Preparation of a Work Sheet, Financial Statements, and Adjusting, Closing, and Reversing Entries
P 4. At the end of the fiscal year, the trial balance of Reed Delivery Service appeared as shown below.
Required
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 trucks, $15,450.
f. Estimated depreciation on the office equipment, $2,700.
g. The company credits the lockbox fees of customers who pay in advance to the Unearned Lockbox Fees account. Of the amount credited to this account during the year, $5,630 had been earned by August 31.
120,600 44,400 31,050Chapter Assignments 171
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h. Lockbox fees earned but unrecorded and uncollected at the end of the accounting period, $816.
i. Accrued but unpaid truck driver’s wages at the end of the year, $1,920.
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.
3. Prepare adjusting, closing, and, when necessary, reversing entries from the work sheet.
4. Can the work sheet be used as a substitute for the financial statements? Explain your answer.