Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
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Textbook Question
Chapter 3, Problem 4P
Hertz Limo Service was organized to provide limousine service between the airport and various suburban locations. It has just completed its second year of business. Its
The following information is also available:
- a. To obtain space at the airport, Hertz paid two years’ rent in advance when it began the business.
- b. An examination of insurance policies reveals that $2,800 expired during the year.
- c. To provide regular maintenance for the vehicles, Hertz deposited $12,000 with a local garage. An examination of maintenance invoices reveals charges of $10,944 against the deposit.
- d. An inventory of spare parts shows $1,902 on hand.
- e. Hertz depreciates all of its limousines at the rate of 12.5 percent per year. No limousines were purchased during the year. (Round answer to the nearest dollar.)
- f. A payment of $1,500 for one full year’s interest on notes payable is now due.
- g. Unearned Passenger Service Revenue on June 30 includes $17,815 for tickets that employers purchased for use by their executives but which have not yet been redeemed.
REQUIRED
- 1. Determine the
adjusting entries and enter them in the general journal (Page 14). - 2. Open ledger accounts for the accounts in the trial balance plus the following: Interest Payable (213); Rent Expense (514); Insurance Expense (515); Spare Parts Expense (516);
Depreciation Expense—Limousines (517); Maintenance Expense (518); and Interest Expense (519). Record the balances shown in the trial balance. - 3.
Post the adjusting entries from the general journal to the ledger accounts, showing proper references. - 4. Prepare an adjusted trial balance, an income statement, a statement of owner’s equity, and a balance sheet. The owner made no investments during the period.
- 5. ACCOUNTING CONNECTION ▶ What effect do the adjusting entries have on the income statement?
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Chapter 3 Solutions
Principles of Accounting
Ch. 3 - Prob. 1DQCh. 3 - Will the carrying value of a long-term asset...Ch. 3 - If, at the end of the accounting period, you were...Ch. 3 - Prob. 4DQCh. 3 - Prob. 5DQCh. 3 - Prob. 6DQCh. 3 - Match the concepts of accrual accounting that...Ch. 3 - The Prepaid Insurance account began the year with...Ch. 3 - The Supplies account began the year with a balance...Ch. 3 - Prob. 4SE
Ch. 3 - Prob. 5SECh. 3 - During the month of August, deposits in the amount...Ch. 3 - Prob. 7SECh. 3 - Malesherbes Companys adjusted trial balance on...Ch. 3 - Prob. 9SECh. 3 - Prob. 10SECh. 3 - Carlos Companys accountant makes the assumptions...Ch. 3 - Four conditions must be met before revenue should...Ch. 3 - Prob. 3EACh. 3 - Prob. 4EACh. 3 - Prob. 5EACh. 3 - Prob. 6EACh. 3 - Prob. 7EACh. 3 - Prob. 8EACh. 3 - Prepare year-end adjusting entries for each of the...Ch. 3 - Prob. 10EACh. 3 - Prob. 11EACh. 3 - Wipro Companys income statement included the...Ch. 3 - At the end of the first three months of operation,...Ch. 3 - On November 30, the end of the current fiscal...Ch. 3 - Kinokawa Consultants Companys trial balance on...Ch. 3 - Hertz Limo Service was organized to provide...Ch. 3 - At the end of its fiscal year, Berwyn Cleaners...Ch. 3 - Brave Advisors Services trial balance on December...Ch. 3 - Prob. 7PCh. 3 - Prob. 8PCh. 3 - Prob. 9APCh. 3 - On March 31, the end of the current fiscal year,...Ch. 3 - Lee Technology Corporations trial balance on...Ch. 3 - Prob. 12APCh. 3 - Prob. 13APCh. 3 - Scoop Consulting Services trial balance on...Ch. 3 - Prob. 15APCh. 3 - Prob. 16APCh. 3 - Never Flake Company provided a rust-prevention...Ch. 3 - Prob. 2CCh. 3 - Prob. 3CCh. 3 - Prob. 4CCh. 3 - Prob. 5CCh. 3 - Prob. 6C
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