2 Accounting Questions

Question 1

 

Foxy Investigative Services is an investigative services firm that is owned and operated by Shirley Vickers. On November 30, 2018, the end of the fiscal year, the accountant for Foxy Investigative Services prepared an end-of-period spreadsheet, a part of which follows:

Foxy Investigative ServicesEnd-of-Period SpreadsheetFor the Year Ended November 30, 2018
~Adjusted Trial BalanceAccount Title~Dr.Cr.
~

Cash~23,000
Accounts Receivable~71,800
Supplies~4,500
Prepaid Insurance~2,500
Building~444,000
Accumulated Depreciation-Building~
44,600Accounts Payable~
11,200Salaries Payable~
2,900Unearned Rent~
1,500Common Stock~
80,000Retained Earnings~
293,200Dividends~11,500
Service Fees~
719,450Rent Revenue~
11,500Salaries Expense~525,000
Rent Expense~46,000
Supplies Expense~10,500
Depreciation Expense-Building~7,400
Utilities Expense~7,350
Repairs Expense~2,500
Insurance Expense~2,300
Miscellaneous Expense~6,000

~1,164,3501,164,350

Required:1.A.Prepare an income statement for the year ended November 30, 2018. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) on the income statement. Refer to the Chart of Accounts for exact wording of account titles.B.Prepare a retained earnings statement for the year ended November 30, 2018. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names.C.Prepare a balance sheet as of November 30, 2018. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. You will not need to enter colons (:) or the word “Less” on the balance sheet; they will automatically insert where necessary. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. For those boxes in which you must enter subtracted or negative numbers use a minus sign.2.Based upon the end-of-period spreadsheet, journalize the closing entries. Refer to the Chart of Accounts for exact wording of account titles.3.If Retained Earnings had instead decreased $40,000 after the closing entries were posted, and the dividends remained the same, what would have been the amount of net income or net loss? If required, use a minus sign to indicate a net loss.

Chart of Accounts

CHART OF ACCOUNTSFoxy Investigative ServicesGeneral Ledger
ASSETS11Cash12Accounts Receivable13Supplies14Prepaid Insurance17Building18Accumulated Depreciation-Building
LIABILITIES21Accounts Payable22Salaries Payable23Unearned Rent
EQUITY31Common Stock32Retained Earnings33Dividends34Income Summary
REVENUE41Service Fees42Rent Revenue
EXPENSES51Salaries Expense52Rent Expense53Supplies Expense54Depreciation Expense-Building55Utilities Expense56Repairs Expense57Insurance Expense59Miscellaneous Expense

Labels and Amount Descriptions

Labels
Current assets
Current liabilities
Expenses
For the Year Ended November 30, 2018
November 30, 2018
Property, plant, and equipment
Revenues
Amount Descriptions
Change in retained earnings
Dividends
Net income
Net loss
Retained earnings, December 1, 2017
Retained earnings, November 30, 2018
Total assets
Total current assets
Total expenses
Total liabilities
Total liabilities and stockholders’ equity
Total property, plant, and equipment
Total revenues
Total stockholders’ equity

Income Statement

1A. Prepare an income statement for the year ended November 30, 2018. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) on the income statement. Refer to the Chart of Accounts for exact wording of account titles.

Foxy Investigative Services

Income Statement

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Retained Earnings Statement

1B. Prepare a retained earnings statement for the year ended November 30, 2018. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names.

Foxy Investigative Services

Retained Earnings Statement

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Balance Sheet

1C. Prepare a balance sheet as of November 30, 2018. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. You will not need to enter colons (:) or the word “Less” on the balance sheet; they will automatically insert where necessary. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Foxy Investigative Services

Balance Sheet

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Liabilities

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Stockholders’ Equity

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Journal

2. Based upon the end-of-period spreadsheet, journalize the closing entries. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

ACCOUNTING EQUATION

DATEDESCRIPTIONPOST. REF.DEBITCREDITASSETSLIABILITIESEQUITY

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Closing Entries

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Final Question

3. If Retained Earnings had instead decreased $40,000 after the closing entries were posted, and the dividends remained the same, what would have been the amount of net income or net loss? If required, use a minus sign to indicate a net loss.

Question 2

 

he unadjusted trial balance of Epicenter Laundry at June 30, 2018, the end of the fiscal year, follows:

Epicenter Laundry
UNADJUSTED TRIAL BALANCE
June 30, 2018

ACCOUNT TITLEDEBITCREDIT1Cash11,000.00 2Laundry Supplies21,500.00 3Prepaid Insurance9,600.00 4Laundry Equipment232,600.00 5Accumulated Depreciation 125,400.006Accounts Payable 11,800.007Common Stock 40,000.008Retained Earnings 65,600.009Dividends10,000.00 10Laundry Revenue 232,200.0011Wages Expense125,200.00 12Rent Expense40,000.00 13Utilities Expense19,700.00 14Miscellaneous Expense5,400.00 15Totals475,000.00475,000.00

The data needed to determine year-end adjustments are as follows:
A.Laundry supplies on hand at June 30 are $3,600.B.Insurance premiums expired during the year are $5,700.C.Depreciation of laundry equipment during the year is $6,500.D.Wages accrued but not paid at June 30 are $1,100.

