Balance amounts in the trial balance columns


Problem: Preparation of a work sheet, financial statements, and adjusting, closing, and reversing entries

At the end of fiscal year, the trial balance of Reed delivery service appeared as shown below.

Reed delivery service

Trial balance

August 31, 2010

Cash

$10,072

 

Accounts receivable

29,314

 

Prepaid insurance

5,340

 

Delivery supplies

14,700

 

Office supplies

2,460

 

Land

15,000

 

Building

196,000

 

Accumulated depreciation-building

 

$53,400

Trucks

103,800

 

Accumulated depreciation-trucks

 

30,900

Office equipment

15,900

 

Accumulated depreciation-office equipment

 

10,800

Accounts payable

 

9,396

Unearned lockbox fees

 

8,340

Mortgage payable

 

72,000

N. Reed, capital

 

128,730

N. Reed, withdrawals

30,000

 

Delivery service revenue

 

283,470

Lockbox fees earned

 

28,800

Truck drivers' wage expense

120,600

 

Office salaries expense

44,400

 

Gas, Oil, and truck repairs expense

31,050

 

Interest expense

7,200

 

 

$625,836

$625,836

Required:

Problem 1. Enter the trial balance amounts in the trial balance columns of a work sheet and complete the work sheet using the information that follows:

a) Expired insurance, $3,060
b) Inventory of unused delivery supplies, $1,430
c) Inventory of unused office supplies, $186
d) Estimated depreciation on the building, $14,400
e) Estimated depreciation on the truck, $15,450
f) Estimated depreciation on the office equipment, $2,700
g) The company credits the lockbox fees account. Of the amount credited to this account during the year, $5,630 had been earned by August 31.
h) Lockbox fees earned but not recorded and uncollected at the end of the accounting period, $816
i) Accrued but unpaid truck drivers’ wages at the end of the year, $1,920

Problem 2. Prepare an income statement, a statement of owner’s equity, and a balance sheet for the company. Assume the owner, Natalie Reed, made no additional investments.

Problem 3. Prepare adjusting, closing, and, when necessary, reversing entries from the work sheet

Problem 4. Can the work sheet be used as a substitute for the financial statements? Explain your answer.

Solution Preview :

Prepared by a verified Expert
Accounting Basics: Balance amounts in the trial balance columns
Reference No:- TGS01881958

Now Priced at $25 (50% Discount)

Recommended (96%)

Rated (4.8/5)