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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:LO 4-1, 4-2, 4-3, 4-4
1.
Account Name
Cash
Supplies
I
DAILY DRIVER, INC.
Unadjusted Trial Balance
At December 31
Prepaid Insurance
Equipment
Accumulated Depreciation
Salaries and Wages Payable
Income Tax Payable
Common Stock
E4-19 Preparing Adjusting Entries, an Adjusted Trial Balance, and Financial Statements
Daily Driver, Inc. (DDI), operates a driving service through a popular ride-sharing app. DDI has
prepared a list of unadjusted account balances at its December 31 year-end. You have reviewed the
balances and made notes shown in the right column.
Retained Earnings
Service Revenue
Salaries and Wages Expense
Supplies Expense
Depreciation Expense
Insurance Expense
Fuel
Income Tax Expense
Totals
Debit
$ 1,000
50
1,200
40,000
8,800
100
0
0
1,250
0
Credit
$ 2.400
0
0
25,000
5,430
19,570
$ 52,400 $ 52,400
Notes
This equals the bank balance.
Only windshield washer fluid that cost $30 remains at December 31.
This amount was paid January 2 for car insurance from January 1 through
December 31 of this year.
This is the car's purchase price.
The car will be two years old at the end of December.
DDI has not yet paid or recorded $800 of salary for December.
DDI paid all its taxes from last year.
DDI issued 5,000 shares at $5 each.
This is the total accumulated earnings to January 1 of this year.
All revenue is received in cash when the service is given.
DDI's only employee receives a monthly salary of $800 to December 31.
This is the cost of windshield washer fluid used to November 30.
The car's benefits are being used up about $2,400 per year.
No car insurance has been paid for next year.
All fuel is paid for in cash.
DDI's tax rate is 20 percent of income before tax.
Required:
Use the notes to determine and record adjusting entries needed on December 31 for (a) sup-
plies used up, (b) insurance costs, (c) using up the car's benefits, (d) salaries not yet accounted
for, and (e) income taxes for the year.
2. Post the adjusting entries from requirement 1 to T-accounts to determine new adjusted
balances, and prepare an adjusted trial balance. (If you are completing this exercise using
the general ledger tool in Connect, this requirement will be completed automatically
for you.)
3. Using the adjusted balances from requirement 2, prepare an income statement, statement of
retained earnings, and classified balance sheet.
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