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Chapter 3: Question 10BE (page 128)

BE3-10 (L03) At the end of its first year of operations, the trial balance of Alonzo Company shows Equipment \(30,000 and zero balances in Accumulated Depreciation—Equipment and Depreciation Expense. Depreciation for the year is estimated to be \)2,000. Prepare the adjusting entry for depreciation at December 31, and indicate the balance sheet presentation for the equipment at December 31.

Short Answer

Expert verified

The net equipment value is $28,000.

Step by step solution

01

Meaning of Balance Sheet

A statement that includes the detail of assets owned and liabilities owed by business entities or individuals at any definite date is known as theBalance Sheet. Stakeholders use it to assess the financial position of entities.

02

Adjusting entry for depreciation at December

Date

Accounts and Explanation

Debit $

Credit $

December, 31

Depreciation expenses

$2,000

Accumulated depreciation-equipment

$2,000

03

Balance sheet presentation for Equipment 

Property Plant and Equipment

Amount $

Amount $

Equipment

$30,000

Less: Depreciation on equipment

$(2,000)

Equipment net of depreciation

$28,000

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Most popular questions from this chapter

BE3-5 (L02,3) Assume that on February 1, Procter & Gamble (P&G) paid $720,000 in advance for 2 years’ insurance coverage. Prepare P&G’s February 1 journal entry and the annual adjusting entry on June 30.

E3-13 (Lo5,6) (Closing Entries) The adjusted trial balance of Lopez Company shows the following data pertaining to sales at the end of its fiscal year, October 31, 2017: Sales Revenue \(800,000, Delivery Expenses \)12,000, Sales Returns and Allowances \(24,000 and Sales Discounts \)15,000.

Instructions:

(b) Prepare separate closing entries for (1) Sales and (2) the contra accounts to sales.

Vedula Advertising was founded by MuraliVedula in January 2015. On the next page are both the adjusted and unadjusted trial balances as of December 31, 2017.

VEDULA ADVERTISING

TRIAL BALANCE

DECEMBER 31, 2017


Unadjusted
Adjusted

Dr.

Cr.

Dr.

Cr.

Cash

\( 11,000

\) 11,000

Accounts Receivable

16,000

19,500

Prepaid Insurance

9,400

6,500

Supplies

3,350

1,790

Equipment

60,000

60,000

Accumulated Depreciation—Equipment

\( 25,000

\) 30,000

Notes Payable

8,000

8,000

Accounts Payable

2,000

2,000

Interest Payable

0

560

Unearned Service Revenue

5,000

3,100

Salaries and Wages Payable

0

820

Common Stock

20,000

20,000

Retained Earnings

5,500

5,500

Dividends

10,000

10,000

Service Revenue

57,600

63,000

Salaries and Wages Expense

9,000

9,820

Insurance Expense

1,560

Interest Expense

560

Depreciation Expense

5,000

Supplies Expense

2,900

Rent Expense

4,350

4,350

\(123,100

\)123,100

\(132,980

\)132,980

Instructions

  1. Journalize the annual adjusting entries that were made.
  2. Prepare an income statement and a retained earnings statement for the year ended December 31, and a classified balance sheet at December 31.
  3. Identify which accounts should be closed on December 31.
  4. If the note has been outstanding 10 months, what is the annual interest rate on that note?
  5. If the company paid $10,500 in salaries and wages in 2017, what was the balance in Salaries and Wages Payable on December 31, 2016?

BE3-9 (L03) Prepare the following adjusting entries at August 31 for Walgreens. (a) Interest on notes payable of \(300 is accrued. (b) Services performed but unbilled total \)1,400. (c) Salaries and wages earned by employees of \(700 have not been recorded. (d) Bad debt expense for year is \)900. Use the following account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries and Wages Expense, Salaries and Wages Payable, Allowance for Doubtful Accounts, and Bad Debt Expense.

“A worksheet is a permanent accounting record, and its use is required in the accounting cycle. “Do you agree? Explain.
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