Page 183 - Accounting Principles (A Business Perspective)

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400,000; and credit, USD 300,000. What was the probable cause of this difference? If this was not the cause, what
should he do to find the error?
Exercise F The Trial Balance of the Printer Repair Company at 2010 December 31, contains the following

account balances listed in alphabetical order to increase your skill in sorting amounts to the proper work sheet
columns.
Printer Repair Company
Trial Balance Account Balances
2010 December 31
Accounts Payable $ 41,000
Accounts Receivable 92,000
Accumulated Depreciation—Buildings 25,000
Accumulated Depreciation—Equipment 9,000
Buildings 140,000
Capital Stock 65,000
Cash 60,000
Equipment 36,000
Prepaid Insurance 3,600
Retained Earnings, 2010 January 1 4,800
Salaries Expense 96,000
Service Revenue 290,000
Supplies on Hand 4,000
Utilities Expense 3,200
Using these account balances and the following additional information, prepare a work sheet for Printer Repair
Company. Arrange the accounts in their approximate usual order.
• Supplies on hand at 2010 December 31, have a cost of USD 2,400.
• The balance in the Prepaid Insurance account represents the cost of a two-year insurance policy covering

the period from 2010 January 1, through 2011 December 31.
• The estimated lives of depreciable assets are buildings, 40 years, and equipment, 20 years. No salvage
values are anticipated.
Exercise G Texban Corporation had a 2010 January 1, balance in its Retained Earnings account of USD
90,000. For the year 2010, net income was USD 50,000 and dividends declared and paid were USD 24,000.
Prepare a statement of retained earnings for the year ended 2010 December 31.
Exercise H Rubino Company reported net income of USD 100,000 for the current year. Examination of the
work sheet and supporting data indicates that the following items were ignored:

• Accrued salaries were USD 6,000 at December 31.
• Depreciation on equipment acquired on July 1 amounted to USD 4,000.
Based on this information, (a) what adjusting journal entries should have been made at December 31, and (b)
what is the correct net income?
Exercise I Refer to the work sheet prepared in the Printer Repair Company exercise. Prepare the adjusting and
closing journal entries.
Exercise J The Income Statement column totals on a work sheet prepared at 2010 December 31, are debit,

USD 500,000; and credit, USD 900,000. In T-account format, show how the postings to the Income Summary
account would appear as a result of the closing process. Identify what each posting represents.
Exercise K After adjustment, these selected account balances of Cold Stream Campground are:
Debits Credits
Retained earnings $540,000.00
Rental revenue 960000
Salaries expense $336,000.00

Accounting Principles: A Business Perspective 184 A Global Text