EX. 4-1 (S.O. 1, 2, and 3) King Oliver began Jazz Company on January 1, 2006. At December 31, 2006, the company had the following adjustment data.
a. Inventory clerk, Count Basie, determined that $4,000 of supplies were on hand.
b. The insurance was obtained through the Dizzy Gillespie Insurance Agency; during the year $3,000 of the insurance had expired.
c. The equipment was purchased from Miles Davis on January 1, 2006 and it is depreciated at a rate of $1,000 per year.
d. Unearned fees of $450 were earned as a result of the Duke Ellington concert on December 4.
e. Fees earned from the Ella Fitzgerald performance on December 31 totaling $2,250 have not been billed.
f. The note payable was a loan from Louis Armstrong; interest of $300 has accrued at December 31.
g. A salary of $850 earned by Jimmy Dorsey in December has not been recorded or paid.
Instructions
(a) Enter the adjustments in the adjustment columns of the work sheet that follows and complete the work sheet (use 10-column paper).
(b) Prepare the closing entries at December 31.
(c) Prepare a post-closing trial balance at December 31.
(a)
| JAZZ COMPANY Work Sheet For the Year Ended Dec. 31, 2006 Adjusted Income Account Titles Trial Balance Adjustments Trial Balance Statement Balance Sheet Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. _____________________________________________________________________________________________________ Cash 6,000 Accounts Receivable 7,850 Supplies 6,000 Prepaid Insurance 9,000 Equipment 10,000 Note Payable 9,750 Unearned Fees 3,100 Common Stock 4,000 Retained Earnings 8,000 Fees Earned 22,000 Salaries Expense 8,000 ______ Totals 46,850 46,850 Supplies Expense Insurance Expense Accumulated Depr. Depreciation Expense Interest Expense Interest Payable Salaries Payable Totals Net Income  Totals |
(b)
(c) JAZZ COMPANY
Post-Closing Trial Balance
December 31, 2006
Debit Credit
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SOLUTIONS TO REVIEW QUESTIONS AND EXERCISES
TRUE-FALSE
1. (T)
2. (F) If total debits exceed total credits, a net loss has occurred.
3. (T)
4. (F) Since a work sheet is not a journal, it should not be used as a basis for posting to ledger accounts.
5. (T)
6. (T)
7. (T)
8. (T)
9. (T)
10. (F) Dividends is credited and Retained Earnings is debited.
11. (F) Income Summary is only used in preparing closing entries.
12. (F) The post-closing trial balance will contain only balance sheet accounts.
13. (T)
14. (F) Correcting entries are made whenever an error is discovered.
15. (F) The operating cycle is the average time required to go from cash to cash in producing revenues.
16. (T)
17. (T)
18. (F) Property, plant, and equipment are reported at cost less accumulated depreciation.
19. (T)
20. (T)
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