Introduction to Accounting 1 Exercises

Exercise#1
Presented below is the Trial Balance and Adjusted Trial Balance for Morning Jacket
Company on December 31.
MORNING JACKET
Trial Balance
December 31
—————————————————————————————————————————
Before Adjustment After Adjustment
Dr. Cr. Dr. Cr.
Cash $ 2,000 $ 2,000
Accounts Receivable 2,800 3,800
Prepaid Rent 2,100 1,400
Supplies 1,200 650
Equipment 18,000 18,000
Accumulated depreciation—
Equipment $ 1,300 $ 1,550
Accounts Payable 2,700 3,070
Notes Payable 10,000 10,000
Interest Payable 140
Salaries and Wages Payable 900
Unearned Service Revenue 4,460 3,960
Owner's Capital 7,200 7,200
Owner's Drawings 3,200 3,200
Service Revenue 8,000 9,500
Salaries and Wages Expense 3,860 5,130
Rent Expense 500 1,200
Supplies Expense 550
Depreciation Expense—
Equipment 250
Interest Expense 140
Totals $33,660 $33,660 $36,320 $36,320

Instructions
Prepare in journal form, with explanations, the adjusting entries that explain the changes in
the balances from the trial balance to the adjusted trial balance.

Exercise#2
New Slang Pest Control has the following balances in selected accounts on December 31,
2012.
Accounts Receivable $0
Accumulated Depreciation – Equipment 0
Equipment 6,650
Interest Payable 0
Notes Payable 15,000
Prepaid Insurance 2,220
Salaries and Wages Payable 0
Supplies 2,940
Unearned Service Revenue 30,000
All of the accounts have normal balances. The information below has been gathered at
December 31, 2012.
1. Depreciation on the equipment for 2012 is $1,300.
2. New Slang Pest Control borrowed $15,000 by signing a 10%, one-year note on July
1, 2012.
Introduction to Accounting 1 Exercises

3. New Slang Pest Control paid $2,220 for 12 months of insurance coverage on
October 1, 2012.
4. New Slang Pest Control pays its employees total salaries of $11,000 every Monday
for the preceding 5-day week (Monday-Friday). On Monday, December 27, 2012,
employees were paid for the week ending December 24, 2010. All employees
worked the five days ending December 31, 2012.
5. New Slang Pest Control performed disinfecting services for a client in December
2012. The client will be billed $3,200.
6. On December 1, 2012, New Slang Pest Control collected $30,000 for disinfecting
processes to be performed from December 1, 2012, through May 31, 2012.
7. A count of supplies on December 31, 2012, indicates that supplies of $650 are on
hand.

Instructions
Prepare in journal form with explanations, the adjusting entries for the seven items listed for
Ben Cartwright Pest Control.

Exercise#3
The trial balances before and after adjustments for Old Julian Calendars at the end of its
fiscal year are presented below.
Old Julian Calendars
Trial Balance
September 31, 2012
—————————————————————————————————————————
Before Adjustment After Adjustment
Dr. Cr. Dr. Cr.
Cash $ 15,080 $ 15,080
Accounts Receivable 14,960 16,110
Supplies 2,760 885
Prepaid Insurance 5,800 1,450
Equipment 13,300 13,300
Accumulated Depreciation – Equip $ 5,220 $ 6,960
Accounts Payable 9,860 9,860
Salaries and Wages Payable 2,750
Rent Payable 1,750
Unearned Sales Revenues 2,175 1,150
Unearned Rent Revenues 2,100 525
Owner's Capital 18,395 18,395
Sales Revenue 48,800 50,975
Rent Revenue 1,575 3,150
Salaries and Wages Expense 36,225 40,725
Supplies Expense 1,875
Insurance Expense 0 4,350
Depreciation Expense 0 0 1,740 0

$ 88,125 $ 88,125 $ 95,515 $ 95,515

Instructions
Prepare the adjusting entries that were made.

