On July 1, 2011, Lucinda Fogle formed a new self-storage business, KeepSafe Co. The following transactions occurred during the company’s first month.

July 1 Fogle invested $20,000 cash and buildings worth$120,000 in the company.
 2 The company rented equipment by paying $1,800 cash for the first month’s (July) rent.
 5 The company purchased$2,300 of office supplies for cash.
 10 The company paid $5,400 cash for the premium on a 12-month insurance policy. Coverage begins on July 11.
 14 The company paid an employee$900 cash for two weeks’ salary earned.
 24 The company collected $8,800 cash for storage fees from customers.
 28 The company paid$900 cash for two weeks’ salary earned by an employee.
 29 The company paid $850 cash for minor repairs to a leaking roof.
 30 The company paid$300 cash for this month’s telephone bill.
 31 Fogle withdrew $1,600 cash from the company for personal use.

The company’s chart of accounts follows:

101	Cash	401	Storage Fees Earned
106	Accounts Receivable	606	Depreciation Expense—Buildings
124	Office Supplies	622	Salaries Expense
128	Prepaid Insurance	637	Insurance Expense
173	Buildings	640	Rent Expense
174	Accumulated Depreciation—Buildings	650	Office Supplies Expense
209	Salaries Payable	684	Repairs Expense
301	L. Fogle, Capital	688	Telephone Expense
302	L. Fogle, Withdrawals	901	Income Summary

Required
1. Use the balance column format to set up each ledger account listed in its chart of accounts.
2. Prepare journal entries to record the transactions for July and post them to the ledger accounts. The company records prepaid and unearned items in balance sheet accounts.
3. Prepare an unadjusted trial balance as of July 31.
4. Use the following information to journalize and post adjusting entries for the month:
 a. Two-thirds of one month’s insurance coverage has expired.
 b. At the end of the month,$1,550 of office supplies are still available.
 c. This month’s depreciation on the buildings is $1,200.
 d. An employee earned$180 of unpaid and unrecorded salary as of month-end.
 e. The company earned $950 of storage fees that are not yet billed at month-end.
5. Prepare the income statement and the statement of owner’s equity for the month of July and the balance sheet at July 31, 2011.
6. Prepare journal entries to close the temporary accounts and post these entries to the ledger.
7. Prepare a post-closing trial balance.

On July 1, 2017, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during the company’s first month.

$$\begin{matrix} \text{July 1} & \text{Plume invested \$30,000 cash and buildings worth \$150,000 in the company in exchange for common stock.}\\ \text{2} & \text{The company rented equipment by paying \$2,000 cash for the first month’s (July) rent.}\\ \text{5} & \text{The company purchased \$2,400 of office supplies for cash.}\\ \text{10} & \text{The company paid \$7,200 cash for the premium on a 12-month insurance policy. Coverage begins on July 11.}\\ \text{14} & \text{The company paid an employee \$1,000 cash for two weeks’ salary earned.}\\ \text{24} & \text{The company collected \$9,800 cash for storage fees from customers.}\\ \text{28} & \text{The company paid \$1,000 cash for two weeks’ salary earned by an employee.}\\ \text{29} & \text{The company paid \$950 cash for minor repairs to a leaking roof.}\\ \text{30} & \text{The company paid \$400 cash for this month’s telephone bill.}\\ \text{31} & \text{The company paid \$2,000 cash in dividends.}\\ \end{matrix}$$

The company’s chart of accounts follows:

$$\begin{matrix} \text{101 } & \text{Cash} & \text{401} & \text{Storage Fees Earned}\\ \text{106} & \text{Accounts Receivable} & \text{606} & \text{Depreciation Expense—Buildings}\\ \text{124} & \text{Office Supplies} & \text{622} & \text{Salaries Expense}\\ \text{128} & \text{Prepaid Insurance} & \text{637} & \text{Insurance Expense}\\ \text{173} & \text{Buildings} & \text{640} & \text{Rent Expense}\\ \text{174} & \text{Accumulated Depreciation—Buildings} & \text{650} & \text{Office Supplies Expense}\\ \text{209 } & \text{Salaries Payable} & \text{684} & \text{Repairs Expense}\\ \text{307} & \text{Common Stock} & \text{688} & \text{Telephone Expense}\\ \text{318} & \text{Retained Earnings} & \text{901} & \text{Income Summary}\\ \text{319} & \text{Dividends}\\ \end{matrix}$$

