George Jarvis purchased a trailer park on January 1, 0007 It is now March 31. George has no accounting training but has kept a record of his cash receipts and cash payments for the three months. Cash Receipts $100,000 Cash Payments $168,600 216,000 8,000 350.000 Jarvis investment for trailer park shares Land Building Office equipment Mortgage payable Insurance Wages Maintenance Office supplies Utilities Property taxes Jarvis, salary Rental sales revende Mortgage interest expense Mortgage principal payments, Jan. and Feb. 4.800 4,500 400 300 900 6,000 10,500 60,000 4.667 2,000 a The building has an estimated life of 20 years and straight-line depreciation is used. b. The office equipment has a five-year life with a trade-in value of $500. The insurance was prepaid on January 1 for the entire year. d. The wages are for the maintenance worker who worked but has not yet been paid for five days during the period ending March 31, 0007. The wage is $9.95 per hour and the work day is eight hours. e. An invoice for grounds maintenance expense of $80 has not yet been paid. f. There are $100 in office supplies remaining in inventory. g. The March utility bill has not yet been received. It is estimated to be $400. h. The property taxes were paid in January for the entire year. i. A rental tenant whose fent is $200 has not yet paid for March. j. Included in the $60,000 received for rental income to date is the amount for a tenant who has prepaid for the entire year. The rent is $175 per month. 1 k. No interest or principal has been paid on the mortgage for March. Interest for March is $2.333. Principal payments for the balance of the year (including March) are $12,000 and should be identified as current mortgage payable. The balance of mortgage payable is $336,000. 5 1. The income tax is 25% of operating income and is payable in April. 2 3 1 Using accrual based accounting, prepare an adjustments worksheet, income statement for the three months ending March 31, 0007, and a balance sheet as of March 31, 0007. Worksheet March 31, 0007 Unadjusted Trial Balance ADJUSTMENTS Adjusted Trial Balance Accounts Debit Credit Debit Credit Debit Credit 7 B 9 10 11 12 13 14 15 16 17 18 1 2 3 George Jarvis Income Statement For the Year Ended March 31, 0007 4 5 6 7 8 9 10 11 + 12 13 14 15 16 17 George Jarivs Balance Sheet As at March 31, 0007 George Jarvis purchased a trailer park on January 1, 0007. It is now March 31. George has no accounting training but has kept a record of his cash receipts and cash payments for the three months. Casb Receipts $100,000 Cash Payments $168,600 216,000 8,000 350,000 Jarvis investment for trailer park shares Land Building office equipment Mortgage payable Insurance Wages Maintenance office supplies Utilities Property taxes Jarvis, salary Rental sales revenue Mortgage interest expense Mortgage principal payments, Jan. and Feb. 4,800 4,500 400 300 900 6,000 10.500 60,000 4,667 2.000 As Mr. Jarvis 's accountant, you discover the following additional information: C. a. The building has an estimated life of 20 years and straight-line depreciation is used. b. The office equipment has a five-year life with a trade-in value of $500. The insurance was prepaid on January 1 for the entire year. d. The wages are for the maintenance worker who worked but has not yet been paid for five days during the period ending March 31, 0007. The wage is $9.95 per hour and the work day is eight hours. e. An invoice for grounds maintenance expense of $80 has not yet been paid. f. There are $100 in office supplies remaining in inventory. g. The March utility bill has not yet been received. It is estimated to be $400. h. The property taxes were paid in January for the entire year. A rental tenant whose rent is $200 has not yet paid for March. j. Included in the $60,000 received for rental income to date is the amount for a tenant who has prepaid for the entire year. The rent is $175 per month. k. No interest or principal has been paid on the mortgage for March. Interest for March is $2,333. Principal payments for the balance of the year (including March) are $12,000 and should be identified as current mortgage payable. The balance of mortgage payable is $336,000. 1. The income tax is 25% of operating income and is payable in April. 1. Using accrual based accounting, prepare an adjustments worksheet, income statement for the three months ending March 31, 0007, and a balance sheet as of March 31, 0007. George Jarvis Worksheet March 31, 0007 Unadjusted Trial Balance ADJUSTMENTS Adjusted Trial Balance Debit Debit Debit Credit Credit Accounts Credit 2 3 14 15 15 17 18 19 20 21 22 George Jarivs Balance Sheet As at March 31, 0007 11 5 0 1 4 5 7 . U George Jarvis Income Statement For the Year Ended March 31, 0007 Particulars Calculations Amount ($) Revenue 60000-175*9+200 58625 216000/20 3/12 $2,700 Operating Expenses: Bilding Depritions Office Equipemt Deprtions Insurance Expense (8000-500)/5 $1,500 4800/123 $1,200 4800+9.95'8'5 $5,198 400+80 $480 Wage Expense Maintainece Expense 3. Office Supplies Expese Utilities Expense 300-100 $200 900+400 $1,300 6000/1213 $1,500 Property Tax Expense Total Operating Expenses $14,078 Operating Income $44,547 4667+2333 3 Mortgage Interest Expense Taxable income $7,000 $37,547 o $11,137 1 Net Income $26,410