Exercise#4
The worksheet for Gibler Rental Company appears below. Using the adjustment data below,
complete the worksheet. Add any accounts that are necessary.
Introduction to Accounting 1 Exercises

Adjustment data:
(a) Prepaid rent expired during August, $2.
(b) Depreciation expense on equipment for the month of August, $8.
(c) Supplies on hand on August 31 amounted to $6.
(d) Salaries and wages expense incurred at August 31 but not yet paid amounted to $10.

GIBLER RENTAL COMPANY

Worksheet
For the Month Ended August 31, 2012

Adjusted Income
Trial Balance Adjustments Trial Balance Statement Balance Sheet

Account Titles Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 20
Accounts Receivable 12
Prepaid Rent 8
Supplies 10
Equipment 50
Accum. Depreciation—
Equipment 10
Accounts Payable 20
Owner’s Capital 25
Owner’s Drawings 2
Rent Revenue 77
Depreciation Expense 6
Rent Expense 4
Salaries and Wages
Expense 20
Totals 132 132
Supplies Expense
Salaries Payable
Totals
Net Income
Totals

Exercise#5
The account balances appearing on the trial balance (below) were taken from the general
ledger of Irick's Copy Shop at September 30.

Additional information for the month of September which has not yet been recorded in the
accounts is as follows:
(a) A physical count of supplies indicates $300 on hand at September 30.
(b) The amount of insurance that expired in the month of September was $200.
(c) Depreciation on equipment for September was $400.
(d) Rent owed on the copy shop for the month of September was $600 but will not be paid
until October.
 Introduction to Accounting 1 Exercises

Instructions
Using the above information, complete the worksheet on the following page for Irick's Copy
Shop for the month of September.

IRICK’S COPY SHOP

Worksheet
For the Month Ended September 30, 2012

Adjusted Income
Trial Balance Adjustments Trial Balance Statement Balance Sheet

Account Titles Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 1,000
Supplies 1,100
Prepaid Insurance 2,200
Equipment 24,000
Accum. Depreciation—
Equipment 4,500
Accounts Payable 2,400
Notes Payable 4,000
Owner’s Capital 15,300
Owner’s Drawings 2,400
Service Revenue 4,900
Utilities Expense 400
Totals 31,100 31,100
Supplies Expense
Insurance Expense
Depreciation Expense
Rent Expense
Rent Payable
Totals
Net Income
Totals

Exercise#6
The adjustments columns of the worksheet for Mandy Company are shown below.

Adjustments
Account Titles Debit Credit
Accounts Receivable 900
Prepaid Insurance 650
Accumulated Depreciation 770
Salaries and Wages Payable 1,200
Service Revenue 900
Salaries and Wages Expense 1,200
Insurance Expense 650
Depreciation Expense 770
3,520 3,520
Introduction to Accounting 1 Exercises

Instructions
(a) Prepare the adjusting entries.
(b) Assuming the adjusted trial balance amount for each account is normal, indicate the
financial statement column to which each balance should be extended.

Exercise#7
Selected worksheet data for Patinkin Company are presented below.

Adjusted
Account Titles Trial Balance Trial Balance
Dr. Cr. Dr. Cr.
Accounts Receivable ? 31,000
Prepaid Insurance 24,000 18,000
Supplies 7,000 ?
Accumulated Depreciation 12,000 ?
Salaries and Wages Payable ? 7,600
Service Revenue 88,000 100,000
Insurance Expense ?
Depreciation Expense 8,000
Supplies Expense 5,200
Salaries and Wages Expense ? 49,000

Instructions
(a) Fill in the missing amounts.
(b) Prepare the adjusting entries that were made.

Exercise#8
These financial statement items are for Rugen Company at year-end, July 31, 2012.

Salaries and wages payable $ 2,980 Notes payable (long-term) $ 3,000

Salaries and wages expense 45,700 Cash 7,200
Utilities expense 19,100 Accounts receivable 9,780
Equipment 38,000 Accumulated depreciation 6,000
Accounts payable 4,100 Owner’s Drawings 4,000
Service revenue 57,200 Depreciation expense 4,000
Rent revenue 6,500 Owner’s capital (beginning 48,000
of the year)

Instructions
(a) Prepare an income statement and an owner's equity statement for the year. The owner
did not make any new investments during the year.
(b) Prepare a classified balance sheet at July 31.