1. Use the balance column format to set up each ledger account listed in its chart of accounts. 2. Prepare journal entries to record the transactions for July and post them to the ledger accounts. Record prepaid and unearned items in balance sheet accounts. 3. Prepare an unadjusted trial balance as of July 31. 4. Use the following information to journalize and post adjusting entries for the month: a. Two-thirds of one month’s insurance coverage has expired. b. At the end of the month, $1,525 of office supplies are still available. c. This month’s depreciation on the buildings is$1,500. d. An employee earned $100 of unpaid and unrecorded salary as of month-end. e. The company earned$1,150 of storage fees that are not yet billed at month-end. 5. Prepare the adjusted trial balance as of July 31. Prepare the income statement and the statement of retained earnings for the month of July and the balance sheet at July 31, 2017. 6. Prepare journal entries to close the temporary accounts and post these entries to the ledger. 7. Prepare a post-closing trial balance.

Shown below is the unadjusted trial balance for Alcorn Institute as of December 31, 2011, which initially records prepaid expenses and unearned revenues in balance sheet accounts. The Institute provides one-onone training to individuals who pay tuition directly to the business and offers extension training to groups in off-site locations. Shown after the trial balance are items a through h that require adjusting entries as of December 31, 2011.

Additional Information Items
a. An analysis of the Institute’s insurance policies shows that $6,400 of coverage has expired.
b. An inventory count shows that teaching supplies costing$2,500 are available at year-end 2011.
c. Annual depreciation on the equipment is $4,000.
d. Annual depreciation on the professional library is$2,000.
e. On November 1, the Institute agreed to do a special four-month course (starting immediately) for a client. The contract calls for a $4,600 monthly fee, and the client paid the first two months’ fees in advance. When the cash was received, the Unearned Training Fees account was credited. The last two month’s fees will be recorded when collected in 2012.
f. On October 15, the Institute agreed to teach a four-month class (beginning immediately) to an individual for$2,200 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (Alcorn’s accruals are applied to the nearest halfmonth; for example, October recognizes one-half month accrual.)
g. The Institute’s only employee is paid weekly. As of the end of the year, three days’ salaries have accrued at the rate of $180 per day.
h. The balance in the Prepaid Rent account represents rent for December.

Required
1. Prepare T-accounts (representing the ledger) with balances from the unadjusted trial balance.
2. Prepare the necessary adjusting journal entries for items a through h, and post them to the T-accounts. Assume that adjusting entries are made only at year-end.
3. Update balances in the T-accounts for the adjusting entries and prepare an adjusted trial balance.
4. Prepare the company’s income statement and statement of owner’s equity for the year 2011, and prepare its balance sheet as of December 31, 2011.

The following unadjusted trial balance is prepared at fiscal year-end for Foster Products Company.

$$\begin{array}{c} \textbf{FOSTER PRODUCTS COMPANY}\\ \textbf{Unadjusted Trial Balance}\\ \textbf{October 31, 2017} \end{array}$$

Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Foster Products Company uses a perpetual inventory system.

Required

1. Prepare adjusting journal entries to reflect each of the following:  a. Store supplies still available at fiscal year-end amount to $3,700.
 b. Expired insurance, an administrative expense, for the fiscal year is$2,800.
 c. Depreciation expense on store equipment, a selling expense, is $3,000 for the fiscal year.
 d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows$21,300 of inventory is still available at fiscal year-end.
2. Prepare a multiple-step income statement for fiscal year 2017 that begins with gross sales and includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses.
3. Prepare a single-step income statement for fiscal year 2017.
4. Compute the current ratio, acid-test ratio, and gross margin ratio as of October 31, 2017. (Round ratios to two decimals.)

