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Exercise #2 Eric Baker began operations as a private investigator on January 1, 2014. The trial balance columns of the worksheet for Eric Baker, P.I.,

Exercise #2

Eric Baker began operations as a private investigator on January 1, 2014. The trial balance columns of the worksheet for Eric Baker, P.I., Inc. at March 31 are as follows.

Eric Baker P.I., Inc.

Worksheet

For the Quarter Ended March 31, 2014

Trial Balance

Account Titles

Dr.

Cr.

Cash

11,410

Accounts Receivable

5,920

Supplies

1,250

Prepaid Insurance

2,400

Equipment

30,000

Notes Payable

10,000

Accounts Payable

12,350

Common Stock

20,000

Dividends

600

Service Revenue

14,200

Salaries and Wages Expense

2,240

Travel Expense

1,300

Rent Expense

1,200

Miscellaneous Expense

230

56,550

56,550

Other data:

1.

Supplies on hand total $480.

2.

Depreciation is $720 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 $1,080.

Instructions

(a)

Enter the trial balance on a worksheet and complete the worksheet.

(b)

Prepare an income statement and a retained earnings statement for the quarter and a classified balance sheet at March 31.

(c)

Journalize the adjusting entries from the adjustments columns of the worksheet.

(d)

Journalize the closing entries from the financial statement columns of the worksheet.

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