Question

ACTG 121 - Financial Accounting Canvas Homework Assignment - 30 points The Lemur Golf Co., a golf adventure company, prepared this unadjusted trial balance at the end of the month: Credit 875 The Lemur Golf Company Unadjusted Trial Balance September 30, 2019 Account Name Debit Cash 21,610 Accounts Receivable 11,900 Prepaid Insurance 6,000 Supplies 1,820 Equipment 8,750 Accumulated Depreciation - Equip Automobile 26,750 Accounts Payable Uneared Golfing Revenue Contributed Capital Dividends 2,400 Retained Earnings Golfing Adventure Revenue Golf Lesson Revenue Salaries Expense 28,210 Rent Expense 13,790 Telephone Expense 5,250 Travel Expense 1,260 Interest Expense 14,870 142,610 10,585 2,800 37,800 20,000 55,550 15,000 142,610 Make the following adjusting journal entries for the month: a Depreciation: the equipment depreciation is $875 and automobile depreciation is $268. b Insurance: the prepaid account represents 6 months of insurance, adjust for Sept. c Salary: payday is every Friday (5-day work week), the weekly payroll is $2,000. Adjust for salaries accrued if the month ends on Tuesday. d The unearned golfing revenue represents two golf adventures; one adventure was completed during the month. Required: Prepare the adjusting journal entries. After preparing the adjusting entries, prepare an Adjusted Trial Balance. Prepare an Income Statement using the Adjusted Trial Balance. Prepare a Statement of Retained Earnings. Prepare a Balance Sheet.

Answer 1

The financial statements of a company includes the preparation of Journal entries, adjusting entries, posting to ledger accounts, preparation of trial balance, income statement, Statement of Retained Earnings and Balance Sheet.
It is prepared at the end of the fiscal year to determine the net profit or loss from business activities and also ascertain the financial position on that day.

Adjusting entries:

Credit Debit 1,143 Date General Journal Sep 30 Depreciation expense Accumulated depreciation - Equipment Accumulated depreciation- Automobile (To record depreciation expense) 875 268 1,000 Sep 30 Insurance expense Prepaid insurance (To record adjustment for insurance expense) 1,000 800 Sep 30 Salaries expense Salaries payable (To record adjustment for salaries expense) 800 1,400 Sep 30 Unearned Golfing revenue Golfing Adventure Revenue (To record adjustment for unearned revenue earned) 1,400

● Adjustment for prepaid insurance for the month of September:

Prepaid insurance = $6,000
Period = 6 months

September month prepaid insurance adjustment = $6,000/ 6 × 1 = $1,000

● Adjustment for salary accrued till Tuesday :

Salary expense per day = $2,000/ 5 = $400

Salary payable from Monday to Tuesday = $400 × 2 = $800

● Adjustment for unearned revenue:

One month golfing revenue = $2,800/ 2 = $1,400

Adjusted Trial Balance:

Dr. The Lemur Golf Company Trial Balance September 30, 2019 Unadjusted Adjustment Adjusted Account Name Dr. Cr. Dr. Cr. Cr. Cash 21,6101 21,610 Accounts receivable 11,900 11,900 Prepaid insurance 6,000 1,000 5,000 Supplies 1,820 1,820 Equipment 8,750 8,750 Accumulated depreciation- Equipment 875 875 1,750 Automobile 26,750 26,750 Accumulated depreciation- Automobile 268 268 Accounts payable 10,585 10,585 Unearned Golfing Revenue 2,800 1,400 1,400 Contributed Capital 37,800 37,800 Dividends 2,400 2,400 Retained Earnings 20,000 20,000 Golfing Adventure Revenue 55,550 1,400 56,950 Golf Lesson Revenue 15,000 15,000 Salaries expense 28,210 29,010 Rent expense 13,790 13,790 Telephone expense 5,250 5,250 Travel expense 1,260 1,260 Interest expense 14,870 14,870 Insurance expense 1,000 1,000 Salaries payable 800 800 Depreciation expense 1,143 1,143 Total 142,610 142,610 4,343 4,343 144,553 144,553 800

Income statement, Statement of Retained Earnings and Balance Sheet:

71,950 The Lemur Golf Company Income Statement September 30, 2019 Revenues Golfing Adventure Revenue 56,950 Golf Lesson Revenue 15,000 Total Revenues Expenses Salaries expense 29,010 Rent expense 13,790 Telephone expense 5,250 Travel expense 1,260 Interest expense 14,870 Insurance expense 1,000 Depreciation expense 1,143 Total Expenses Net income 66,323 5,627 The Lemur Golf Company Statement of Retained Earnings September 30, 2019 Beginning balance 20,000 Net profit 5,627 Dividends -2,400 Ending balance 23,227 40,330 The Lemur Golf Company Balance Sheet September 30, 2019 Assets Current Assets Cash 21,610 Accounts receivable 11,900 Prepaid insurance 5,000 Supplies 1,820 Total Current Assets Non-Current Assets Equipment 8,750 Accumulated depreciation- Equipment -1,750 Automobile 26,750 Accumulated depreciation- Automobile Total Non-Current Assets Total Assets Liabilities and Owner's Equity Current liabilities Accounts payable 10,585 Salaries payable 800 Unearned Golfing Revenue 1,400 Total Current Liabilities Owner's Equity Contributed Capital 37,800 Retained Earnings 23,227 Total owner's equity Total Liabilities and Owner's Equity -268 33,482 73,812 12,785 61,027 73,812