Determining Adjusting Entries and tracing their Effects to Financial Statements

p16. Simone Jacobs opened a small tax-preparation service. At the end of its second year of operation, Jacobs Financial Advisors Service had the following trial balance.

Jacobs Financial Advisors Service trial Balance

December 31, 2014

 

 

Cash	11,265	Â
Accounts Receivable	2,191
Prepaid Insurance	520
Office Supplies	682
Office Equipment	7,980
Accumulated Depreciation—Office Equipment	Â	Â	790
Accounts Payable	Â	Â	437
Unearned Tax Fees	Â	Â	519
S. Jacobs, Capital	Â	Â	5,474
S. Jacobs, Withdrawals	7,500	Â	Â
Tax Fees Revenue	Â	Â	36,926
Office Salaries Expense	9,700	Â	Â
Advertising Expense	650	Â	Â
Rent Expense	3,200	Â	Â
Telephone Expense	458	Â	Â
Â	44,146	Â	44,146

 

The following information is also available:

a.     Office supplies on hand, December 31, 2014, $319

b.     Insurance still unexpired, $180

c.      Estimated depreciation of office equipment, $870

d.     Telephone expense for December, $182; the bill was received but not recorded.

e.      The services for all unearned tax fees had been performed by the end of the year.

 

.

 

 

 

                                                                                                                                                                               

 

REQUIRED

1.    Open T accounts for the accounts in the trial balance plus the following: Office Sup- plies Expense; Insurance Expense; and Depreciation Expense—Office Equipment. Record the balances shown in the trial balance.

2.    Determine the adjusting entries and post them directly to the T accounts.

3.    Prepare an adjusted trial balance, an income statement, a statement of owner’s equity, and a balance sheet. The owner made no investments during the period.

4.    ACCounting ConneCtion ▶ Why is it not necessary to show the effects of the above transactions on the statement of cash flows?