A review of the ledger of Baylor Company at December 31, 2020, produces the following data pertaining to the preparation of annual adjusting entries.

1. Salaries and Wages Payable $0. There are eight employees. Salaries and wages are paid every Friday for the current week. Five employees receive$700 each per week, and three employees earn $600 each per week. December 31 is a Tuesday. Employees do not work weekends. All employees worked the last 2 days of December.

2. Unearned Rent Revenue$429,000. The company began subleasing office space in its new building on November 1. Each tenant is required to make a $5,000 security deposit that is not refundable until occupancy is terminated. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease.

$$\begin{array}{lccccc} \underline{\hspace{20pt}\text{Date}\hspace{20pt}}&&\underline{\hspace{10pt}\text{Term (in months)}\hspace{10pt}}&\hspace{10pt}&\underline{\hspace{10pt}\text{Monthly Rent}\hspace{10pt}}&&\underline{\hspace{10pt}\text{Number of Leases}\hspace{10pt}}&\hspace{10pt}\\ \text{Nov. 1}&&6&\hspace{10pt}&\text{\$6,000}&&5\\ \text{Dec. 1}&&6&&\text{\$8,500}&&4\\ \end{array}$$

3. Prepaid Advertising $13,200. This balance consists of payments on two advertising contracts. The contracts provide for monthly advertising in two trade magazines. The terms of the contracts are as shown below.

$$\begin{array}{cccccc} \underline{\hspace{20pt}\text{Contract}\hspace{20pt}}&&\underline{\hspace{10pt}\text{Date}\hspace{10pt}}&\hspace{10pt}&\underline{\hspace{10pt}\text{Amount}\hspace{10pt}}&&\underline{\hspace{10pt}\text{Number of Magazine Issues}\hspace{10pt}}&\hspace{10pt}\\ \text{A650}&&\text{May 1}&\hspace{10pt}&\text{\$6,000}&&12\\ \text{B974}&&\text{Oct. 1}&&\text{\$7,200}&&24\\ \end{array}$$

The first advertisement runs in the month in which the contract is signed.

4. Notes Payable $60,000. This balance consists of a note for one year at an annual interest rate of 12%, dated June 1.

Prepare the adjusting entries at December 31, 2020. (Show all computations).

Andy Roddick is the new owner of Ace Computer Services. At the end of August 2020, his first month of ownership, Roddick is trying to prepare monthly financial statements. Below is some information related to unrecorded expenses that the business incurred during August.

1. At August 31, Roddick owed his employees $1,900 in wages that will be paid on September 1.

2. At the end of the month, he had not yet received the month's utility bill. Based on past experience, he estimated the bill would be approximately$600.

3. On August 1, Roddick borrowed $30,000 from a local bank on a 15-year mortgage. The annual interest rate is 8%.

4. A telephone bill in the amount of$117 covering August charges is unpaid at August 31.

Prepare the adjusting journal entries as of August 31, 2020, suggested by the information above.

The ledger of Duggan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.

$$\begin{array} {lrr} \textbf{}&\textbf{Debit}&\textbf{Credit}\\ \\ \text{Prepaid Insurance}\hspace{105pt} \ &\ \text{\$\hspace{10pt}3,600}&\\ \text{Supplies}\hspace{40pt}& \text{2,800}&\\ \text{Equipment}\hspace{81pt}& \text{25,000}&\\ \text{Accumulated Depreciation-Equipment}\hspace{52pt} && \text{\$\hspace{10pt}8,400} &\\ \text{Notes Payable}\hspace{59pt}&& \text{20,000}&\\ \text{Unearned Rent Revenue}\hspace{59pt}&& \text{9,300}&\\ \text{Rent Revenue}\hspace{65pt}&& \text{60,000}&\\ \text{Interest Expense}\hspace{59pt}& \text{-0-}&\\ \text{Salaries and Wages Expense}\hspace{65pt}& \text{14,000}&\\ \end{array}$$

An analysis of the accounts shows the following.

1. The equipment depreciates $250 per month.

2. One-third of the unearned rent was recognized as revenue during the quarter.

3. Interest of$500 is accrued on the notes payable.

4. Supplies on hand total $850.

5. Insurance expires at the rate of$300 per month.

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are Depreciation Expense. Insurance Expense, Interest Payable, and Supplies Expense. (Omit explanations.)

