Balance sheet Accounts

Cash Accounts receivable

_{1/1 Bal. 30,000 1/1 Bal. 15,000}

_{a. 70,000 50,000 d. a. 30,000 27,300 b.}

_{b. 27,300 24,000 e.}

_{c. 10,000 15,000 f.}

_{2,500 g.}

12/31 Bal.45,80012/31 Bal.17,700

Equipment Allow. for uncollectible accounts

_{1/1 Bal. 20,000 500 1/1 Bal.}

_{f. 15,000 1,000 Adjusting}

12/31 Bal.35,000 1,50012/31 Bal.

Accumulated depreciation Salaries payable

_{6,000 1/1 Bal. 9,000 1/1 Bal.}

_{2,000 Adjusting d. 9,000 1,000 Adjusting}

8,000 12/31 Bal.1,00012/31 Bal.

Common stock Retained earnings

_{40,000 1/1 Bal. 9,500 1/1 Bal.}

_{10,000 c. g. 2,500}

_{31,000 Closing}

50,000 12/31 Bal.38,00012/31 Bal.

Problem 2-6 (continued)

InCome statement Accounts

Service revenue Miscellaneous expenses

_{0 1/1 Bal. 1/1 Bal. 0}

_{100,000 a. e. 24,000}

_{Closing 100,000 24,000 Closing}

0 12/31 Bal.12/31 Bal.0

Depreciation expense Bad debt expense

_{1/1 Bal. 0 1/1 Bal. 0}

_{Adjusting 2,000 Adjusting 1,000}

_{2,000 Closing 1,000 Closing}

12/31 Bal.012/31 Bal.0

Salaries expense Income summary

_{1/1 Bal. 0 100,000 Closing}

_{d. 41,000 Closing 69,000}

_{Adjusting 1,000 42,000 Closing Closing 31,000}

12/31 Bal.012/31 Bal.0

Problem 2-6 (concluded)

Requirement 9

Account Title	Debits		Credits
Cash	45,800
Accounts receivable	17,700
Allowance for uncollectible accounts			1,500
Equipment	35,000
Accumulated depreciation			8,000
Salaries payable			1,000
Common stock			50,000
Retained earnings	_____		38,000
Totals	98,500		98,500

Problem 2-7

Requirement 1

a.Interest receivable 600

Interest revenue ($10,000 x 12% x ¹/2)600

b.Depreciation expense($30,000 x ¹/5)6,000

Accumulated depreciation 6,000

c.Unearned rent revenue 2,000

Rent revenue ($6,000 x ²/6)2,000

d.Prepaid insurance 1,500

Insurance expense ($2,400 x ¹⁵/24)1,500

e.Interest expense($20,000 x 12% x ³/12)600

Interest payable 600

f.Supplies expense($1,800 - 700)1,100

Supplies 1,100

Requirement 2

Income overstated

(understated)

Adjustments to revenues:

Understatement of interest revenue $ (600)

Understatement of rent revenue (2,000)

Adjustments to expenses:

Overstatement of insurance expense (1,500)

Understatement of depreciation expense 6,000

Understatement of interest expense 600

Understatement of supplies expense 1,100

Overstatement of net income $3,600

Problem 2-8

1.Depreciation expense($75,000 ÷ 8 years)9,375

Accumulated depreciation 9,375

2.Wage expense($4,500 - 3,000)1,500

Wages payable 1,500

3.Bad debt expense 550

Allowance for uncollectible accounts 550

[($32,500 x 2%) - $100]

4.Interest expense ($30,000 x 10% x ⁴/12)1,000

Interest payable 1,000

5.Supplies 500

Supplies expense 500

6.Prepaid rent 1,000

Rent expense 1,000

Problem 2-9

Requirements 1 and 2

a.Depreciation expense($50,000 ÷ 50 years)1,000

Accumulated depreciation - buildings 1,000

b.Depreciation expense($100,000 x 10%)10,000

Accumulated depreciation - equipment 10,000

c.Insurance expense 1,500

Prepaid insurance 1,500

d.Bad debt expense 850

Allowance for uncollectible accounts 850 [($9,000 x 10%) - $50]

e.Salaries expense 1,500

Salaries payable 1,500

f.Rent revenue 1,200

Unearned rent revenue 1,200

Problem 2-9 (continued)