DAILY DRIVER, INC. Unadjusted Trial Balance At December 31 22 CHAPTER 4 Adjustments, Financial Statements, and Financial Results. Account Name Cash Supplies Prepaid Insurance Equipment Debit $ 1,000 Credit Notes 50 1,200 40,000 This equals the bank balance. Only windshield washer fluid that cost $30 remains at December 31. This amount was paid January 2 for car insurance from January 1 throu December 31 of this year. This is the car's purchase price. Accumulated Depreciation $ 2,400 The car will be two years old at the end of December. Salaries and Wages Payable 0 DDI has not yet paid or recorded $800 of salary for December. Income Tax Payable 0 DDI paid all its taxes from last year. Common Stock 25,000 DDI issued 5,000 shares at $5 each. Retained Earnings 5,430 This is the total accumulated earnings to January 1 of this year. Service Revenue 19,570 All revenue is received in cash when the service is given. Salaries and Wages Expense 8,800 Supplies Expense 100 Depreciation Expense 0 Insurance Expense 0 Fuel Expense 1,250 Income Tax Expense 0 DDI's only employee receives a monthly salary of $800 to December 3 This is the cost of windshield washer fluid used to November 30. The car's benefits are being used up about $2,400 per year. No car insurance has been paid for next year. All fuel is paid for in cash. DDI's tax rate is 20 percent of income before tax. Totals $52,400 $52,400 Required: 1. Use the notes to determine and record adjusting entries needed on December 31 for (a) sup- plies used up, (b) insurance costs, (c) using up the car's benefits, (d) salaries not yet accounted for, and (e) income taxes for the year. 2. Post the adjusting entries from requirement 1 to T-accounts to determine new adjusted balances, and prepare an adjusted trial balance. (If you are completing this exercise using the general ledger tool in Connect, this requirement will be completed automatically for you.) 3. Using the adjusted balances from requirement 2, prepare an income statement, statement of retained earnings, and classified balance sheet. E4-20 Preparing Adjusting Entries, an Adjusted Trial Balance, and Financial Statements Bill's Boards (BB) is an outdoor advertising company founded by William Longfall. William knows very little accounting so he hired a friend to "keep the books." Unfortunately, William did not review his friend's work and now it seems his friend has made a mess of the accounting records. William has provided you the following list of unadjusted account balances at BB's September 30 fiscal year-end. You have reviewed the balances with William and made notes shown in the right column. LO 4-1, 4-2, 4-3, 4-4 LEVEL UP GL 22