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Exercise 2 SARA's's Landry is a small business owned by Sara Ricchi. She provided us with the documents for the year ended December, 31, 2020. She is concerned that there are a number of errors in all documents made by her accountants (at least 15 wrong amounts). Required: Determine what those errors are and correctly recalculate amounts in all documents. You can use an end-of-period spreadsheet as a correct initial data. Account Title SARA'S'S Laundry End-of-period Spreadsheet (Work Sheet) For the Year Ended December 31, 2020 Unadjusted TB Adjustments Debit Credit Debit Credit 11,000 21,500 17,900 9,600 5,700 232,600 125,400 6,500 11,800 Adjusted TB Debit Credit 11,000 3,600 3.900 232,600 131,900 11,800 1,100 1,100 105,600 105,600 Cash Laundry Supplies Prepaid Insurance Laundry Equipment accum, Depreciation Accounts Payable Wages Payable Sara Ricchi, Capital Sara Bicchi, Drawing Laundry Revenue Wages Expease Rest Expense Utilities Expense Laundry Supplies Exp. Depreciation Expense Insurance Expense Miscellaneous Expense 10,000 10,000 232,200 232,200 125,200 1,100 40,000 19,700 126,300 40,000 19,700 17,900 6,500 5,700 17,900 6,500 5,700 5,400 5,400 475,000 475,000 31,200 31,200 482,600 482,600 $232,200 SARA'S LAUNDRY Income Statement For the Year Ended December 31, 2020 Laundry revenue Expenses: Wages expense Rent expense Utilities expense Laundry supplies expense Depreciation expense Insurance expense Miscellaneous expense Total expenses Net income $126,300 40,000 19,700 3,600 6,500 5,700 5,400 221,500 $ 10,700 SARA'S LAUNDRY Statement of Owner's Equity For the Year Ended December 31, 2020 Sara Bicchi, capital, July 1, 2013 Net income for the year Less withdrawals Increase in owner's equity Sara Ricchi, capital, June 30, 2020 $105,600 $10,700 - 10,000 7,000 $112,600 SARA'S'S LAUNDRY Balance Sheet December 31, 2020 Liabilities Assets Current liabilities: Accounts payable $11,800 $ 11,000 21,500 3,900 5 13,200 $ 36,400 1,100 Current assets: Cash Laundry supplies Prepaid insurance Total current assets Property. land, and equipment: Laundry equipment Lexs accumulated depreciation Total property, plant, and equipment Total assets 12.900 $232,600 131,900 Total current liabilities Long-term labilities: Wages payable Total liabilities Owner's Equity Sara Ricchi, capital Total liabilities and owner's equity 88.000 364,5 $400,900 $100,900 Closing Entries 2020 June 30 Laundry Revenue Income Summary 232,200 232,200 30 121,500 Income Summary Wages Expense Rent Expense Utilities Expense Laundry Supplies Expense Depreciation Expense Insurance Expense Miscellaneous Expense 126,300 40,000 19,700 17,900 6,500 5,700 5,400 30 Income Summary Sara Ricchi, Capital 10,700 10,700 30 Sara Ricchi Capital Sara Ricchi, Drawing 15,000 5,000 SARA'S'S LAUNDRY Post-Closing Trial Balance December 31, 2020 Credit Balances Cast Laundry Supplies Prepaid Insurance Laundry Equipment Accumulated Depreciation Accounts Payable Wages Payable Sara Bicchi, Capital Sara Bicchi, Drawing Debit Balances 11,000 3,600 3,900 232,600 131,900 11,800 1,100 106,300 10,000 Total 383,000 119,200