Hertz Limo Service was organized to provide limousine

service between
Hertz Limo Service was organized to provide limousine service between the airport and various
suburban locations. It has just completed its second year of business. Its trial balance
follows.The following information is also available:a. To obtain space at the airport, Hertz paid
two years’ rent in advance when it began the business.b. An examination of insurance policies
reveals that $2,800 expired during the year.c. To provide regular maintenance for the vehicles,
Hertz deposited $12,000 with a local garage. An examination of maintenance invoices reveals
charges of $10,944 against the deposit.d. An inventory of spare parts shows $1,902 on hand.e.
Hertz depreciates all of its limousines at the rate of 12.5 percent per year. No limousines were
purchased during the year. (Round answer to the nearest dollar.)f. A payment of $1,500 for one
full year’s interest on notes payable is now due.g. Unearned Passenger Service Revenue on
June 30 includes $17,815 for tickets that employers purchased for use by their executives but
which have not yet been redeemed.REQUIRED1. Determine the adjusting entries and enter
them in the general journal (Page 14).2. Open ledger accounts for the accounts in the trial
balance plus the following: Interest Payable (213); Rent Expense (514); Insurance Expense
(515); Spare Parts Expense (516); Depreciation Expense—Limousines (517); Maintenance
Expense (518); and Interest Expense (519). Record the balances shown in the trial balance.3.
Post the adjusting entries from the general journal to the ledger accounts, showing proper
references.4. 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.5. What effect
do the adjusting entries have on the income statement?View Solution:
Hertz Limo Service was organized to provide limousine service between
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