Cash 2000 2000 Accounts Receivable 2800 3800 Prepaid Rent 2100 1400 Supplies

Cash 2000 2000 accounts receivable 2800 3800 prepaid

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Cash$ 2,000$ 2,000Accounts Receivable2,8003,800Prepaid Rent2,1001,400Supplies1,200650Equipment18,00018,000Accumulated depreciation—Equipment$ 1,300$ 1,550Accounts Payable2,7002,700Notes Payable10,00010,000Interest Payable140Salaries and Wages Payable1,270Unearned Service Revenue4,4603,960Owner's Capital7,2007,200Owner's Drawings3,2003,200Service Revenue8,0009,500Salaries and Wages Expense3,8605,130Rent Expense5001,200Supplies Expense550Depreciation Expense—Equipment250Interest Expense140Totals$33,660$33,660$36,320$36,320InstructionsPrepare in journal form, with explanations, the adjusting entries that explain the changes in thebalances from the trial balance to the adjusted trial balance.Solution 238(15 min.)Accounts Receivable.............................................................................1,000Service Revenue..........................................................................1,000(To record revenue recognized but not yet received)Rent Expense........................................................................................700Prepaid Rent................................................................................700(To record expiration of prepaid rent)Supplies Expense.................................................................................550Supplies........................................................................................550(To record supplies used)FOR INSTRUCTOR USE ONLY3 - 67
Test Bank for Accounting Principles, Eleventh EditionSolution 238(cont.)Depreciation Expense...........................................................................250Accumulated Depreciation—Equipment.......................................250(To record depreciation expense)Salaries and Wages Expense...............................................................1,270Salaries and Wages Payable........................................................1,270(To record salaries owed, not yet paid)Interest Expense...................................................................................140Interest Payable...........................................................................140(To record accrued interest payable)Unearned Service Revenue..................................................................500Service Revenue..........................................................................500(To record revenue earned)LO 4 and 5, BT: AN, Difficulty: Medium, TOT: 15 min., AACSB: Analytic, AICPA BB: None, AICPA FN: Measuring, AICPA PC: Problem solvingEx. 239Compute the net income for 2014 based on the following amounts presented on the adjusted trialbalance of D-Lay Company.Accumulated Depreciation – Equip.$20,000Depreciation Expense18,000Salaries and Wages Expense15,000Service Revenue40,000Unearned Service Revenue8,000Solution 239(5 min.)Service Revenue$40,000Depreciation Expense$18,000Salaries and Wages Expense15,00033,000Net Income$7,000LO 6, BT: AP, Difficulty: Medium, TOT: 5 min., AACSB: Analytic, AICPA BB: None, AICPA FN: Reporting, AICPA PC: Problem solvingFOR INSTRUCTOR USE ONLY3 - 68
Adjusting the AccountsEx. 240New Slang Pest Control has the following balances in selected accounts on December 31, 2014.Accounts Receivable$ 0Accumulated Depreciation – Equipment0Equipment6,650Interest Payable0Notes Payable20,000Prepaid Insurance2,220Salaries and Wages Payable0Supplies2,940Unearned Service Revenue30,000All of the accounts have normal balances. The information below has been gathered at December 31, 2014.1.Depreciation on the equipment for 2014 is $1,300.2.New Slang Pest Control borrowed $20,000 by signing a 10%, one-year note on July 1, 2014.3.New Slang Pest Control paid $2,220 for 12 months of insurance coverage on October 1, 2014.4.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, 2014, employees were paid for the week ending December 24, 2014. All employees worked the five days ending December 31, 2014.

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