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Chapter 4: Q27E (page 228)

Lucas Architects recorded the following adjusting entries as of December 31: a. Service Revenue accrued, \(2,600. b. Unearned Revenue that has been earned, \)1,300. c. Office Supplies on hand, \(530. The balance of the Office Supplies account was \)880. d. Salaries owed to employees, \(600. e. One month of Prepaid Rent has expired, \)3,100. f. Depreciation on equipment, $1,075. Journalize any necessary reversing entries for Lucas Architects.

Short Answer

Expert verified

Reversing entries are as follows:

Accounts and Explanation

Debit

Credit

(a)

Service Revenue

$2,600

Accounts Receivable

$2,600

To reverse the accrued revenue adjusting entry

(d)

Salaries Payable

$600

Salaries Expense

$600

To reverse the salaries adjusting entry

Step by step solution

01

Step-by-Step-SolutionStep 1: Explanation on Reversing Entries

These are the special journal entries, which is opposite of previous adjusting entry made in the books of accounts.

02

Applicability of Reversing Entries

Reversing entries are recorded are recorded for the accrual adjusting entries related to accruals.

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Most popular questions from this chapter

The adjusted trial balance of Erickson Real Estate Appraisal at June 30, 2018, follows:


Requirements

1. Prepare the company’s income statement for the year ended June 30, 2018.

2. Prepare the company’s statement of retained earnings for the year ended June 30, 2018.

3. Prepare the company’s classified balance sheet in report form at June 30, 2018.

4. Journalize the closing entries.

5. Open the T-accounts using the balances from the adjusted trial balance, and post the closing entries to the T-accounts.

6. Prepare the company’s post-closing trial balance at June 30, 2018.

On December 1, Curt Wilson began an auto repair shop, Wilson’s Quality Automotive. The following transactions occurred during December: Dec. 1 Wilson contributed \(63,000 cash to the business in exchange for shares of common stock. 1 Purchased \)14,400 of equipment paying cash. 1 Paid \(3,600 for a twelve-month insurance policy starting on December 1. 9 Paid \)15,000 cash to purchase land to be used in operations. 10 Purchased office supplies on account, \(2,200. 19 Borrowed \)24,000 from the bank for business use. Wilson signed a notes payable to the bank in the name of the corporation. The note is due in five years. 22 Paid \(2,000 for advertising expenses. 26 Paid \)1,000 on account. 28 The business received a bill for utilities to be paid in January, \(260. 31 Revenues earned during the month included \)18,500 cash and \(3,800 on account. 31 Paid employees’ salaries \)3,900 and building rent \(800. Record as a compound entry. 31 The business received \)1,380 for auto screening services to be performed next month. 31 Paid cash dividends of \(5,000 to stockholders. The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Equipment; Accumulated Depreciation—Equipment; Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Notes Payable; Common Stock; Retained Earnings; Dividends; Income Summary; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation Expense—Equipment. Adjustment data: a. Office Supplies used during the month, \)600. b. Depreciation for the month, \(240. c. One month insurance has expired. d. Accrued Interest Expense, \)120. Requirements 1. Prepare the journal entries, and post to the T-accounts. 2. Prepare an unadjusted trial balance. 3. Complete the worksheet for the month ended December 31, 2018 (optional). 4. Prepare the adjusting entries, and post to the T-accounts. 5. Prepare an adjusted trial balance. 6. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form. 7. Prepare the closing entries, and post to the T-accounts. 8. Prepare a post-closing trial balance.

On December 1, Bob Waldo began an auto repair shop, Waldo’s Quality Automotive. The following transactions occurred during December: Dec. 1 Waldo contributed \(70,000 cash to the business in exchange for shares of common stock. 1 Purchased \)12,000 of equipment paying cash. 1 Paid \(1,750 for a five-month insurance policy starting on December 1. 9 Paid \)20,000 cash to purchase land to be used in operations. 10 Purchased office supplies on account, \(2,800. 19 Borrowed \)15,000 from the bank for business use. Waldo signed a note payable to the bank in the name of the corporation. The note is due in five years. 22 Paid \(1,300 for advertising expenses. 26 Paid \)900 on account. 28 The business received a bill for utilities to be paid in January, \(280. 31 Revenues earned during the month included \)16,000 cash and \(3,600 on account. 31 Paid employees’ salaries \)3,800 and building rent \(1,200. Record as a compound entry. 31 The business received \)1,440 for auto screening services to be performed next month. 31 Paid cash dividends of \(5,500 to stockholders. The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Equipment; Accumulated Depreciation—Equipment; Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Notes Payable; Common Stock; Retained Earnings; Dividends; Income Summary; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation Expense—Equipment. Adjustment data: a. Office Supplies used during the month, \)1,800. b. Depreciation for the month, \(200. c. One month insurance has expired. d. Accrued Interest Expense, \)75. Requirements 1. Prepare the journal entries, and post to the T-accounts. 2. Prepare an unadjusted trial balance. 3. Complete the worksheet for the month ended December 31, 2018 (optional). 4. Prepare the adjusting entries, and post to the T-accounts. 5. Prepare an adjusted trial balance.6. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form. 7. Prepare the closing entries, and post to the T-accounts. 8. Prepare a post-closing trial balance.

What does liquidity mean?

The unadjusted trial balance of Data Solution at November 30, 2018, follows: DATA SOLUTION Unadjusted Trial Balance November 30, 2018 Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Common Stock Dividends Service Revenue Depreciation Expense—Equipment Salaries Expense Rent Expense Utilities Expense Supplies Expense Balance \( 4,400 \) 48,300 \( 48,300 5,100 \) 1,500 30,200 32,900 8,800 2,900 2,100 3,100 1,800 3,100 700 Additional information at November 30, 2018: a. Accrued Service Revenue, \(800. b. Depreciation, \)350. c. Accrued Salaries Expense, \(650. d. Prepaid Rent expired, \)700. e. Office Supplies used, $550. Requirements 1. Complete Data Solution’s worksheet for the month ended November 30, 2018. 2. How much was net income for November?
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