Unadjusted Financial Statements Stockholders' Equity Common stock Retained earnings Total liabilities and stockholders' equity $12,000 33,250 45,250 $54,150 These financial statements were prepared from the unadjusted trial balance. Cole Designs Inc. Income Statement For the Year Ended December 31, 20Y3 Fees earned $69,400 Wages expense (43,700) Net income $25,700 Cole Designs Inc. Balance Sheet December 31, 20Y3 Assets Adjusted Financial Statements These financial statements were prepared from the adjusted trial balance. Cole Designs Inc. Income Statement For the Year Ended December 31, 2013 Fees earned $75,500 Expenses: Wages expense $46,300 Supplies expense 3,400 Insurance expense Depreciation expense 1,500 Total expenses (53,700) Net Income $21,800 Cash Accounts receivable Supplies Prepaid insurance Office equipment Total assets $4,250 31,800 3,500 3,600 11,000 $54,150 2.500 Liabilities Unearned fees $8,900 $4,250 32,350 100 1,100 $11.000 (1,500) Cole Designs Inc. Balance Sheet December 31, 2013 Assets Cash Accounts receivable Supplies Prepaid insurance Office equipment Accumulated depreciation-office equipment Total assets Liabilities Wages payable Unearned fees Total liabilities Stockholders' Equity ' Common stock Retained earnings Total liabilities and stockholders' equity ' Accounting Bases a) Under which basis of accounting would adjusting entries never be recorded? b) Which accounts would most likely not be used under the cash basis of accounting? Under the accrual basis of accounting, many of the account balances in the ledger at the end of the accounting period are reported on the financial statements without change. Some accounts require updating, though. When preparing financial statements, the economic life of the business is divided into time periods. The matching principle states that? c) Under the accrual basis of accounting, the revenue recognition principle states that? 9.500 $47,300 $2,600 3,350 $5,950 $12,000 29,350 41,350 $47,300 Under which basis of accounting would adjusting entries never be recorded? d) Review the following selected transaction data of a business for April. Keeping the matching principle in mind, indicate which of the following would be used to compute net income for the month of April. . Which accounts would most likely not be used under the cash basis of accounting? a. b. C. Cash paid in April for expenses incurred in May. Cash paid in April for expenses incurred in April Cash received in April from customers for services performed in May. Expenses incurred in April but not paid until June. Services provided to customers on account during April Cash received from cash customers for services performed in April. . d. e. e f 1 For the following financial statement items, indicate Yes or No If the item was overstated, understated or neither on the financial statements prepared using the unadjusted trial balance. Overstated Understated Neither Net Income Stockholders equity Revenues Total assets Total expenses Total liabilities Adjusting Entries Journalize the six December 31 adjusting entries for Cole Designs Inc. that adjusted the accounts to arrive at the financial statements in the Adjusted Financial Statements panel. If an amount box does not require an entry, leave it blank Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31
