INTRO TO FIN ACCT (LL W/ ACCESS-1 SMSTR
INTRO TO FIN ACCT (LL W/ ACCESS-1 SMSTR
10th Edition
ISBN: 9781264038947
Author: Libby
Publisher: MCG
bartleby

Videos

Question
Book Icon
Chapter 4, Problem 7AP

1.

To determine

Journal the adjusting entries for Corporation SBRS.

1.

Expert Solution
Check Mark

Explanation of Solution

Adjusting entries are those entries which are recorded at the end of the year to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

Journal the adjusting entries for Corporation SBRS.

Transaction for adjustment (a):

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
December31Depreciation Expense (+E, –SE) 3,000 
   Accumulated Depreciation (+XA, –A)  3,000
  (Record depreciation expense)   

Table (1)

Transaction for adjustment (b):

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
December31Insurance Expense (+E, –SE) 450 
   Prepaid Insurance (–A)  450
  (Record part of prepaid insurance expired)   

Table (2)

Transaction for adjustment (c):

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
December31Wages Expense (+E, –SE) 2,100 
   Wages Payable (+L)  2,100
  (Record accrued expense)   

Table (3)

Transaction for adjustment (d):

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
December31Supplies Expense (+E, –SE) 500 
   Supplies (–A)  500
  (Record part of supplies used)   

Table (4)

Working Notes:

Calculation of supplies expense.

Supplies expense=(Supplies at the beginning of the period+Supplies purchased during the periodSupplies on the hand at the end of the period)=$1,300+$0$800=$500

Transaction for adjustment (e):

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
December31Income Tax Expense (+E, –SE) 2,300 
   Income Tax Payable (+L)  2,300
  (Record accrued expense)   

Table (5)

2.

To determine

Prepare an income statement and a classified balance sheet for the current year for Incorporation SBRS.

2.

Expert Solution
Check Mark

Explanation of Solution

Prepare an income statement for the current year ended December 31 for Incorporation SBRS.

Incorporation SBRS
Income Statement
For the Current Year Ended December 31
ParticularsAmount ($)Amount ($)
Operating Revenue:  
 Service revenue $48,000
Operating Expenses:  
 Supplies expense 500 
 Insurance expense450 
 Depreciation expense3,000 
 Wages expense27,300 
 Remaining expenses 7,700 
Total expenses 38,950
Operating Income 9,050 
     Income tax expense 2,300 
Net Income $6,750
   
Earnings per share     $2.25

Table (6)

Working Notes:

Calculate earnings per share.

Earningspershare = Netincome Average number of shares of stock outstanding during the period =$6,7503,000shares=$2.25

Prepare a classified balance sheet for the current year for Incorporation SBRS.

Incorporation SBRS
Balance Sheet
At December 31 of the Current Year
AssetsAmount ($)Liabilities and Stockholders’ EquityAmount ($)
Current Assets: Current Liabilities: 
Cash$19,600Accounts payable2,500
Accounts receivable7,000Wages payable2,100
Supplies 800Income taxes payable2,300
Prepaid insurance450Total current liabilities6,900
Total current assets27,850Note payable, long term5,000
Equipment27,000Total liabilities11,900
Accumulated depreciation      (15,000)Stockholders' Equity 
Other assets 5,100Common stock300
  Additional paid-in capital15,700
  Retained earnings17,050
  Total stockholders' equity33,050
Total assets$44,950Total liabilities and stockholders' equity$44,950

Table (7)

Working Notes:

Calculate retained earnings.

Retained earnings = Unadjusted balance + Net income= $10,300+$6,750=$17,050

3.

To determine

Prepare the closing entry for Incorporation SBRS for the current year, by using the adjusted balances.

3.

Expert Solution
Check Mark

Explanation of Solution

Prepare the closing entry for Incorporation SBRS for the current year, by using the adjusted balances.

