Financial Accounting: An Integrated Statements Approach, 2nd Edition

The data necessary to adjust Socket Realty accounts from Problem 4-3A as of June 30, 2007, are

as follows:

a. Prepaid insurance expired during June, $280.

b. Office supplies on hand at June 30, $580.

c. Depreciation on office equipment, $160.

d. Unearned fees earned during June, $480.

e. Accrued fees as of June 30, $960.

f. Accrued salary and commissions as of June 30, $560.

Instructions

1. Journalize the necessary adjusting entries for June.


2. Post the adjusting entries to T accounts. Identify each adjusting entry as “Adjusting.” For
   those accounts that were adjusted, determine an adjusted balance.


3. Prepare an adjusted trial balance as of June 30.


4. Prepare an income statement, a retained earnings statement, and a classified balance sheet.


5. Journalize and post the closing entries for June. Identify each entry as “Closing.” Determine
   post-closing balances.


6. Prepare a post-closing trial balance as of June 30, 2007.


7. (Appendix) Prepare a statement of cash flows for June. Note that the June 16 payment on
   account of $640 was for a May purchase of supplies on account.


8. (Appendix) Reconcile net income with net cash flows from operations for June.

Heritage Company offers legal consulting advice to death-row inmates. Heritage Company pre-

pared the following trial balance at April 30, 2006, the end of the current fiscal year:

198 Chapter 4 Accounting Information Systems

Heritage Company

Trial Balance

April 30, 2006

Debit Credit

Balances Balances

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

Capital Stock 50,000

Retained Earnings 162,500

Dividends 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

Problem 4–5A

Adjustments and financial

statements

Goals3, 4

2. Total debit column,
   $509,720

GENERAL LEDGER

Problem 4-4A

Adjusting entries, financial

statements, closing entries

Goal3, 4

3. Total debit column,
   $99,200

GENERAL LEDGER