Chapter 3 Accrual Accounting Concepts 141Total
Net Total Total Stockholders’
Income Assets Liabilities Equity
Reported amounts $207,320 $440,960 $29,720 $411,240
Corrections:
Adjustment (a) 1,025 1,025 0 1,025
Adjustment (b)Adjustment (c)
Adjustment (d)Corrected amountsAdjustment data for Giddy Laundry, Inc., for the year ended July 31, 2007, are as follows:a. Wages accrued but not paid at July 31, $2,000.
b. Depreciation of equipment during the year, $8,000.
c. Laundry supplies on hand at July 31, $1,250.
d. Insurance premiums expired during the year, $2,100.Instructions
- Using the integrated financial statement framework shown below, record each adjustment
to the appropriate accounts identifying each adjustment by its letter. After all adjustments
are recorded, determine the balances.
Alternate Problem
3-6B
Adjustment process and
financial statements
Goals3, 4
- Net income, $101,050
GENERAL LEDGER
- Prepare an income statement and retained earnings statement for the year ended July 31,
2007. The retained earnings balance as of August 1, 2006, was $23,800. - Prepare a classified balance sheet as of July 31, 2007.
- Prepare a statement of cash flows for the year ended July 31, 2007.
Balance Sheet
Assets Liabilities Stockholders’ Equity
Laundry Prepaid Laundry Acc. Accts. Wages Capital Retained
CashSuppliesInsurance Equip.Deprec.PayablePayableStockEarnings
20,000 4, 800 3, 800 18 0,000 36,000 4,100 0 30,000 138 ,500Statement of Cash Flows
Operating (Revenues) 225,000
Financing (Capital Stock) 7,500
Operating (Expenses) 125,000
Investing (Equipment) 90,000
Financing (Dividends) 2,000
Net increase in cash 15,500
Beginning cash balance 4,500
Ending cash balance 20,000Statement of
Cash FlowsIncome
StatementIncome Statement
July 225,000 Laundry revenue
July 65,000 Wages expense
July 22,500 Rent expense
July 18 ,000 Utilities expense
July 2, 8 00 Misc. expenseBalances, July 31, 2007INTEGRATED FINANCIAL
STATEMENT FRAMEWORK