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(Renata) Ch. 9 Summative

The document outlines the adjustments for depreciation of fixed assets, including office equipment, automobiles, and buildings, along with additional financial information for the year ended December 31, 2015. It includes a detailed trial balance, income statement, and balance sheet reflecting various expenses, net income, and asset valuations. The adjustments account for depreciation, insurance, interest, supplies, salaries, and doubtful accounts, culminating in a net income of $40,042.90.

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110 views7 pages

(Renata) Ch. 9 Summative

The document outlines the adjustments for depreciation of fixed assets, including office equipment, automobiles, and buildings, along with additional financial information for the year ended December 31, 2015. It includes a detailed trial balance, income statement, and balance sheet reflecting various expenses, net income, and asset valuations. The adjustments account for depreciation, insurance, interest, supplies, salaries, and doubtful accounts, culminating in a net income of $40,042.90.

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renatamickus
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Adjusting for Depreciation of Fixed Assets

1 Office Equipment - 30,100-


Accumulated Depreciation at start of period - 15,000-
Salvage Value - 100-
Useful Life 6 years
Adjust for the whole year $5,000.00

2 Automobile - 14,200.00-
Accumulated Depreciation at start of period - 9,546.94-
Rate: 20%
Adjust for the whole year $930.61

3 Building - 147,100.00-
Accumulated Depreciation at start of period - 8,650.66-
Rate: 2%
Adjust for the whole year $2,768.99

Additional Information for Adjustments

4 Insurance Policy premium at start of period: ( 12,900)


Duration of the insurance policy 40 months
Adjust for December only ( 322.50)

5 Interest is deducted directly from the bank account. The


interest rate (per year) for all debt is: 9.6%
Total of loans and mortgages: ( 64,500)
Adjust for December only ( 516)

6 Supplies on hand at month end were: ( 6,000)

7 Year end was exactly one quarter of the way through a pay
period. Salaries need to be expensed and accrued (S/P). A
pay period total is: ( 11,900)

8 The Senior Accountant informs you that an account will not


be collected (doubtful account). She tells you to expense it
and add it to the contra account. It is valued at: ( 244)
D. Virk, Chartered Accountants Worksheet Year Ended: December 31, 2015
Trial Balance Adjustments Income Statement Balance Sheet
Accounts
DR CR DR CR DR CR DR CR
Bank ( 26,865.00) ( 516.00) ( 26,349.00)
Accounts Receivable ( 9,650.00) ( 9,650.00)
Allowance for Doubtful Accounts ( 610.00) ( 244.00) ( 854.00)
Supplies ( 7,000.00) ( 1,000.00) ( 6,000.00)
Prepaid Insurance ( 12,900.00) ( 322.50) ( 12,577.50)
Building ( 147,100.00) ( 147,100.00)
Accumulated Amortization - Building ( 8,650.66) ( 2,768.99) ( 11,419.64)
Office Equipment ( 30,100.00) ( 30,100.00)
Accumulated Amortization - Equipment ( 15,000.00) ( 5,000.00) ( 20,000.00)
Automobile ( 14,200.00) ( 14,200.00)
Accumulated Amortization - Automobile ( 9,546.94) ( 930.61) ( 10,477.56)
Accounts Payable ( 3,275.00) ( 3,275.00)
Salaries Payable ( 2,975.00) ( 2,975.00)
HST Payable ( 11,650.00) ( 11,650.00)
HST Recoverable ( 150.00) ( 150.00)
Loan Payable ( 17,500.00) ( 17,500.00)
Mortgage Payable ( 47,000.00) ( 47,000.00)
D. Virk, Capital ( 94,132.40) ( 94,132.40)
D. Virk, Drawings ( 13,200.00) ( 13,200.00)
Fees Revenue ( 77,500.00) ( 77,500.00)
Automobile Expense ( 2,400.00) ( 2,400.00)
Doubtful Accounts Expense ( 1,250.00) ( 244.00) ( 1,494.00)
Salaries Expense ( 17,900.00) ( 2,975.00) ( 20,875.00)
Utilities Expense ( 2,150.00) ( 2,150.00)
( 284,865.00) ( 284,865.00)
Insurance Expense ( 322.50) ( 322.50)
Supplies Expense ( 1,000.00) ( 1,000.00)
Mortgage & Loan Intrest Expense ( 516.00) ( 516.00)
Depreciation Expense. Equipment ( 5,000.00) ( 5,000.00)
Depreciation Expense. Building ( 2,768.99) ( 2,768.99)
Depreciation Expense. Automobile ( 930.61) ( 930.61)
( 13,757.10) ( 13,757.10) ( 37,457.10) ( 77,500.00) ( 259,326.50) ( 219,283.60)
NET INCOME 40,042.90 40,042.90
( 77,500.00) ( 77,500.00) ( 259,326.50) ( 259,326.50)

Salary accural( 8,925)


