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