Homework 4

1. Latitudes Company had the following adjusted trial balance.

LATITUDES COMPANY
Adjusted Trial Balance
For the Month Ended June 30, 2020
Account Titles Debits Credits
Cash $ 3,200
Accounts Receivable 3,900
Supplies 500
Accounts Payable $ 1,800
Unearned Service Revenue 200
Share Capital-Ordinary 4,000
Retained Earnings 800
Dividends 300
Service Revenue 5,100
Salaries and Wages Expense 1,800
Miscellaneous Expense 300
Supplies Expense 2,300
Salaries and Wages Payable 400
$12,300 $12,300
Instruction:
(a) Prepare closing entries at June 30, 2020.
(b) Prepare a post-closing trial balance.

2. The trial balances of Barola Company follow with the accounts arranged in alphabetic
order. Analyze the data and prepare (a) the adjusting entries and (b) the closing entries
made by Barola Company.
Trial Balances
Unadjusted Adjusted Post-Closing
Accounts Payable $10,000 $10,000 $10,000
Accounts Receivable 2,200 3,200 3,200
Accumulated Depreciation−Equip. 13,000 17,000 17,000
Cash 60,000 60,000 60,000
Depreciation Expense 0 4,000 0
Dividends 11,000 11,000 0
Equipment 75,000 75,000 75,000
Insurance Expense 0 16,300 0
Prepaid Insurance 17,800 1,500 1,500
Prepaid Rent 15,000 11,000 11,000
Retained Earnings 52,200 52,200 72,400
Rent Expense 0 4,000 0
Salaries and Wages Expense 38,000 45,000 0
Salaries and Wages Payable 0 7,000 7,000
Service Revenue 96,000 105,000 0
Share Capital-Ordinary 30,000 30,000 30,000
Supplies 3,200 700 700
Supplies Expense 2,000 4,500 0
Unearned Service Revenue 23,000 15,000 15,000

3. Harken Company discovered the following errors made in January 2020.

(1) A payment of Salaries and Wages Expense of $600 was debited to Equipment and
credited to Cash, both for $600.
(2) A collection of $2,000 from a client on account was debited to Cash $200 and credited
to Service Revenue $200.
(3) The purchase of equipment on account for $680 was debited to Equipment $860 and
credited to Accounts Payable $860.

Instructions
Correct the errors by reversing the incorrect entry and preparing the correct entry.

4. The following items (in thousands) were taken from the financial statements of Zhao
Company. (All dollars are in thousands.)

Mortgage payable ¥2,443 Accumulated depreciation−equip.3,655

Prepaid insurance 880 Accounts payable 1,444
Equipment 13,500 Notes payable (due after 2020) 368
Long-term investments 764 Share capital—ordinary 6,000
Short-term investments 3,690 Accounts receivable 1,696
Notes payable (due in 2020) 981 Inventories 1,756
Cash 3,168 Retained earnings 10,563

Instructions
Prepare a classified statement of financial position in good form as of December 31, 2020.