Cullumber Company's trial balance on December 31 shows Supplies of $8,900 and Supplies Expenses of$0. On December 31, there are $2,000 of supplies on hand. Prepare the adjusting entry on December 31.

At the end of its first year, the trial balance of Cullumber Company shows Equipment of $23,000 and zero balances in Accumulated Depreciation Equipment and Depreciation Expenses. Depreciation for the year is estimated to be$2,800. Prepare the annual adjusting entry for depreciation on December 31.

Define each of the following terms:

Permanent current assets; temporary current assets

Andy Roddick is the new owner of Ace Computer Services. At the end of August 2017, his first month of ownership, Roddick is trying to prepare monthly financial statements. Below is some information related to unrecorded expenses that the business incurred during August.

1. At August 31, Roddick owed his employees $1,900 in wages that will be paid on September 1.
2. At the end of the month, he had not yet received the month’s utility bill. Based on past experience, he estimated the bill would be approximately$600.
3. On August 1, Roddick borrowed $30,000 from a local bank on a 15-year mortgage. The annual interest rate is 8%.
4. A telephone bill in the amount of$117 covering August charges is unpaid at August 31.

Scratch Miniature Golf and Driving Range Inc. was opened on March 1 by Rick Fowler. The following selected events and transactions occurred during March.

Scratch uses the following accounts: Cash, Prepaid Insurance, Land, Buildings, Equipment, Accounts Payable, Common Stock, Dividends, Service Revenue, Advertising Expense, and Salaries and Wages Expense.

Journalize the March transactions. (Provide explanations for the journal entries.)

Presented below are the captions of Faulk Company's balance sheet.

Instructions

Indicate by letter where each of the following items would be classified.

The adjusted trial balance for Okabe Company is presented in the previous exercise.

Instructions
Prepare a classified balance sheet at July 31.

For each item below, indicate to which category of elements of financial statements it belongs.

a. Retained earnings.

Jill Accardo, M.D., maintains the accounting records of Accardo Clinic on a cash basis. During 2017, Dr. Accardo collected $142,600 from her patients and paid$55,470 in expenses. At January 1, 2017, and December 31, 2017, she had accounts receivable, unearned service revenue, accrued expenses, and prepaid expenses as follows. (All long-lived assets are rented.)

$$\begin{array}{lcc} {\text{}}&\text{\underline{January 1, 2017}}&\text{\underline{December 31, 2017}}\\ \text{Accounts receivable}&\text{\$\hspace{10pt}9,250}&\text{\$\hspace{10pt}15,927}\\ \text{Unearned service revenue}&\text{\hspace{15pt}2,840}&\text{\hspace{20pt}4,111}\\ \text{Accrued expenses}&\text{\hspace{15pt}3,435}&\text{\hspace{20pt}2,108}\\ \text{Prepaid expenses}&\text{\hspace{15pt}1,917}&\text{\hspace{20pt}3,232}\\ \end{array}$$

Prepare a schedule that converts Dr. Accardo’s “excess of cash collected over cash disbursed” for the year 2017 to net income on an accrual basis for the year 2017.

Jill Accardo, M.D., maintains the accounting records of Accardo Clinic on a cash basis. During 2020, Dr. Accardo collected $142,600 from her patients and paid$55,470 in expenses. At January 1, 2020, and December 31, 2020, she had accounts receivable, unearned service revenue, accrued expenses, and prepaid expenses as follows. (All long-lived assets are rented.)

Prepare a schedule that converts Dr. Accardo's "excess of cash collected over cash disbursed" for the year 2020 to net income on an accrual basis for the year 2020.

The adjusted trial balance of Lopez Company shows the following data pertaining to sales at the end of its fiscal year. October 31, 2020: Sales Revenue $800,000, Delivery Expense$12,000, Sales Returns and Allowances $24,000, and Sales Discounts$15,000.

Instructions

a. Prepare the revenues section of the income statement.

b. Prepare separate closing entries for (1) sales and (2) the contra accounts to sales.