DateAccount Title and ExplanationPost. Ref.Debit ($)Credit ($)
  Service Revenue (–R) 48,000 
   Supplies Expense (–E)   500
   Depreciation Expense (–E)  3,000
   Insurance Expense (–E)  450
   Wages Expense (–E)  27,300
   Remaining Expenses (–E)  7,700
   Income Tax Expense (–E)  2,300
   Retained earnings (+SE)  6,750
  (Record closing of revenues and expenses)   

Table (8)

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Chapter 4 Solutions

INTRO TO FIN ACCT (LL W/ ACCESS-1 SMSTR

Ch. 4 - 11. Explain why the income statement accounts are...Ch. 4 - 12. What is a post-closing trial balance? Is it a...Ch. 4 - 1. Which of the following accounts would not...Ch. 4 - 2. Which account is least likely to appear in an...Ch. 4 - On October 1, 2020, the $12,000 premium on a...Ch. 4 - On June 1, 2019, Oakcrest Company signed a...Ch. 4 - 5. Failure to make an adjusting entry to recognize...Ch. 4 - 6. An adjusted trial balance Shows the ending...Ch. 4 - 7. JJ Company owns a building. Which of the...Ch. 4 - 8. At the beginning of the current year. Donna...Ch. 4 - 9. According to GAAP, what ratio must be reported...Ch. 4 - 10. If a company is successful in acquiring...Ch. 4 - Preparing a Trial Balance Hagadorn Company has the...Ch. 4 - Matching Definitions with Terms Match each...Ch. 4 - Matching Definitions with Terms Match each...Ch. 4 - In each of the following transactions (a) through...Ch. 4 - For each of the transactions in M4-4, indicate the...Ch. 4 - In each of the following transactions (a) through...Ch. 4 - For each of the transactions in M4-6, indicate the...Ch. 4 - Prob. 8MECh. 4 - Prob. 9MECh. 4 - Prob. 10MECh. 4 - Indicate how the adjustments below affect the...Ch. 4 - Prob. 12MECh. 4 - Refer to the adjusted trial balance for Catena’s...Ch. 4 - Prob. 1ECh. 4 - Identifying Adjusting Entries from Unadjusted...Ch. 4 - Prob. 3ECh. 4 - Prob. 4ECh. 4 - A+T Williamson Company is making adjusting entries...Ch. 4 - Gauge Construction Company is making adjusting...Ch. 4 - Refer to E4-3 and E4-5. Required: For each of the...Ch. 4 - Trotman’s Variety Store is completing the...Ch. 4 - Johnson’s Boat Yard, Inc., repairs, stores, and...Ch. 4 - Refer to E4-8. Required: For each of the...Ch. 4 - Refer to E4-9. Required: For each of the...Ch. 4 - Recording Transactions Including Adjusting and...Ch. 4 - Gordon Company started operations on January 1 of...Ch. 4 - Note 1: On April 1 of the current year, Warren...Ch. 4 - Campbell Soup Company is a manufacturer and...Ch. 4 - Quinlan-Cohen, Inc., publishers of movie and song...Ch. 4 - On December 31, Fawzi Company prepared an income...Ch. 4 - Recording the Effects of Adjusting Entries and...Ch. 4 - Prob. 19ECh. 4 - Green Valley Company prepared the following trial...Ch. 4 - Prob. 21ECh. 4 - Refer to E4-20. Required: What are the purposes...Ch. 4 - Prob. 1PCh. 4 - All of the current year’s entries for Zimmerman...Ch. 4 - S. Miller Towing Company provides hauling and...Ch. 4 - Refer to the information regarding Zimmerman...Ch. 4 - Refer to the information regarding S. Miller...Ch. 4 - Ramirez Company is completing the information...Ch. 4 - Prob. 7PCh. 4 - Prob. 1APCh. 4 - Hannah Company’s annual accounting year ends on...Ch. 4 - Prob. 3APCh. 4 - Refer to the information regarding Hannah Company...Ch. 4 - Refer to the information regarding Bill’s Catering...Ch. 4 - Prob. 6APCh. 4 - Prob. 7APCh. 4 - Adjusting Accounts at Year-End (the Accounting...Ch. 4 - Prob. 1COMPCh. 4 - Prob. 2COMPCh. 4 - Refer to the financial statements of American...Ch. 4 - Refer to the financial statements of Express, Inc....Ch. 4 - Prob. 3CPCh. 4 - Prob. 4CPCh. 4 - Prob. 5CPCh. 4 - Prob. 6CPCh. 4 - Prob. 7CPCh. 4 - Prob. 8CPCh. 4 - You are the regional sales manager for Lauren...
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
IAS 29 Financial Reporting in Hyperinflationary Economies: Summary 2021; Author: Silvia of CPDbox;https://www.youtube.com/watch?v=55luVuTYLY8;License: Standard Youtube License