Date
Particulars PR Debit Credit
2015
Adjusting Entries

Dec 31 Depreciation Expense. Equipment ( 5,000.00)


Accumulated Amortization - Equipment ( 5,000.00)

31 Depreciation Expense. Automobile ( 930.61)


Accumulated Amortization - Automobile ( 930.61)

31 Depreciation Expense. Building ( 2,768.99)


Accumulated Amortization - Building ( 2,768.99)

31 Insurance Expense ( 322.50)


Prepaid Insurance ( 322.50)

31 Bank ( 516.00)
Mortgage & Loan Intrest Expense ( 516.00)

31 Supplies Expense ( 1,000.00)


Supplies ( 1,000.00)

31 Salaries Expense ( 2,975.00)


Salaries Payable ( 2,975.00)

31 Doubtful Accounts Expense ( 244.00)


Allowance for Doubtful Accounts ( 244.00)
D. Virk, Chartered Accountants
Income Statement
For Year Ended December 31, 2015
Revenue
Fees Revenue ( 77,500.00)

Operating Expenses
Automobile Expense ( 2,400.00)
Doubtful Accounts Expense ( 1,494.00)
Salaries Expense ( 20,875.00)
Utilities Expense ( 2,150.00)
Insurance Expense ( 322.50)
Supplies Expense ( 1,000.00)
Mortgage & Loan Intrest Expense ( 516.00)
Depreciation Expense. Equipment ( 5,000.00)
Depreciation Expense. Building ( 2,768.99)
Depreciation Expense. Automobile ( 930.61)
Total Expenses - 37,457.10-
Net Income ($ 40,042.90)

Hint: Net Income should be the same as on the worksheet.


D. Virk, Chartered Accountants
Balance Sheet
December 31, 2015
Assets
Current Assets

Bank ( 26,349.00)
Accounts Receivable ( 9,650.00)
Allowance for Doubtful Accounts ( 854.00) - 8,796.00-
Supplies ( 6,000.00)
Prepaid Insurance ( 12,577.50) - 53,722.50-

Plant and Equipment


Building ( 147,100.00)
Less Accum Deprec - Building ( 11,419.64) - 135,680.36-
Office Equipment ( 30,100.00)
Less Accum Deprec - Equipment ( 20,000.00) - 10,100.00-
Automobile ( 14,200.00)
Less Accum Deprec - Automobile ( 10,477.56) - 3,722.44- - 149,502.80-
Total Assets - 203,225.30-

Liabilities & Owner's Equity


Current Liabilities
Accounts Payable ( 3,275.00)
Salaries Payable ( 2,975.00)
HST Payable ( 11,650.00)
HST Recoverable ( 150.00) 11,500.00 17,750.00

Long-Term Liabilities
Loan Payable ( 17,500.00)
Mortgage Payable ( 47,000.00) - 64,500.00-

D. Virk, Capital
Balance Jan 1 ( 94,132.40)
Net Income 40,042.90
Drawings ( 13,200.00)
Increase in Equity - 26,842.90-
Balance Dec 31 - 120,975.30-
Total L + OE 203,225.30
Date
Particulars PR Debit Credit

Closing Entries X
Dec 31 Fees Revenue ( 77,500.00)
Income Summary ( 77,500.00)

31 Income Summary ( 37,457.10)


Automobile ( 2,400.00)
Doubtful Accounts ( 1,494.00)
Salaries ( 20,875.00)
Utilities ( 2,150.00)
Insurance ( 322.50)
Supplies ( 1,000.00)
Mortgage & Loan Intrest ( 516.00)
Depreciation Expense. Equipment ( 5,000.00)
Depreciation Expense. Building ( 2,768.99)
Depreciation Expense. Automobile ( 930.61)

31 Income Summary ( 94,132.40)


D. Virk, Capital ( 94,132.40)

31 D. Virk, Capital ( 13,200.00)


D. Virk, Drawings ( 13,200.00)
D. Virk, Chartered Accountants
Post Closing Trial Balance
For December 31, 2015
Accounts DR CR

Bank ( 26,349.00)
Accounts Receivable ( 9,650.00)
Allowance for Doubtful Accounts ( 854.00)
Supplies ( 6,000.00)
Prepaid Insurance ( 12,577.50)
Building ( 147,100.00)
Accumulated Depreciation - Building ( 11,419.64)
Office Equiment ( 30,100.00)
Accumulated Depreciation - Equipment ( 20,000.00)
Automobile ( 14,200.00)
Accumulated Depreciation - Automobile ( 10,477.56)
Accounts Payable ( 3,275.00) ( - )
Salaries Payable ( 2,975.00)
HST Payable ( 11,650.00)
HST Recoverable ( 150.00)
Loan Payable ( 17,500.00)
Mortgage Payable ( 47,000.00)
D. Virk, Capital - 120,975.30-
Total ( 246,126.50) ( 246,126.50)

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