and Expense Summary 388,680.00

2 Income and Expense Summary 306,250.00

Salaries Expense 139,600.00
Advertising Expense 12,000.00
Rent Expense 60,000.00
Taxes and Licences 16,900.00
Utilities Expense 31,250.00
Miscelneous Expense 13,650.00
Insurance Expense 5,400.00
Supplies Expense 12,450.00
Depreciation Expense 15,000.00

3 Consulting Fees 82,430.00

R. Harris Drawing 82,430.00

4 R. Harris Drawing 10,430.00

R. Harris Capital 10,430.00
 Problem 2.10 (Requirement g) Post-Closing Trial Balance

RH Consulting Services
Post-Closing Trial Balance
June 30. 2017

ACCOUNTS Debit Credit

Cash 152,360.00
Accounts Receivable 70,500.00
Office Supplies 6,400.00
Prepaid Insurance 5,400.00
Furniture and equipment 150,000.00
Accumulated Deprecation 45,000.00
Accounts Payable 66,080.00
Rent Payable 10,000.00
Accrued Advertising 1,000.00
Unearned Consulting Fees 4,800.00
R. Harris Capital 257,780.00
TOTAL 384,660.00 384,660.00
 Problem 2.11 (Requirement a) Adjusting Journal Entries

Debit Credit

1 Professional Fees 3,400.00

Unearned Professional Fees 3,400.00
1/3 x 10,200

2 Depreciation Expense 22,500.00

Accumulated Depreciation 22,500.00
200,000/10 years (useful life)
Add: 50,000/10 x 6/12

3 Rent Expense 36,000.00

Prepaid Rent 36,000.00

4 Prepaid Insurance 1,500.00

Insurance Expense 1,500.00

5 Advertising Expense 1,200.00

Advertising Payable 1,200.00

6 Supplies Expense 10,650.00

Office Supplies 10,650.00
 Problem 2.11 (Requirement b) Trial Balance
AZ law Office
Trial Balance
For the Year Ended December 31. 2017

Adjusted Trial
Trial Balance Adjustments Income Statement Balance Sheet
Balance
ACCOUNTS DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT
Cash 62,350 62,350 62,350
Accounts Receivable 40,780 40,780 40,780
Prepaid Rent 39,000 3) 36,000 3,000 3,000
Office Supplies 13,600 6) 10,650 2,950 2,950
Furniture and equipment 250,000 250,000 250,000
Accumulated Deprecation 40,000 2) 22,500 62,500 62,500
Accounts Payable 36,250 36,250 36,250
Alex Zamora Drawing 54,000 54,000 54,000
Alex Zamora Capital 186,760 186,760 186,760
Professional Fees 438,800 1) 3,400 435,400 435,400
Salary Expense 165,800 165,800 165,800
Advertising Expense 5,500 5) 1,200 6,700 6,700
Insurance Expense 7,500 4) 1,500 6,000 6,000
Travel Expense 25,950 25,950 25,950
Utilities Expense 24,700 24,700 24,700
Miscelaneous Expense 12,630 12,630 12,630
TOTALS 701,810 701,810
Unearned Professional Fees 1) 3,400 3,400 3,400
Depreciation Expense 2) 22,500 22,500 22,500
Rent Expense 3) 36,000 36,000 36,000
Prepaid Insurance 4) 1,500 1,500 1,500
Advertising Payable 5) 1,200 1,200 1,200
Supplies Expense 6) 10,650 10,650 10,650
TOTALS 75,250 75,250 725,510 725,510 310,930 435,400 414,580 290,110
Profit 124,470 124,470
TOTALS 435,400 435,400 414,580 414,580
 Problem 2.11 (Requirement c) Statement of Comprehensive Income

AZ law Office
Statement of Comprehensive Income
For the year ended December 31, 2017