Required:
Note: Download the spreadsheet on the T Accounts panel, saving the Excel file to your computer. Be sure to save your work in Excel. The spreadsheet input will not be included in your grade in CengageNOW on this problem.1. For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as “Bal.”2. Using the Excel spreadsheet downloaded from the T Accounts panel, click the Work Sheet tab. Enter the unadjusted trial balance on the end-of-period work sheet and complete the work sheet.3. a. Journalize the adjusting entries on page 10 of the journal. Adjusting entries are recorded on June 30. Refer to the Chart of Accounts for exact wording of account titles.3. b. Post the adjusting entries. In the T accounts, identify the adjustments by “Adj.” and the new balances as “Adj. Bal.” (Be sure to add a posting reference to the journal.)4. Prepare an adjusted trial balance.5. a. Prepare an income statement for the year ended June 30, 2018. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. You will not need to enter colons (:) on the income statement. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names.5. b. Prepare a retained earnings statement for the year ended June 30, 2018. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names.5. c. Prepare a balance sheet as of June 30, 2018. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. You will not need to enter colons (:) on the balance sheet; they will automatically insert where necessary. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. For those boxes in which you must enter subtracted or negative numbers use a minus sign.6. a. Journalize the closing entries on page 11 of the journal. Refer to the Chart of Accounts for exact wording of account titles. (Note: Complete the adjusted trial balance, the income statement, the retained earnings statement, and the balance sheet BEFORE completing part 6. a.)6. b. Post the closing entries. In the T accounts, identify the closing entries by “Clos.” (Be sure to add a posting reference to the journal.)7. Prepare a post-closing trial balance.

Chart of Accounts

CHART OF ACCOUNTSEpicenter LaundryGeneral LedgerASSETS11Cash13Laundry Supplies14Prepaid Insurance17Laundry Equipment18Accumulated Depreciation
LIABILITIES21Accounts Payable22Wages Payable
EQUITY31Common Stock32Retained Earnings33Dividends34Income SummaryREVENUE41Laundry Revenue
EXPENSES51Wages Expense52Rent Expense53Utilities Expense54Laundry Supplies Expense55Depreciation Expense56Insurance Expense59Miscellaneous Expense

Labels and Amount Descriptions

LabelsCurrent assetsCurrent liabilitiesExpensesFor the Year Ended June 30, 2018June 30, 2018Property, plant, and equipmentAmount DescriptionsChange in retained earningsNet incomeNet lossRetained earnings, June 30, 2018Retained earnings, July 1, 2017Total assetsTotal current assetsTotal expensesTotal liabilitiesTotal liabilities and stockholders’ equityTotal property, plant, and equipmentTotal stockholders’ equity

T Accounts

Note:Download the SPREADSHEET, saving the Excel file to your computer. Be sure to save your work in Excel. The spreadsheet input will not be included in your grade in CengageNOW on this problem.1. For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as “Bal.”3. b. Post the adjusting entries. In the T accounts, identify the adjustments by “Adj.” and the new balances as “Adj. Bal.”6. b. Post the closing entries. In the T accounts, identify the adjustments by “Clos.”

Work Sheet

2. Using the Excel spreadsheet downloaded from the T Accounts panel, click the Work Sheet tab. Enter the unadjusted trial balance on the end-of-period work sheet and complete the work sheet.

Journal

3. a. Journalize the adjusting entries on page 10 of the journal. Adjusting entries are recorded on June 30. Refer to the Chart of Accounts for exact wording of account titles. 6. a. Journalize the closing entries on page 11 of the journal. Refer to the Chart of Accounts for exact wording of account titles. (Note: Complete the adjusted trial balance, the income statement, the retained earnings statement, and the balance sheet BEFORE completing part 6. a.)
PAGE 10PAGE 11

JOURNAL
ACCOUNTING EQUATION

DATEDESCRIPTIONPOST. REF.DEBITCREDITASSETSLIABILITIESEQUITY1 Adjusting Entries      23456789

Adjusted Trial Balance

4. Prepare an adjusted trial balance. If an amount box does not require an entry, leave it blank.

Epicenter Laundry
ADJUSTED TRIAL BALANCE
June 30, 2018

ACCOUNT TITLEDEBITCREDIT1Cash2Laundry Supplies3Prepaid Insurance4Laundry Equipment5Accumulated Depreciation6Accounts Payable7Wages Payable8Common Stock9Retained Earnings10Dividends11Laundry Revenue12Wages Expense13Rent Expense14Utilities Expense15Laundry Supplies Expense16Depreciation Expense17Insurance Expense18Miscellaneous Expense19Totals

Income Statement

5. a. Prepare an income statement for the year ended June 30, 2018. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. You will not need to enter colons (:) on the income statement. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names.

Epicenter LaundryIncome Statement1 2  3 4 5 6 7 8 9 10 11

Retained Earnings Statement

5. b. Prepare a retained earnings statement for the year ended June 30, 2018. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names.

Epicenter LaundryRetained Earnings Statement1 2 3 4 5

Balance Sheet

5. c. Prepare a balance sheet as of June 30, 2018. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. You will not need to enter colons (:) on the balance sheet; they will automatically insert where necessary. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Epicenter LaundryBalance Sheet1Assets  2  3 4 5 6 7  8 9 10 11 12Liabilities  13  14 15 16 17Stockholders’ Equity  18 19 20 21

Post-closing Trial Balance

7. Prepare a post-closing trial balance.

Epicenter Laundry
POST-CLOSING TRIAL BALANCE
June 30, 2018

ACCOUNT TITLEDEBITCREDIT1Cash2Laundry Supplies3Prepaid Insurance4Laundry Equipment5Accumulated Depreciation6Accounts Payable7Wages Payable8Common Stock9Retained Earnings10Totals