Accounting

/in /by
1) Reen Lawns, Inc., performs adjusting entries every month, but closes its accounts only at year-end. The company’s year-end adjusted trial balance dated December 31, 2015, was:

 

GREEN LAWNS, INC. Adjusted Trial Balance December 31, 2015
  Cash $  182,200    
  Accounts receivable   9,000    
  Supplies    600    
  Equipment    24,000    
  Accumulated depreciation: equipment     $ 10,000
  Accounts payable        3,000
  Income taxes payable        7,000
  Capital stock        50,000
  Retained earnings        90,000
  Dividends    4,000    
  Lawn care revenue earned       192,000
  Salary expense   104,000    
  Supply expense    2,400    
  Advertising expense    600    
  Depreciation expense: equipment    2,000    
  Income taxes expense    23,600    
         
  $ 352,000 $ 352,000
   

 

  

 

  

 

  

 
 

 

a-1. Prepare an income statement for the year ended December 31, 2015.
   
   

 

a-2. Prepare a statement of retained earnings for the year ended December 31, 2015.
   
   

 

a-3. Prepare the company’s balance sheet dated December 31, 2015. (Amounts to be deducted should be indicated by a minus sign.)
   
   

 

b. Does the company appear to be liquid?
   
 
  No
  Yes

 

 

c. Has the company been profitable in the past?
   
 
  No
  Yes

 
 

 

 

 

 

 

 

2) Reen Lawns, Inc., performs adjusting entries every month, but closes its accounts only at year-end. The company’s year-end adjusted trial balance dated December 31, 2015, was:

 

 

GREEN LAWNS, INC. Adjusted Trial Balance December 31, 2015
  Cash $  182,200    
  Accounts receivable    9,000    
  Supplies    600    
  Equipment    24,000    
  Accumulated depreciation: equipment     $  10,000
  Accounts payable        3,000
  Income taxes payable        7,000
  Capital stock        50,000
  Retained earnings        90,000
  Dividends   4,000    
  Lawn care revenue earned        192,000
  Salary expense    104,000    
  Supply expense    2,400    
  Advertising expense    600    
  Depreciation expense: equipment    2,000    
  Income taxes expense    23,200    
         
  $  352,000 $  352,000
   

 

  

 

  

 

  

 
 

 

a. Prepare all necessary closing entries at December 31, 2015.

1. Record the entry to close Lawn Care Revenue earned to income summary

2. REcord the entry to close all expense accounts to income summary

3. Record the entry to transfer net income earned in 2015 to retained earnings account

4. Record the entry to close dividends declared in 2015 to retained earnings account.

 

Prepare an after-closing trial balance dated December 31, 2015.

· Record the entry to close all expense accounts to income summary.

· Record the entry to close all expense accounts to income summary.

 
 

 

 

 

 

 

 

 

 

 

 

3) Cat Fancy, Inc., has provided the following information from its most current financial statements:

 

     
  Total revenue $ 125,000
  Total expenses   80,000
  Total current assets   32,000
  Total current liabilities   8,000
  Total stockholders’ equity, January 1, 2015   74,000
  Total stockholders’ equity, December 31, 2015   76,000
 

 

Compute the company’s net income percentage in 2015

  Compute the company’s return on equity in 2015

Compute the company’s current ratio at December 31, 2015.

 

 

 

 

4)

Terrific Temps fills temporary employment positions for local businesses. Some businesses pay in advance for services; others are billed after services have been performed. Advanced payments are credited to an account entitled Unearned Fees. Adjusting entries are performed on a monthly basis. An unadjusted trial balance dated December 31, 2015, follows. (Bear in mind that adjusting entries have already been made for the first 11 months of 2015, but not for December.)

 

TERRIFIC TEMPS UNADJUSTED TRIAL BALANCE DECEMBER 31, 2015
  Cash $ 27,020      
  Accounts receivable   59,200      
  Unexpired insurance   900      
  Prepaid rent   3,000      
  Office supplies   600      
  Equipment   60,000      
  Accumulated depreciation: equipment       $ 29,500
  Accounts payable         4,180
  Notes payable         12,000
  Interest payable         320
  Unearned fees         6,000
  Income taxes payable         4,000
  Unearned revenue         20,000
  Retained earnings         49,000
  Capital stock         25,000
  Dividends   3,000      
  Fees earned         75,000
  Travel expense   5,000      
  Insurance expense   2,980      
  Rent expense   9,900      
  Office supplies expense   780      
  Utilities expense   4,800      
  Depreciation expense: equipment   5,500      
  Salaries expense   30,000      
  Interest expense   320      
  Income taxes expense   12,000      
   

 

  

 

    

 

  

 
  $ 225,000   $ 225,000
   

 

 

  

 

 

    

 

 

  

 

 
 

 

 

Other Data
1. Accrued but unrecorded fees earned as of December 31, 2015, amount to $1,500.
2. Records show that $2,500 of cash receipts originally recorded as unearned fees had been earned as of December 31.
3. The company purchased a six-month insurance policy on September 1, 2015, for $1,800.
4. On December 1, 2015, the company paid its rent through February 28, 2016.
5. Office supplies on hand at December 31 amount to $400.
6. All equipment was purchased when the business first formed. The estimated life of the equipment at that time was 10 years (or 120 months).
7. On August 1, 2015, the company borrowed $12,000 by signing a six-month, 8 percent note payable. The entire note, plus six months’ accrued interest, is due on February 1, 2016.
8. Accrued but unrecorded salaries at December 31 amount to $2,700.
9. Estimated income taxes expense for the entire year totals $15,000. Taxes are due in the first quarter of 2016.

 

Instructions

 

a. For each of the numbered paragraphs, prepare the necessary adjusting entry 1. Record the accrued but uncollected fees earned 2. Record fees earned as of December 31st 3. Record the December insurance expense 4. REcord the December rent expense 5. Record the offices supplies used in December 6. Record the December depreciation expense 7. Record the interest accrued in December 8. Record the salaries accrued in December 9. Record the income taxes accrued in December B. Determine that amount at which each of the following accounts will be reported in the company’s 2015 income statement: 1. FEES EARNED 2. TRAVELS EXPENSE 3. INSURANCE EXPERIENCE 4. RENT EXPENSE 5. OFFICE SUPPLIES EXPERIENCE 6. UTILITIES EXPENSE 7. DEPRECIATION EXPENSE: EQUIPMENT. 8. INTERNET EXPENSE 9. SALARY EXPENSE 10. INCOME TAX EXPENSE.

  The unadjusted trial balance reports dividends of $3,000. As of December 31, 2015, have these dividends been paid?
   
 
  Yes
  No
 
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