Accounting financial statement
\fTRANSACTIONS (l MARK EACH, 20 MARKS) M. H. Acosta, CA, completed these transactions during November of the current year: Nov. 1 : Began a public accounting practice by investing $4,000 in cash and office equipment having a $3,300 fair value. Nov. 2: Purchased on credit office equipment, $900, and office supplies, $150. Nov 4: Completed accounting work for client and immediately received a payment of $400 cash. Completed accounting work on credit for Acme Loan Co., $600. Nov. 8: Paid for the items purchased on credit on November 2. Nov. 10: Paid the annual $800 premium on an insurance policy. Nov. 14: Received payment in full from Acme Loan Co. for the work completed on Nov. November 8. 18: M. H. Acosta withdrew $650 cash from the practice to pay personal Nov. expenses. 27: Paid the November utility bills, $140. Nov. 30: a. Use the following page to prepare general journal entries to record the transactions. SECTION 2BAdjusting JOURNAL ENTRIES Prepare the following Independent adjusting journal entries at year end: a. Of the $30,000 balance in Unearned Revenue, $16,000 remains unearned. b. The annual amortization on furniture is $7,000. c. Office supplies shows a balance of $4,000, but a physical count reveals there is only $2,800 on hand. d. Accrued revenue at year end is $6,500. e. Employees are owed $5,400 in salaries for the last three days of the year. SECTION 2CSTATEMENTS AND BALANCE SHEET (25 marks) use the following to answer questions 1 to 3 below: Below is the year-end adjusted trial balance of the ledger of Acosta Accounting. ACOSTA ACCOUNTING Adjusted Trial Balance December 31, 2010 $100,000 Cash Accounts receivable 7,000 Prepaid rent 15,000 Prepaid insurance 9,000 Office supplies 3,300 Office equipment 8,000 Accumulated amortization equipment Building 350,000 Accumulated amortization, building Land 42,000 700,000 Accounts payable Salaries payable Interest payable Lon -term note payable Margarita Acosta, capital Margarita Acosta, withdrawals 5,800 14,500 2,500 52,000 200,500 370,800 Service fees earned Salaries expense pense Rent expense Amortization expense, equipment $3,200 90,000 5,200 5,000 800 Amortization expense, building 7 000 Totals 1 500 800 1 500 800 a. Prepare an Income Statement for the year ending December 31, 2010. b. prepare a Statement of Owner's Equity for the year ending December 31, 2010. There were no investments by the owner during the year. c. Prepare a classified year-end balance sheet. A $7,000 Installment on the longterm note payable is due within one year. SECTION 2DJOURNAL ENTRIES Prepare the following journal entries: a. June 1: Sold inventory to Smith Co. for $10,000, terms 2/10, n/30. Cost of goods was $6,500. b. June 2: Purchased inventory from Jones Ltd. for $8,000, terms 2/10, n/30. c. June 4: Returned $1 ,500 of defective inventory to Jones Ltd. and received a credit. d. June 10: Collected the amount owing from Smith Co. regarding the June 1 e. sale. June 20: Paid the amount owing to Jones Ltd. regarding the June 2 purchase. SECTION ECLOSING JOURNAL ENTRIES The items that follow appeared in the Income Statement columns of the work sheet prepared for a sole proprietorship at year-end. Also, the owner's withdrawal account was debited for $12,000 during the year ended December 31. a. Prepare closing journal entries for the business. Income Statement Revenue from services Office salaries expense Rent expense $97,400 $28,1 00 13,8 00 Insurance expense 1, 700 Office plies expense sup Amortization expense, office equipment 800 Net income 4 800 $49,2 00 $97,400 48 200 $97,4 00 $97,400
