Page 188 - Accounting Principles (A Business Perspective)

4. Completing the accounting cycle

Expired prepaid advertising is USD 16,500.
a. Prepare a 12-column work sheet for the year ended 2010 December 31. You need not include account
numbers. Briefly explain the entries in the Adjustments columns at the bottom of the work sheet, as was done in

Exhibit 20.
b. Prepare the required closing entries.
Problem E The following trial balance and additional data are for Florida Time-Share Property Management
Company:
FLORIDA TIME-SHARE PROPERTY MANAGEMENT COMPANY
Trial Balance
2010 December 31
Debits Credits
Cash $ 424,000
Prepaid Rent 28,800
Prepaid Insurance 7,680
Supplies on Hand 2,400
Office Equipment 24,000
Accumulated Depreciation—Office Equipment $ 5,760
Automobiles 64,000
Accumulated Depreciation—Automobiles 16,000
Accounts Payable 2,880
Unearned Management Fees 12,480
Capital Stock 360,000
Retained Earnings, 2010 January 1 120,640
Dividends 28,000
Commissions Revenue 260,000
Management Fee Revenue 19,200
Salaries Expense 199,840
Advertising Expense 2,400
Gas and Oil Expense 14,240
Miscellaneous Expense 1,600
$ 796,960 $ 796,960
Insurance expense for the year, USD 3,840.
Rent expense for the year, USD 19,200.
Depreciation expense: office equipment, USD 2,880; and automobiles, USD 12,800.

Salaries earned but unpaid at December 31, USD 26,640.
Supplies on hand at December 31, USD 1,000.
The unearned management fees were received and recorded on 2010 November 1. The advance payment
covered six months' management of an apartment building.
a. Prepare a 12-column work sheet for the year ended 2010 December 31. You need not include account numbers
or explanations of adjustments.
b. Prepare an income statement.

c. Prepare a statement of retained earnings.
d. Prepare a classified balance sheet.
e. Prepare adjusting and closing entries.

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