Principles of Accounting week 4 apply

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Principles of Accounting week 4 apply

Exercise 3-7 Preparing adjusting entries LO P1, P3, P4

  1. Wages of $11,000 are earned by workers but not paid as of December 31.
  2. Depreciation on the company’s equipment for the year is $10,000.
  3. The Office Supplies account had a $350 debit balance at the beginning of December. During December, $5,594 of office supplies are purchased. A physical count of supplies at December 31 shows $609 of supplies available.
  4. The Prepaid Insurance account had a $5,000 balance at the beginning of December. An analysis of insurance policies shows that $1,800 of unexpired insurance benefits remain at December 31.
  5. The company has earned (but not recorded) $750 of interest revenue for the year ended December 31. The interest payment will be received on 10 days after the year-end January 10.
  6. The company has a bank loan and has incurred (but not recorded) interest expense of $4,000 for the year ended December 31. The company will pay the interest five days after the year-end on January 5.


For each of the above separate cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31.
 

NoTransactionGeneral JournalDebitCredit
1a.Wages expenses11,000
Wages payable11,000
2b.Depreciation expense—Equipment10,000
Accumulated depreciation—Equipment10,000
3c.Supplies expenses5,335
Supplies5,335
4d.Insurance expenses3,200
Prepaid insurances3,200
5e.Interest receivable750
Interest revenue750
6f.Interest expense4,000
Interest payable4,000

Exercise 3-10 Preparing Financial Statements from a Trial Balance LO P6

Following are the accounts and balances from the adjusted trial balance of Stark Company.
 

 
Notes payable$31,000 Accumulated depreciation-Buildings$35,000 
Prepaid insurance 4,500 Accounts receivable 8,000 
Interest expense 900 Utilities expense 3,300 
Accounts payable 11,500 Interest payable 900 
Wages payable 2,400 Unearned revenue 1,800 
Cash 50,000 Supplies expense 600 
Wages expense 9,500 Buildings 240,000 
Insurance expense 3,800 Stark, Withdrawals 13,000 
Stark, Capital 144,800 Depreciation expense-Buildings 12,000 
Services revenue 120,000 Supplies 1,800 


Prepare the (1) income statement and (2) statement of owner’s equity for the year ended December 31, and (3) balance sheet at December 31. The Stark, Capital account balance was $144,800 on December 31 of the prior year.

Complete this question by entering your answers in the tabs below.

  • Income Statement
  • Statement of Owners Equity
  • Balance Sheet

Prepare the income statement for the year ended December 31.

 
STARK COMPANY Income Statement For Year Ended December 31 Services revenues $120,000 Expenses Interest expense 900 Wages expense 9,500 Insurance expense 3,800 Utilities expense 3,300 Supplies expense 600 Depreciation expense—Buildings 12,000 Total expenses 30,100 Net income $89,900
  • Income Statement
  • Statement of Owners Equity

Complete this question by entering your answers in the tabs below.

  • Income Statement
  • Statement of Owners Equity
  • Balance Sheet

Prepare the statement of owner’s equity for the year ended December 31. The Stark, Capital account balance was $144,800 on December 31 of the prior year.

 
STARK COMPANY Statement of Owner’s Equity For Year Ended December 31 Stark, Capital, Dec. 31 prior year end $144,800 Add: Net income 89,900 234,700 Less: Withdrawals 13,000 Stark, Capital, Dec. 31 current year end $221,700
  • Income Statement
  • Balance Sheet

Complete this question by entering your answers in the tabs below.

  • Income Statement
  • Statement of Owners Equity
  • Balance Sheet

Prepare the balance sheet at December 31.

 
STARK COMPANY Balance Sheet December 31 Assets Prepaid insurance $4,500   Cash 50,000   Accounts receivable 8,000   Supplies 1,800   Buildings 200,000   Accumulated depreciation—Buildings 35,000 165,000   Total assets $229,300   Liabilities Notes payable 31,000   Wages payable 2,400   Accounts payable 11,500   Interest payable 900   Unearned revenue 1,800     Total liabilities 47,600   Equity 181700     Total liabilities and equity $181,700  
  • Statement of Owners Equity
  • Balance Sheet

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