Income statement preparation (Learning Objective 3) 15–20 min.

The accountant for Halco, Inc., posted adjusting entries

(a) through

(e) to the accounts at December 31, 2014. Selected balance sheet accounts and all the revenues and expenses of the entity follow in T-account form.

Requirements 1. Explain the purpose for each adjusting entry.
2. Calculate ending balances in the accounts and use the appropriate accounts to prepare the income statement of Halco, Inc., for the year ended December 31, 2014. List expenses in order from largest to smallest.
3. Were the 2014 operations successful? Give the reason for your answer.AppendixLO1

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Accounts Receivable 7,000 (e) 1,100 Salaries Payable (d) 2,300 Supplies Accumulated 2,500 (a) 800 Depreciation, Equipment 3,600 (b) 1,400 Accumulated Depreciation, Building 50,000 (c) 3,600 Service Revenue 15,700 Salaries Expense Supplies Expense Depreciation Expense, 10,500 (a) 800 Equipment (d) 2,300 (b) 1,400 (e) 1,100 Depreciation Expense, Building (c) 3,600