ACC 290 Week 4 Apply: Connect® Exercise

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ACC 290 Week 4 Apply: Connect® Exercise
ACC 290 Week 4 Apply: Connect® Exercise
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ACC 290 Week 4 Apply: Connect® Exercise

Review the Knowledge Check in preparation for this assignment.

Complete the Week 4 Exercise in Connect®.

Note: You have only one attempt available to complete this assignment.

Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after your due date.

 1

Paula Judge owns Judge Creative Designs. The trial balance of the firm for January 31, 2019, the first month of operations, is shown below.

End-of-the-month adjustments must account for the following items:

  1. Supplies were purchased on January 1, 2019; inventory of supplies on January 31, 2019, is $1,500.

  2. The prepaid advertising contract was signed on January 1, 2019, and covers a four-month period.

  3. Rent of $2,000 expired during the month.

  4. Depreciation is computed using the straight-line method. The equipment has an estimated useful life of 10 years with no salvage value.

Required:

  1. Complete the worksheet for the month.

  2. Prepare an income statement, statement of owner’s equity, and balance sheet. No additional investments were made by the owner during the month.

  3. Journalize and post the adjusting entries.

Analyze

If the adjusting entries had not been made for the month, would net income be overstated or understated?

2

The trial balance of Neal Company as of January 31, 2019, after the company completed the first month of operations, is shown in the partial worksheet below.

Required:

  1. Complete the worksheet by making the following adjustments: supplies on hand at the end of the month, $7,000; expired insurance, $6,900; depreciation expense for the period, $3,000.

 

Analyze:

How does the insurance adjustment affect Prepaid Insurance?

3

The completed worksheet for Cantu Corporation as of December 31, 2019, after the company had completed the first month of operation, appears below.

CANTU CORPORATION

Worksheet

Month Ended December 31, 2019

  Trial Balance  Adjustments  Adjusted Trial Balance  Income Statement  Balance Sheet  
Account Name Debit  Credit  Debit  Credit  Debit  Credit  Debit  Credit  Debit  Credit  
Cash 76,600           76,600           76,600     
Accounts Receivable 11,400           11,400           11,400     
Supplies 8,900        5,400  8,900           3,500     
Prepaid Advertising 10,800        1,800  10,800           9,000     
Equipment 100,000           100,000           100,000     
Accumulated Depreciation—Equipment          2,000     2,000           2,000  
Accounts Payable    11,400           11,400           11,400  
Selena Cantu, Capital    107,400           107,400           107,400  
Selena Cantu, Drawing 6,600           6,600           6,600     
Fees Income    112,900           112,900     112,900        
Supplies Expense       5,400     5,400     5,400           
Advertising Expense       1,800     1,800     1,800           
Depreciation Expense-Equipment       2,000     2,000     2,000           
Salaries Expense 16,200           16,200     16,200           
Utilities Expense 1,200           1,200     1,200           
Totals 231,700  231,700  9,200  9,200  233,700  233,700  26,600  112,900  207,100  120,800  
Net Income                   86,300        86,300  
                    112,900  112,900  207,100  207,100  

Required:

  1. Prepare an income statement.

  2. Prepare a statement of owner’s equity. The owner made no additional investments during the month.

  3. Prepare a balance sheet.

Analyze:

If the adjustment to Prepaid Advertising had been $3,600 instead of $1,800, what net income would have resulted?