E4-19 Preparing Adjusting Entries, an Adjusted Trial Balance, and Financial Statements

Daily Driver, Inc. (DDI), operates a driving service through a popular ride-sharing app. DDI has

prepared a list of unadjusted account balances at its December 31 year-end. You have reviewed the

balances and made notes shown in the right column.

DAILY DRIVER, INC. Unadjusted Trial Balance At December 31 Account Name Debit Credit Notes Cash $ \"110 This equals the bank balance. Supplies 50 Only windshield washer fluid that cost $30 remains at December 3]. This amount was paid January 2 for car insurance from January I through Prepaid Insurance 1,200 December 3] ofthis year. Equipment 40,000 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 DUI 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,C[|0 DDI issued 5,000 shares at $5 each. Retained Earnings 5,430 This is the total accumulated earnings to January I of this year. Service Revenue 19,5?0 All revenue is received in cash when the service is given. Salaries and Wages Expense 8,8300 DDI's only employee receives a monthly salary of $800 to December 3]. Supplies Expense 100 This is the cost of windshield washer fluid used to November 30. Depreciation Expense 0 The car's benefits are being used up about $2 400 per year. Insurance Expense 0 No car insurance has been paid for next year. Fuel Expense 1,250 All fuel is paid for in cash. Income Tax Expense 0 DDI's tax rate is 20 percent of income beare tax. Totals 3; 52,400 m Required: 1. Use the notes to determine and record adjusting entries needed on December 31 for (a) sup plies used up, (b) insurance costs. {as} using up the caris benefits. (d) salaries not yet accounted for, and {3) income taxes for the year. 2-. Post the adjusting entries from requirement 1 to Taccounts 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 idjusting Entries, an lidjusted Trial Balance, and Financial Statements LO 4-1 , 4-2, 4-3, 4-4 Billis Boards {BB} is an outdoor advertising company founded by William Longfall. William f knows very little accounting so he hired a friend to "keep the books." Unfortunately. William 15 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 yearend. You have reviewed the balances with William and made notes shown in the right column