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Q-1) Harvey Specter started his own firm, Specter Co. on July 1, 2011. The list of different account titles with respective balances (each account has

Q-1) Harvey Specter started his own firm, Specter Co. on July 1, 2011. The list of different account titles with respective balances (each account has a normal balance) at September 30, 2013 is as follows

Specter Co.

List of Accounts September 30, 2013

Account #

Account Title

Balance ($)

101

Cash

8,100

112

Accounts Receivable

10,800

126

Prepaid Insurance

8,400

130

Building

50,000

149

Equipment

24,000

201

Accounts Payable

20,000

209

Unearned Service Revenue

6,000

254

Capital

22,900

330

Drawing

10,000

354

Sales Revenue

60,000

333

Salaries Expenses

7,000

440

Rent Expenses

30,000

470

Advertising Expenses

3,500

380

Inventories

1,500

480

Trade mark

21,000

420

Mortgage payable

48,000

355

Dividend Revenue

19000

202

Accumulated Depreciation building

4,000

205

Supplies

5,600

Instruction:

  1. Prepare a single step income statement and owners equity statement for quarter ending September 30 and a classified balance sheet as of September 30, 2013.

(5+5+15=25 marks)

  1. Harvey just realized his accountant forgot to take account of the adjusting entries before preparing the financial statements. So, conduct necessary steps. (25marks)
  1. At the end of September unearned revenue remains unearned is $4,500.
  2. Employees are paid weekly and at the end of the week. September 30 is Wednesday and employees are paid on Thursdays. Company has three employees, who are paid $3,750 each for a 5-day work week (Sunday Thursday).
  3. Insurance policy is for 2-years (policy covers from August 01, 2013 to July 31, 2015).
  4. The equipment has a 5-year life (purchased on July 1, 2013). It is being depreciated at $400 per month for 60 months.
  5. Mortgage interest rate is 12%. (Mortgage taken out on July 01, 2013 for 2 years).
  6. Utilities expense incurred but not paid on September 30, 2013, $250.
  7. $600 of supplies has been used.
  8. Invoices representing $1,150 of services performed during the month have not been recorded as of September 30.

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