Profession Fees 435,400.00

Less: Expenses
Salaries Expense 165,800.00
Advertising Expense 6,700.00
Insurance Expense 6,000.00
Travel Expense 25,950.00
Utilities Expense 24,700.00
Miscelaneous Expense 12,630.00
Depreciation Expense 22,500.00
Rent Expense 36,000.00
Supplies Expense 10,650.00 310,930.00
Profit 124,470.00

Problem 2.11 ( Requirement d) Statement of Owner's Equity

AZ Law Office
Statement of Owner's Equity
For the Year Ended December 31, 2017

Beginning Capital 136,660.00

Add: Additional Investment 50,700.00
Profit 124,470.00 175,170.00
TOTAL 311,830.00
Less: Drawing 54,000.00
Ending Capital 257,830.00
 Problem 2.11 (Requirement e) Statement of Financial Position

AZ Law Office
Statement of Financial Position
As of December 31, 2017
ASSETS
Cash 62,350.00
Accounts Receivable 40,780.00
Prepaid Rent 3,000.00
Office Supplies 2,950.00
Prepaid Insurance 1,500.00
Furniture and equipment 250,000.00
Accumulated Deprecation 62,500.00 187,500.00
TOTAL ASSETS 298,080.00

LIABILITIES
Accounts Payable 36,250.00
Unearned Professional Fees 3,400.00
Advertising Payable 600.00
TOTAL LIABILITIES 40,250.00

OWNER'S EQUITY
A. Zamora Capital 257,830.00
TOTAL LIABILITIES AND OWNER'S EQUITY 298,080.00
 Problem 2.11 (Requirement f) Closing Entries

Closing Entries

Professional Fees 435,400.00

Income and Expense Summary 435,400.00

Income and Expense Summary 310,330.00

Salaries Expense 165,800.00
Advertising Expense 6,100.00
Insurance Expense 6,000.00
Travel Expense 25,950.00
Utilities Expense 24,700.00
Miscelaneous Expense 12,630.00
Depreciation Expense 22,500.00
Rent Expense 36,000.00
Supplies Expense 10,650.00

Income and Expense Summary 125,070.00

A. Zamora Drawing 125,070.00

A. Zamora Drawing 71,070.00

A. Zamora Capital 71,070.00
 Problem 2.11 (Requirement g) Post-closing Trial Balance

AZ Law Office
Post-Closing Trial Balance
December. 31, 2017

ACCOUNT TITLE Debit Credit

Cash 62,350.00
Accounts Receivable 40,780.00
Prepaid Rent 3,000.00
Prepaid Insurance 1,500.00
Office Supplies 2,950.00
Furniture and equipment 250,000.00
Accumulated Deprecation 62,500.00
Accounts Payable 36,250.00
Unearned Professional Fees 3,400.00
Advertising Payable 600.00
A. Zamora Capital 257,830.00
TOTAL 360,580.00 360,580.00
 Problem 2.12 (Requirement 1) Statement of Comprehensive Income
ACE Hardware Company
Statement of Comprehensive Income
For the Year Ended December 31, 2017

Sales 1,950,345.00
Less: Sales Discount 24,820.00
Net Sales 1,925,525.00
Cost of Sales
Inventory, Beginning 715,250.00
Add: Purchases 1,320,500.00
Transportation-in 30,875.00
Gross 1,351,375.00
Less: Purchase Returns 2,585.00
Purchase Discount 20,000.00 (22,585.00) 1,328,790.00
Total Goods Available for Sale 2,044,040.00
Less: Inventory, ending 785,345.00 1,258,695.00
Gross Profit 666,830.00
Less: Expenses
Advertising Expense 207,325.00 18,000.00
Transportation-out 12,260.00
Depreciation Store Equipment 12,000.00
Miscelaneous Selling Expense 17,650.00
Office Salary Expense 65,900.00
Rent Expense 48,000.00
Taxes and Licenses 6,750.00
Miscellaneous General Expense 600.00
Impairment Loss 2,515.00
Insurance Expense 9,000.00
Supplies Expense 8,650.00
Depreciation Office Equipment 6,000.00 322,925.00
Net Profit from operation 343,905.00
Interest Expense (6,000.00)
Net Profit 337,905.00
 Alternative solution Problem 2.12 (Requirement 1)
ACE hardware Company
Statement of Comprehensive Income
For the Year Ended December 31, 2017
Net Sales 1,925,525.00
Net Purchases (1,328,790.00)
Income in Merchandise Inventory 70,095.00
Depreciation Expense (18,000.00)
Operating Expense (304,925.00)
Interest Expense (6,000.00)
Net Profit 337,905.00
Problem 2.12 (Requirement 2) Statement of Owner's Equity
ACE hardware Company
Statement of Owner's Equity
For the Year Ended December 31, 2017

