Prepare the required adjusting journal entry for each situation as of December 31 of the current year. See the last page for the unadjusted account balances shown in T-accounts. (a) Suppose Deana's had received a $1,800 shipment of supplies in September of the current year. When counting the supplies on December 31 of the current year, Deana's found only $800 worth of supplies on hand. (b) Suppose Deana's had paid $12,000 for six months' rent on November 1 of the current year. As of December, 31 of the current year, two months' (November \& December) prepaid rent has expired. Ensure the equation still balances and debits = credits. (c) Suppose Deana's had paid $6,000 for one year's insurance on June 1 of the current year. (d) The company had acquired equipment costing $40,000 on January 1 of the current year. Suppose that the depreciation on this equipment was calculated to be $2,000 for the current year. (e) On December 1 of the current year, the company had sold $500 in gift certificates for decorating services to a customer. On December 31 of the current year, the accountant received an envelope containing $400 worth of redeemed gift certificates, not yet recorded in the company's books. Finerwe the sauation etill halanses and dahite = wrodite (f) Investments owned by the company earned $1,200 in additional interest revenue for the year; the cash will be received in January. Ensure the eauation still balances and dehits = credits. (g) The company borrowed using a note payable from the bank for $30,000 on January 1 of the current year, due with all interest on June 30 of the following year. The note payable requires 10% interest. Fnewre the equation still halanees and dehits = credits (h) The company calculated its income taxes as $26,110 for the current year ended December 31 . Fnsure the ecuuation still halances and dehits = credits. (i) On December 15 of the current year, the company declared a $750 dividend, payable January 15 of the following year. Fnsure the eruation still halances and dehits = credits Post the adjusting entries above to the T-accounts on the following page. PREPARE AN ADJUSTED TRIAL BALANCE (Part 2) Use the adjusted balanees from the T-accounts to prepare an adjusted trial balance for Deana's Decorators as of December 31 of the current year (2018). Deana's Decorators Adjusted Trial Balance December 31, 2018 FINANCIAL STATEMENTS Use the balances from the trial balance to prepare (1) an income statement (multi-step) for Deana's Decorators for the year ended December 31 of the current year and (2) a balance sheet (classified) as of December 31 of the current year (2018). Deana's Decorators Income Statement For the year ended December 31, 2018 Deana's Decorators Balance Sheet December 31, 2018 INTERPRETING THE FINANCIAL STATEMENTS (Part 3) Refer to the financial statements and calculate ratios below for each of the following categories for the current year (show all calculations and note instructor will provide additional data required): 1. Liquidity Current Ratio 2. Activity Average Collection Period Total Asset Turnover 3. Debt Debt Ratio Times Interest Earned 4. Profitability Net Profit Margin (NPM) Return of Assets (ROA) Return on Equity (ROE) Earnings Per Share (EPS) 5. Market Ratios Price/Earning (PE) Ratio
