Q1: Read paragraphs 85 and 86 in Concepts Statement No. 5 Recognition and Measurement in Financial Statements of Business Enterprises and identify the three ways that expense can be recognized in the income statement.

Q2. Listed below are the transactions of Rook Medical., for the month of March.

March 1 Rook begins practice as a family practitioner and invests $50,000 cash.

1 Purchases medical equipment on account from JK Enterprises for $22,800.

3 Pays rent for office space, $1,500 for the month.

3 Employs a receptionist, Michelle Kwin.

4 Purchases medical supplies for cash, $1,165.

10 Receives cash of $850 from patients for services performed.

15 Bills patients $11,560 for services performed.

21 Pays JK Enterprises. on account, $7,600.

23 Withdraws $3,000 cash from the business for personal use.

26 Receives $2,600 from patients on the account.

30 Bills patients $6,890 for services performed.

31 Pays the following expenses in cash: Salaries and wages $2,500; miscellaneous office expenses $910.

31 Medical supplies used during the month, $695.

Instructions

(a) Enter the transactions shown above in appropriate general ledger accounts (use T-accounts). Use the following ledger accounts: Cash, Accounts Receivable, Supplies, Equipment, Accumulated DepreciationEquipment, Accounts Payable, Owners Capital, Service Revenue, Rent Expense, Office Expense, Salaries and Wages Expense, Supplies Expense, Depreciation Expense, and Income Summary. Allow 10 lines for the Cash and Income Summary accounts, and 5 lines for each of the other accounts needed. Record depreciation using a 5-year life on the equipment, the straight-line method, and no salvage value. Do not use a drawing account. You may close income summary account into Owners Capital account.

(b) Prepare an income statement, a statement of owners equity, and an unclassified balance sheet.

Q3. A review of the ledger of Dallas Company at December 31, 2017, produces the following data pertaining to the preparation of annual adjusting entries.

1. Salaries and Wages Payable $0. There are nine employees. Salaries and wages are paid every Friday for the current week. Five employees receive $850 each per week, and four employees earn $500 each per week. December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December.

2. Unearned Rent Revenue $660,000. The company began leasing office space in its new building on October 1. Each tenant is required to make a $10,000 security deposit that is not refundable until occupancy is terminated. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease.

Date Term (in months) Monthly Rent Number of Leases

Oct. 1 12 $ 8,000 2

Nov. 1 6 $10,000 1

Dec. 1 12 $ 8,500 4

3. Prepaid Advertising $23,400. This balance consists of payments on three advertising contracts. The contracts provide for monthly advertising in three trade magazines. The terms of the contracts are as shown below.

Contract Date Amount Number of Magazine Issues

J5K July 1 $6,000 12

K56 Oct 1 $8,400 12

L76H Dec 1 $9,000 6

The first advertisement runs in the month in which the contract is signed.

4. Notes Payable $108,000. This balance consists of a note for one year at an annual interest rate of 10%, dated September 1.

Q4.

Brothers Mike and Tim Hargen began operations of their tool and die shop (H & H Tool,Inc.) on January 1, 2014. The annual reporting period ends December 31. The trial balance on January 1, 2015, flows:

Account titles	Debit	Credit
Cash	6,000
Account receivable	5,000
Supplies	13,000
Land
Equipment	78,000
Accumulated depreciation (on equipment)		8,000
Other assets (not detailed to simplify)	7,000
Account payable
Wages payable
Interest payable
Income taxes payable
Long-term notes payable
Common stock (8,000 shares, $0.5 par value)		4,000
Additional paid-in capital		80,000
Retained earnings		17,000
Service revrnue
Depreciation expense
Supplies expense
Wages expense
Interest expense
Income tax expense
Remaining expense (not detailed to simplify)
Totals	109,000	109,000

Transactions during 2015 follow:

Borrowed $15,000 cash on a five-year, 8 percent note payable, dated March 1, 2015.

Purchased land for a future building site; paid cash, $13,000.

Earned $215,000 in revenues for 2015, including $52,000 on credit and the rest in cash.

Sold 4,000 additional shares of capital stock for cash at $1 market value per share on January 1, 2015.

Incurred $114,000 in Remaining Expenses for 2015, including $20,000 on credit and the rest paid in cash.

Collected accounts receivable, $34,000.

Purchased other assets, $15,000 cash.

Purchased supplies on account for future use, $27,000.

Paid accounts payable, $26,000.

Signed a three-year $33,000 service contract to start February 1, 2016.

Declared and paid cash dividends, $25,000.

Data for adjusting entries:

Supplies counted on December 31, 2015, $18,000.

Depreciation for the year on the equipment, $10,000.

Interest accrued on notes payable (to be computed).

Wages earned by employees since the December 24 payroll but not yet paid, $16,000.

Income tax expense, $11,000, payable in 2016.

Required:

Set up T-accounts for the accounts on the trial balance and enter beginning balances.

Prepare journal entries for transactions (a) through (k) and post them to the T-accounts.

Journalize and post the adjusting entries (l) through (p).

Prepare an income statement (including earnings per share), statement of stockholders' equity, and balance sheet.

Journalize and post the closing entry.