Question

PROBLEM 4-4A Optional work sheet and financial statements Heritage Company offers legal consulting advice to death-row inmates. Heritage Company prepared the following trial balance at April 30, 2006, the end of the cur- rent fiscal year: Objectives 2, 3, 4 Heritage Company Trial Balance April 30, 2006 Cash Accounts Receivable._.... 10,500 P.A.S.S Prepaid Insurance.. Supplies. . Land . 4. Net loss: $6,720 . . 1,350 50,000 Building uilding 50,700 Equipment ...92,700 36,300 Accounts Payable. 6,500 Unearned Rent 3,000 212,500 Shelby Powers, Capital Shelby Powers, Drawing . Fees Revenue . Salaries and Wages Expense . . Advertising Expense. Utilities Expense.. Repairs Expense Miscellaneous Expense . ..-. 191,000 . . 96,200 63,200 18,000 . 500,000 The data needed to determine year-end adjustments are as follows: fees revenue at April 30 are $2,800. b. Insurance expired during the year is $450 c. Supplies on hand at April 30 are S650 d. Depreciation of building for the year is $1,620. e. Depreciation of equipment for the year is $3,500. f. Accrued salaries and wages at April 30 are $1,800. g. Unearned rent at April 30 is $1,500 a. Accrued Instructions 1. Optional: Enter the trial balance on a ten-column work sheet and complete the work sheet. Add accounts as needed. 2. Journalize the adjusting entires, adding accounts as needed. 3. Prepare an adjusted rial balance of April 30, 2006. 4. Prepare an income statement for the year ended April 30. 5. Prepare a statement of owners equity for the year ended April 30. No additional investments were made during the year 6. Prepare a balance sheet as of April 30 7. Compute the percent of total revenue to total assets for the year

Answer 1

		ADJUSTING JOURNAL ENTRY
	Ref	Account Titles	Debit	Credit
	a	Accounts receivable	$2,800
		Fees revenue		$2,800
	b	Insurance expense	$450
		Prepaid insurance		$450
	c	Supplies expense	$700		(1350-650)
		Supplies		$700
	d	Depreciation-building	$1,620
		Accumulated depreciation-building		$1,620
	e	Depreciation-equipment	$3,500
		Accumulated depreciation-equipment		$3,500
	f	Salaries and wages expense	$1,800
		Salaries and wages payable		$1,800
	g	Unearned rent	$1,500
		Rent income		$1,500
		INCOME STATEMENT
		Fees Revenue		$193,800
		Rent income		$1,500
		Total Revenue		$195,300
		Expenses:
		Salaries and wages expense	$98,000
		Advertising expense	$63,200
		Utilities expense	$18,000
		Repair expense	$12,500
		Misc expense	$4,050
		Insurance expense	$450
		Supplies expense	$700
		Depreciation-building	$1,620
		Depreciation-equipment	$3,500
		Total expenses		$202,020
		Net Income		($6,720)
		STATEMENT OF OWERS EQUITY
		Shelby Powers, capital	$212,500
		Shelby Powers, drawings	($10,000)
		Accumulated loss	($6,720)
		Total Owners Equity	$195,780
				ADJUSTED TRIAL BALANCE Unadjusted balance Adjustments Adjusted balance Credit Debit Debit Credit Debit Credit Cash $3,200 $3,200 $10,500 $1,800 $1,350 Accounts receivable $2,800 $13,300 $450 $1,350 Prepaid insurance Supplies $700 $650 50,000 136,500 $50,000 Land Building 136,500 50,700 Accumulated depreciation-building $1,620 52,320 $92,700 $92,700 Equipment $39,800 Accumulated depreciation-equipment $36,300 $3,500 $6,500 $3,000 $6,500 $1,500 212,500 Accounts payable Unearned rent $1,500 Shelby Powers, capital $212,500 Shelby Powers, drawings $10,000 $10,000 $2,800 $193,800 Fees Revenue $191,000 Salaries and wages expense $96,200 $1,800 $98,000 $63,200 $18,000 $63,200 $18,000 Advertising expense Utilities expense $12,500 12,500 Repair expense $4,050 $4,050 Misc expense $450 $450 Insurance expense Supplies expense $700 $700 1,620 $3,500 1,620 $3,500 Depreciation-building Depreciation-equipment $1,800 $1,500 $12,370 $12,370 Salaries and wages payable $1,800 $1,500 Rent income TOTAL 500,000 $500,000 509,720 $509,720