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P3-32A Journalizing adjusting entries
Laughter Landscaping has the following independent cases at the end of the year on December 31, 2014.
a. Each Friday, Laughter pays employees for the current week’s work. The amount of the weekly payroll is $7,000 for a five-day workweek. This year December 31 falls on a Wednesday.
b. Details of Prepaid insurance are shown in the account:
Jan 1 $4,500 Prepaid insurance Laughter prepays a full year’s insurance each year on January 1. Record insurance expense for the year ended December 31.
c. The beginning balance of Supplies was $4,000. During the year, Laughter purchased supplies for $5,200, and at December 31 the supplies on hand total $2,400.
d. Laughter designed a landscape plan, and the client paid Laughter $7,000 at the start of the project. Laughter recorded this amount as Unearned service revenue. The job will take several months to complete, and Laughter estimates that the company has earned 60% of the total revenue during the current year.
e. Depreciation for the current year includes Equipment, $3,700; and Trucks, $1,300. Make a compound entry.
1. Journalize the adjusting entry needed on December 31, 2014, for each of the previous items affecting Laughter Landscaping.
P3-33A Analyzing and journalizing adjustments
Galant Theater Production Company unadjusted and adjusted trial balances at December 31, 2012, follow.
GALANT THEATER PRODUCTION COMPANY
Adjusted Trial Balance
Account Debit Credit Debit Credit
Cash $3,900 $3,900
Accounts receivable 6,100 6,900
Supplies 1,700 300
Prepaid insurance 2,700 2,100
Equipment 25,000 25,000
Accumulated depreciation $8,800 $13,200
Accounts payable 4,000 4,000
Salary payable 300
Common stock 16,000 16,000
Retained earnings 4,300 4,300
Dividends 30,500 30,500
Service revenue 71,000 71,800
Depreciation expense 4,400
Supplies expense 1,400
Utilities expense 4,700 4,700
Salary expense 29,500 29,800
Insurance expense 600
Total $104,100 $104,100 $109,600 $109,600
1. Journalize the adjusting entries that account for the differences between the two trial balances.
E4-21 Identifying and journalizing closing entries
The accountant for Klein Photography has posted adjusting entries (a)–(e) to the following selected accounts at December 31, 2012.
1. Journalize Klein Photography’s closing entries at December 31, 2012.
2. Determine Klein Photography’s ending Retained earnings balance at
December 31, 2012.
P4-25A Preparing a worksheet, financial statements, and closing entries
The trial balance of Fugazy Investment Advisers, Inc., at December 31, 2012, follows:
FUGAZY INVESTMENT ADVISERS, INC.
Account Debit Credit
Accounts receivable 46,000
Accumulated depreciation $11,000
Accounts payable 15,000
Unearned service revenue 2,000
Note payable, long-term 39,000
Common stock 17,600
Retained earnings 20,400
Service revenue 97,000
Salary expense 32,000
Interest expense 3,000
Rent expense 9,000
Insurance expense 2,000
Total $202,000 $202,000
1. Enter the account data in the Trial Balance columns of a worksheet, and complete the worksheet through the Adjusted Trial Balance. Key each adjusting entry by the letter corresponding to the data given. Leave a blank line under Service revenue.
2. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in account format.
3. Prepare closing journal entries from the worksheet.
4. Did the company have a good or a bad year during 2012? Give the reason for your answer.