HAILEY COLLEGE OF BANKING AND FINANCE

CORPORATE FINANCIAL REPORTING

COMPLETION OF FINANCIAL STATEMENTS

Q. No. 1: Ithaca Services Co. offers cleaning services to business clients. The trial balance for Ithaca Services Co.
has been prepared on the work sheet for the year ended January 31, 2006, shown below.

Ithaca Services Co.

Work Sheet
For the Year Ended January 31, 2006
Adjusted
Trial Balance Adjustments Trial Balance
Account Title Dr. Cr. Dr. Cr. Dr. Cr.
Cash 8
Accounts Receivable 50
Supplies 8
Prepaid Insurance 12
Land 50
Equipment 32
Accumulated Depr.—Equip. 2
Accounts Payable 26
Wages Payable 0
Terry Dagley, Capital 112
Terry Dagley, Drawing 8
Fees Earned 60
Wages Expense 16
Rent Expense 8
Insurance Expense 0
Utilities Expense 6
Depreciation Expense 0
Supplies Expense 0
Miscellaneous Expense 2
Totals 200 200

The data for year-end adjustments are as follows:

a) Fees earned, but not yet billed, $7.
b) Supplies on hand, $3.
c) Insurance premiums expired, $6.
d) Depreciation expense, $5.
e) Wages accrued, but not paid, $1

Required:
Enter the adjustment data, and place the balances in the Adjusted Trial Balance columns
Q. No. 2: Ithaca Services Co. offers cleaning services to business clients. Complete the following work sheet for
Ithaca Services Co.
Ithaca Services Co.
Work Sheet
For the Year Ended January 31, 2006
Adjusted Income
Trial Balance Statement Balance Sheet
Account Title Dr. Cr. Dr. Cr. Dr. Cr.
Cash 8
Accounts Receivable 57
Supplies 3
Prepaid Insurance 6
Land 50
Equipment 32
Accumulated Depr.—Equip. 7
Accounts Payable 26
Wages Payable 1
Terry Dagley, Capital 112
Terry Dagley, Drawing 8
Fees Earned 67
Wages Expense 17
Rent Expense 8
Insurance Expense 6
Utilities Expense 6
Depreciation Expense 5
Supplies Expense 5
Miscellaneous Expense 2
Totals 213 213
Based upon the data, prepare an income statement, statement of owner’s equity, and balance sheet for Ithaca
Services Co. Furthermore, complete the worksheet as given above.

Q. No. 3: The trial balance of Dynamite Laundry at July 31, 2006, the end of the current fiscal year, and the data
needed to determine year-end adjustments are as follows:
Trial Balance
July 31, 2006
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,900
Laundry Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500
Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,800
Laundry Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,050
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,100
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100
David Duffy, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,800
David Duffy, Drawing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
Laundry Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,000
Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,400
Rent Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,000
Utilities Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,650
Miscellaneous Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,700
250,000 250,000
 a. Wages accrued but not paid at July 31 are $1,200.
b. Depreciation of equipment during the year is $6,800.
c. Laundry supplies on hand at July 31 are $1,750.
d. Insurance premiums expired during the year are $2,400.
Instructions
a. Enter the trial balance on a ten-column work sheet and complete the work sheet. Add accounts as
needed.
b. Prepare an income statement, a statement of owner’s equity (no additional investments were made
during the year), and a balance sheet.
c. On the basis of the adjustment data in the work sheet, journalize the adjusting entries.

Q. No. 4: Heritage Company offers legal consulting advice to death-row inmates. Heritage Company prepared the
following trial balance at April 30, 2006, the end of the current fiscal year:
Trial Balance
April 30, 2006
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,500
Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,800
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,350
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136,500
Accumulated Depreciation—Building . . . . . . . . . . . . . . . . . . . . . 50,700
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92,700
Accumulated Depreciation—Equipment . . . . . . . . . . . . . . . . . . . . . . . . 36,300
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500
Unearned Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Shelby Powers, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212,500
Shelby Powers, Drawing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Fees Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191,000
Salaries and Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,200
Advertising Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,200
Utilities Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000
Repairs Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,500
Miscellaneous Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,050
500,000 500,000
The data needed to determine year-end adjustments are as follows:
a. Accrued fees revenue at April 30 are $2,800.
b. Insurance expired during the year is $450.
c. Supplies on hand at April 30 are $650.
d. Depreciation of building for the year is $1,620.
e. Depreciation of equipment for the year is $3,500.
f. Accrued salaries and wages at April 30 are $1,800.
g. Unearned rent at April 30 is $1,500.
Instructions
1. Enter the trial balance on a ten-column work sheet and complete the work sheet. Add accounts as
needed.
2. Journalize the adjusting entries, adding accounts as needed.
3. Prepare an adjusted trial balance of April 30, 2006.
4. Prepare an income statement for the year ended April 30.
5. Prepare a statement of owner’s equity for the year ended April 30. No additional investments were made
during the year.
6. Prepare a balance sheet as of April 30.