The ledger of Ley Company includes the following ...



The ledger of Ley Company includes the following unadjusted balances: Prepaid Insurance $3,000, Service Revenue $58,000, and Salaries Expense $25,000. Adjusting entries are required for (a) expired insurance $1,200; (b) services provided $1,100, but unbilled and uncollected; and (c) accrued salaries payable $800. Enter the unadjusted balances and adjustments into a worksheet and complete the worksheet for all accounts. Note:You will need to add the following accounts: Accounts Receivable, Salaries Payable, and Insurance Expense.

The following selected accounts appear in the adjusted trial balance columns of the worksheet for Batan Company: Accumulated Depreciation; Depreciation Expense; Common Stock; Dividends; Service Revenue; Supplies; and Accounts Payable. Indicate the financial statement column (income statement Dr., balance sheet Cr., etc.) to which each balance should be extended.

| | |Income Statement | |Balance Sheet |

|Account | |Dr. |Cr. | |Dr. |Cr. |

|Accumulated Depreciation | | | | | |X |

|Depreciation Expense | |X | | | | |

|Common Stock | | | | | |X |

|Dividends | | | | |X | |

|Service Revenue | | |X | | | |

|Supplies | | | | |X | |

|Accounts Payable | | | | | |X |

The ledger of Swann Company contains the following balances: Retained Earnings $30,000; Dividends $2,000; Service Revenue $50,000; Salaries Expense $27,000; and Supplies Expense $4,000. Prepare the closing entries at December 31.

Dec. 31 Service Revenue 50,000

Income Summary 50,000

31 Income Summary 31,000

Salaries Expense 27,000

Supplies Expense 4,000

31 Income Summary 19,000

Retained Earnings 19,000

31 Retained Earnings 2,000

Dividends 2,000

The adjusted trial balance columns of the worksheet for Porter Company are as follows. PORTER COMPANY Worksheet For the Year Ended December 31, 2008 ACCOUNT NO. Account Titles Adjusted trial balance DR. CR. --------- 101 cash 18,800 112 accounts receivable 16,200 126 supplies 2,300 130 prepaid Insurance 4,400 151 office Equipment 44,000 152 Accumulated Depreciation-Office Equipment 20,000 200 Notes Payable 20,000 201 Accounts Payable 8,000 212 Salaries payable 2,600 230 Interest Payable 1,000 311 Common stock 30,000 320 Retained Earnings 6,000 332 Dividends 12,000 400 service revenue 77,800 610 Advertising Expenses 12,000 631 supplies expense 3,700 711 Depreciation Expensese 8,000 722 Insurance Expense 4,000 726 Salaries Expense 39,000 905 Interest Expense 1,000 Totals 165,400 165,400 Instructions (a) Complete the worksheet by extending the balances to the financial statement columns. (b) Prepare an income statement, a retained earnings statement, and a classified balance sheet. $10,000 of the notes payable become due in 2009. No additional issuance of common stock occurred during 2008. (c) Prepare the closing entries. Use J14 for the journal page. (d) Post the closing entries. Use the three-column form of account. Income Summary is account No. 350. (e) Prepare a post-closing trial balance.

(a) PORTER COMPANY

Partial Worksheet

For the Year Ended December 31, 2008

| | |Adjusted | |Income | |Balance |

|Account | |Trial Balance | |Statement | |Sheet |

|No. | |Titles | |Dr. | |Cr. | |Dr. |

|Dec. 31 | |Service Revenue | |400 | |77,800 | | |

| | | Income Summary | |350 | | | |77,800 |

| | | | | | | | | |

| 31 | |Income Summary | |350 | |67,700 | | |

| | | Advertising Expense | |610 | | | |12,000 |

| | | Supplies Expense | |631 | | | | 3,700 |

| | | Depreciation Expense | |711 | | | | 8,000 |

| | | Insurance Expense | |722 | | | | 4,000 |

| | | Salaries Expense | |726 | | | |39,000 |

| | | Interest Expense | |905 | | | |1,000 |

| | | | | | | | | |

| 31 | |Income Summary | |350 | |10,100 | | |

| | | Retained Earnings | |320 | | | |10,100 |

| | | | | | | | | |

| 31 | |Retained Earnings | |320 | |12,000 | | |

| | | Dividends | |332 | | | |12,000 |

(d)

Retained Earnings No. 320

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Jan. 31 | |Balance | |Π | | | | | |6,000 |

|Dec. 31 | |Closing entry | |J14 | | | |10,100 | |16,100 |

| 31 | |Closing entry | |J14 | |12,000 | | | |4,100 |

Dividends No. 332

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Dec. 31 | |Balance | |Π | |12,000 | | | |12,000 |

| 31 | |Closing entry | |J14 | | | |12,000 | |0 |

Income Summary No. 350

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Dec. 31 | |Closing entry | |J14 | | | |77,800 | | 77,800 |

| 31 | |Closing entry | |J14 | |67,700 | | | | 10,100 |

| 31 | |Closing entry | |J14 | |10,100 | | | | 0 |

Service Revenue No. 400

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Dec. 31 | |Balance | |Π | | | |77,800 | | 77,800 |

| 31 | |Closing entry | |J14 | |77,800 | | | | 0 |

Advertising Expense No. 610

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Dec. 31 | |Balance | |Π | |12,000 | | | | 12,000 |

| 31 | |Closing entry | |J14 | | | |12,000 | | 0 |

Supplies Expense No. 631

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

| 31 | |Closing entry | |J14 | | | |3,700 | | 0 |

Depreciation Expense No. 711

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Dec. 31 | |Balance | |Π | |8,000 | | | | 8,000 |

| 31 | |Closing entry | |J14 | | | |8,000 | | 0 |

Insurance Expense No. 722

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Dec. 31 | |Balance | |Π | |4,000 | | | |4,000 |

| 31 | |Closing entry | |J14 | | | |4,000 | | 0 |

Salaries Expense No. 726

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Dec. 31 | |Balance | |Π | |39,000 | | | |39,000 |

| 31 | |Closing entry | |J14 | | | |39,000 | |0 |

Interest Expense No. 905

|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |

|Dec. 31 | |Balance | |Π | |1,000 | | | |1,000 |

| 31 | |Closing entry | |J14 | | | |1,000 | |0 |

(e) PORTER COMPANY

Post-Closing Trial Balance

December 31, 2008

| | |Debit | |Credit |

Cash $18,800

Accounts Receivable 16,200

Supplies 2,300

Prepaid Insurance 4,400

Office Equipment 44,000

Accumulated Depreciation—Office

Equipment $20,000

Notes Payable 20,000

Accounts Payable 8,000

Salaries Payable 2,600

Interest Payable 1,000

Common Stock 30,000

Retained Earnings               4,100

$85,700 $85,700

-----------------------

|LEY COMPANY |

|Worksheet |

| | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |Account Titles | |Dr. | |Cr. | |Dr. | |Cr. | |Dr. | |Cr. | |Dr. | |Cr. | |Dr. | |Cr. | | | | | | | | | | | | | | | | | | | | | | | |Prepaid Insurance

Service Revenue

Salaries Expense

Accounts Receivable

Salaries Payable

Insurance Expense | | 3,000

25,000 | |

58,000 | |

(c)   800

(b) 1,100

(a) 1,200 | |(a) 1,200

(b) 1,100

(c)   800 | | 1,800

25,800

 1,100

 1,200 | |

59,100

   800 | |

25,800

 1,200 | |

59,100 | |1,800

1,100 | |

  800 | | | | | | | | | | | | | | | | | | | | | | | |

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