Adjusting entries affect at least one balance sheet account and at least one income statement account. For the entries below, identify the account to be debited and the account to be credited from the following accounts: Cash; Accounts Receivable; Prepaid Insurance; Equipment; Accumulated Depreciation; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Insurance Expense; and Depreciation Expense. Indicate which of the accounts is the income statement account and which is the balance sheet account.

e. Entry to record annual depreciation expense.

Adjusting entries affect at least one balance sheet account and at least one income statement account. For the entries below, identify the account to be debited and the account to be credited from the following accounts: Cash; Accounts Receivable; Prepaid Insurance; Equipment; Accumulated Depreciation; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Insurance Expense; and Depreciation Expense.

Indicate which of the accounts is the income statement account and which is the balance sheet account.

• Entry to record annual depreciation expense.

Adjusting entries affect at least one balance sheet account and at least one income statement account. For the entries below, identify the account to be debited and the account to be credited from the following accounts: Cash; Accounts Receivable; Prepaid Insurance; Equipment; Accumulated Depreciation; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Insurance Expense; and Depreciation Expense.

Indicate which of the accounts is the income statement account and which is the balance sheet account.

• Entry to record expiration of prepaid insurance.

Adjusting entries affect at least one balance sheet account and at least one income statement account. For the entries below, identify the account to be debited and the account to be credited from the following accounts: Cash; Accounts Receivable; Prepaid Insurance; Equipment; Accumulated Depreciation; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Insurance Expense; and Depreciation Expense.

Indicate which of the accounts is the income statement account and which is the balance sheet account.

• Entry to record revenue earned but not yet billed (nor recorded).

Adjusting entries affect at least one balance sheet account and at least one income statement account. For the entries below, identify the account to be debited and the account to be credited from the following accounts: Cash; Accounts Receivable; Prepaid Insurance; Equipment; Accumulated Depreciation; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Insurance Expense; and Depreciation Expense. Indicate which of the accounts is the income statement account and which is the balance sheet account.

b. Entry to record wage expenses incurred but not yet paid (nor recorded).

The following information is from the annual financial statements of Raheem Company. Compute its accounts receivable turnover for 2016 and 2017. Compare the two years’ results and give a possible explanation for any change (competitors average a turnover of 11).

$$\begin{matrix} & \text{2017} & \text{2016} & \text{2015}\\ \text{Net sales} & \text{\$405,140} & \text{\$335,280} & \text{\$388,000}\\ \text{Accounts receivable, net (year-end)} & \text{44,800} & \text{41,400} & \text{34,800}\\ \end{matrix}$$

For each separate case below, follow the three-step process for adjusting the accrued expense account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year.

Interest Payable. At its December 31 year-end, the company owes $250 of interest on a line-of-credit loan. That interest will not be paid until sometime in January of the next year.

Classify the following adjusting entries as involving prepaid expenses (PE), unearned revenues (UR), accrued expenses (AE), or accrued revenues (AR).

______ d. To record expiration of prepaid insurance.

In its first year of operations, Roma Company reports the following.

• Earned revenues of $45,000 ($37,000 cash received from customers).

• Incurred expenses of $25,500 ($20,250 cash paid toward them).

• Prepaid $6,750 cash for costs that will not be expensed until next year.

Compute Roma’s first-year net income under the cash basis and the accrual basis of accounting.

Adjusting entries affect at least one balance sheet account and at least one income statement account. For the entries below, identify the account to be debited and the account to be credited from the following accounts: Cash; Accounts Receivable; Prepaid Insurance; Equipment; Accumulated Depreciation; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Insurance Expense; Depreciation Expense. Indicate which of the accounts is the income statement account and which is the balance sheet account. a. Entry to record revenue earned that was previously received as cash in advance. b. Entry to record wage expenses incurred but not yet paid (nor recorded). c. Entry to record revenue earned but not yet billed (nor recorded). d. Entry to record expiration of prepaid insurance. e. Entry to record annual depreciation expense.