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

The accountant for Cyclone Construction, Inc., posted adjusting entries

(a) through (e)

to the accounts at July 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 Cyclone Construction, Inc., for the year ended July 31, 2014. List expenses in order from largest to smallest.
3. Were the 2014 operations successful? Give the reason for your answer.AppendixLO1

Transcribed Image Text:

Accounts Receivable 29,300 (e) 1,200 Salaries Payable (d) 1,700 Supplies Accumulated 3,000 (a) 600 Depreciation, Equipment Accumulated Depreciation, Building 5,200 46,000 (b) 1,800 (c) 6,000 Service Revenue 38,000 Salaries Expense Supplies Expense Depreciation Expense, 14,000 (a) 600 Equipment (d) 1,700 (b) 1,800 (e) 1,200 Depreciation Expense, Building (c) 6,000