Sherlock Holmes began operations as a private investigator on January 1 . 2006. The trial balance columns of the work sheet for Sherlock Holmes P.I. at March 31 are as follows.

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Other data:
1. Supplies on hand total $680.
2. Depreciation is $1,000 per quarter.
3. Interest accrued on 6-month note payable, issued January 1. $300.
4. Insurance expires at the rate of $200 per month.
5. Services provided but unbilled at March 31 total $830.
Instructions

(a) Enter the trial balance on a work sheet and complete the work sheet.

(b) Prepare an income statement and a retained earnings statement for the quarter and a classified balance sheet at March 31. Stockholders purchased $20,000 of common stock for cash at the beginning of the quarter ended March 31, 2006.

(c) Journalize the adjusting entries from the adjustments columns of the work sheet.

(d) Journalize the closing entries from the financial statement columns of the work sheet.

Transcribed Image Text:

SHERLOCK HOLMES P.I. Work Sheet For the Quarter Ended March 31, 2006 Trial Balance Account Titles Dr. Cr. Cash 11.400 Accounts Receivable 5,620 Supplies 1,050 Prepaid Insurance 2.400 Equipment 30.000 Notes Payable 10.000 Accounts Payable 12.350 Common Stock 20,000 Dividends 600 Service Revenue 13.620 Salaries Expense 2,200 Travel Expense 1.300 Rent Expense 1.200 Miscellaneous Expense 200 55.970 55.970