PRACTICE SET ADJUSTMENT, WORKSHEET, AND STATESMENTS

I. DEBITS AND CREDITS II. TRIAL BALANCE

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Trials Balance

ASSETS = LIABILITIES + OWNER’S EQUITY September 30, 1991

DR. CR. DR. CR. DR. CR.

+ - + - + - Cash $105

Accounts Receivable 10

Prepaid Advertising 60

WITHDRAWALS EXPENSES REVENUE Ironing Supplies 10

DR CR. DR. CR. DR. CR. Ironing Equipment 60

+ - + - + - Accounts Payable $15

Unearned Ironing Revenue 10

Instruction: Student should use the
appropriate Trial Balance figures and Linda Smith, Capital 150
adjustment on the left and journalize Linda Smith, Withdrawals 30
on the right. Journal entry description
Ironing Revenue 170
are not required.
Rent Expense 50

Telephone Expenses 20

$345 $345

III. ADJUSTING JOURNAL ENTRIES

Practice Set Adjustment- Wednesday, September 30, 1991

ANALYZING TRANSACTIONS JOURNALIZING

TRANSACTIONS

Assets = Liabilities + Owner’s Equity

a. One month of scheduled advertising appeared

in the school newspaper. See Transaction 2, page A8. DR. CR.

Prepaid Advertising Advertising Expense a. Advertising Expense 15

15 15 Prepaid Advertising 15

b. A count of Ironing Supplies revealed

approximately $5 worth on hand.

Ironing Supplies Ironing Supplies Expenses b. Ironing Supplies Expense 5

5 5 Ironing Supplies 5
 c. Depreciation was taken on equipment
with a useful life of 5 years
Accumulated Depreciation Depreciation Expense
Ironing Equipment Ironing Equipment c. Depreciation Expense
1 1 Ironing Equipment 1
Accumulated Depreciation
Ironing Equipment 1

d. On Thursday, 10/1, Linda would pay her first employee

who worked Tuesday and Thursday, $12 for the week.

Salaries Payable Salaries Expense d. Salaries Expenses 6

6 6 Salaries Payable 6

e. Ironing Services for one of the two students who had paid
in advance had been performed as of 9/30/91.

Unearned
Ironing Revenue Ironing Revenue e. Unearned Ironing Revenue 5
5 5 Ironing Revenue 5

f. On Tuesday, September 29, services had been finished

for 2 students who promised to pay $5 each on 5/10.

Accounts Receivable Ironing Revenue f. Accounts Receivable 10

10 10 Ironing Revenue 10

Instruction: The adjustment from Part III should be transposed into the adjustment
columns of the worksheet. Check the correctness of the adjustments by verifying the
Adjusted Trial Balanced Sheet. Be sure to place then letter of the adjustment to the left of
the amount as demonstrated with adjustment a.

IV. WORK SHEET

Adjusted Income Balance
Trial Balance Adjustments Trial Balance Statement Sheet

Cash 105 105 105

Accounts Received 10 (f) 10 20 20
Prepaid Advertising 60 (a) 15 45 45
Ironing Supplies 10 (b) 5 5 5
Incoming Equipment 60 60 60
Accounts Payable 15 15 15
Unearned Ironing Revenue 10 (e) 5 5 5
Capital, Linda Smith 150 150 150
Withdrawals, Linda Smith 30 30 30
Ironing Revenue 170 (e) 5 185 185
 (f) 10
Rent Expense 50 50 50
Telephone Expense 20 20 20
$345 $345
Advertising Expense (a) 15 15 15
Ironing Supplies Equipment (b) 5 5 5
Depreciation Expense,
Ironing Equipment (c) 1 1 1
Accumulated Depreciation, (c) 1 1 1
Ironing Equipment
Salaries Expense (d) 6 6 6
Salaries Payable (d) 6 6 6
42 42 362 362 97 185 265 177

88 88
185 185 265 265

V. ACCOUNTING STATEMENTS

Instruction: use the Adjusted Trial Balance above to complete an Income Statement and Balance Sheet.

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Income Statement Balance Sheet
For the Month Ended Sept. 30, 1991 September 30, 1991

ASSETS LIABILITIES
Revenue: Current Assets: Current Liabilities:
Ironing Revenue $185 Cash $105 Accounts Payable $15
Account Receivable 20 Unearned Ironing
Operating Expenses: Prepaid Advertising 45 Revenue 5
Rent $50 Ironing Supplies 5 Salaries Payable 6
Telephone 20 Ironing Equipment $60 Total Liabilities $ 26
Advertising 15 Less Accumulated
Ironing Supplies 5 Depreciation 1 59 OWNER’S EQUITY
Depreciation Expense,
Ironing Equipment 1 Capital Sept. 1 $150
Salaries 6 Income $88
Withdrawal 30 58
Total Operating Expenses 97 Total Liabilities + 208
Net Income $ 88 Total Assets $234 Owner’s Equity $234