ACCT 220 Week 2 Homework Problems Solution

ACCT 220 Week 2 Homework Problems Solution

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ACCT 220 Week 2 Homework Problems Solution

Review the unadjusted trial balance below and prepare adjusting journal entries to record the various described items

below.  Record in the space provided at the bottom of this spreadsheet.  After completing journal entries, complete the

adjusted trial balance below.  Lastly complete the income statement, balance sheet and statement of retained earnings.

The balance sheet must balance.  The accounting equation is Assets = Liabilities + Equity.

Baltimore Corporation

Unadjusted Trial Balance

January 31, 2016

Debits

Credits

Cash

$           37,500

$                    –

Accounts receivable

12,410

–

Prepaid insurance

2,400

–

Supplies inventory

7,113

–

Equipment

35,000

–

Accumulated depreciation

–

10,000

Accounts payable

–

7,569

Salaries payable

–

–

Interest payable

–

–

Unearned revenue

–

8,500

Loan payable

–

11,500

Capital stock

–

25,000

Retained earnings, Jan. 1

–

15,457

Revenues

–

43,995

Depreciation expense

–

–

Interest expense

–

–

Insurance expense

–

–

Office expense

2,500

–

Rent expense

13,000

–

Salary expense

12,098

–

Supplies expense

–

–

Utilities expense

–

–

$         122,021

$          122,021

1

Belair Corporation’s equipment had an original life of 140 months, and the straight-line depreciation method is used.

As of January 1, the equipment was 40 months old.  The equipment will be worthless at the end of its useful life.

2

As of the end of the month, Belair Corporation has provided services to customers for which the earnings process is complete.

Formal billings are normally sent out on the first day of each month for the prior month’s work.  January’s unbilled work is $25,000.

3

Utilities used during January, for which bills will soon be forthcoming from providers, are estimated at $1,500.

4

A review of supplies on hand at the end of the month revealed items costing $3,500.

5

The $2,400 balance in prepaid insurance was for a 6-month policy running from January 1 to June 30.

6

The unearned revenue was collected in December of 2014.  60% of that amount was actually earned in January, with the remainder to be earned in February.

7

The loan accrues interest at 1% per month.  No interest was paid in January.

8

At month end, salaries of $2,120 have been earned but not paid.

JE #

ACCOUNT

DEBIT

CREDIT

1

2

3

4

5

6

7

8

Baltimore Corporation

Adjusted Trial Balance

January 31, 2016

Debits

Credits

Cash

Accounts receivable

Prepaid insurance

Supplies inventory

Equipment

Accumulated depreciation

Accounts payable

Salaries payable

Interest payable

Unearned revenue

Loan payable

Capital stock

Retained earnings, Jan. 1

Revenues

Depreciation expense

Insurance expense

Interest expense

Office expense

Rent expense

Salary expense

Supplies expense

Utilities expense

$                   –

$                    –

Baltimore Corporation

Income Statement

For the month ended January 31, 2016

Baltimore Corporation

Balance Sheet

January 31, 2016

Baltimore Corporation

Statement of Retained Earnings

As of January 31, 2015