Beginning Capital 486,135.00

Add: Additional Investment 30,000.00
Net Profit 337,905.00 367,905.00
Total 854,040.00
Less: Drawings 48,000.00
Beg. Capital 486,135.00
Add: Additional Investment 30,000.00
NP 337,905.00 367,905.00
Total 854,040.00
Less: Drawings 48,000.00
Ending Capital 806,040.00
 Problem 2.12 (Requirement 3) Statement of Financial Position
ACE hardware Company
Statement of Financial Position
As of December 31, 2017
ASSETS
Current Assets:
Cash 130,115
Notes Receivable 30,000
Accounts Receivable 125,750
Allow. For Impairment Loss 4,835 120,915
Merchandise Inventory 785,345
Prepaid Insurance 6,000
Office Supplies 3,750
Total Current Assets 1,076,125
Non-Current Assets:
Store Equipment 120,000
Accumulated Depreciation 36,000 84,000
Office Equipment 60,000
Accumulated Depreciation 18,000 42,000
Total Assets 1,202,125

LIABILITIES AND OWNER'S EQUITY

Current-Liabilities
Accounts Payable 335,535
Notes Payable 10,000
Vat Payable 10,550
Total Current Liabilities 356,085

Non-Current Liabilities
Notes Payable 40,000
Total Liabilities 396,085

Owner's Equity
Ace Zamora Capital 806,040
Total Liabilities and Owner's Equity 1,202,125
 Problem 2.12 (Requirement 4) Closing Entries
CLOSING ENTRIES

1 Merchandise Inventory End 785,345

Income and Expense Summary 785,345

2 Income and Expense Summary 2,420,370

Beg. Inventory 715,250
Purchases 1,320,500
Sales Discount 24,820
Purchase returns and Allowances 2,515
Sales Salaries 115,600
Advertising Expense 18,000
Transportation Out 12,260
Miscelaneous Selling Expense 17,650
Office Salary Expense 65,900
Rent Expense 48,000
Taxes and Licenses 6,750
Miscelaneous General Expense 600
Interest Expense 6,000
Insurance Expense 9,000
Supplies Expense 8,650
Depreciation Store Equipment 12,000
Depreciation Office Equipment 6,000

3 Sales 1,950,345
Purchase Return 2,585
Purchase Discount 20,000
Income and Expense Summary 1,972,930

4 Income and Expense Summary 337,905

Ace Zamora Drawing 337,905

5 Ace Zamora Drawing 289,905

Ace Zamora Capital 289,905
 Problem 2.12 (Requirement 5) Post-Closing Trial Balance
ACE hardware Company
Post-Closing Trial Balance
December. 31, 2017

ACCOUNT TITLE Debit Credit

Cash 130,115
Notes Receivable 30,000
Accounts Receivable 125,750
Allow. For Impairment Loss 4,835
Merchandise Inventory
Prepaid Insurance 6,000
Office Supplies 3,750
Store Equipment 120,000
Accumulated Depreciation 36,000
Office Equipment 60,000
Accumulated Depreciation 18,000
Accounts Payable 335,535
Notes Payable 50,000
Vat Payable 10,550
Ace Zamora Capital 806,040
Total 1,260,960 1,260,960