Problem 4D: Adjusting Entries, Posting, and Trial Balance

1

Problem 4d: Adjusting Entries, Posting, and Trial Balance

1.Charles Fox has been operating the Fox Limousine Service for the past six years. Fox Limousine Service's unadjusted trial balance as of March 31 is shown below. Based on the unadjusted trial balance, determine the Fox Limousine Service's net income (loss) for March.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
A) / $2,060
B) / $635
C) / $4,115
D) / $4,750
E) / $360

2.Based on the unadjusted trial balance, determine Fox Limousine Service's total assets on March 31.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
A) / $12,950
B) / $2,500
C) / $6,060
D) / $8,560
E) / $5,560

3.Based on the unadjusted trial balance, determine Fox Limousine Service's total liabilities on March 31.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
A) / $2,500
B) / $12,950
C) / $900
D) / $8,560
E) / $6,500

4.Based on the unadjusted trial balance, determine Fox Limousine Service's total stockholders' equity on March 31.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
A) / $2,500
B) / $4,000
C) / $6,060
D) / $12,950
E) / $5,700

5.Fox Limousine Service's unadjusted trial balance as of March 31 is shown below. By addition and subtraction, show the effects of the following information on Fox Limousine Service's resources and sources of resources. An examination of the supplies revealed that only $425 of supplies were on hand on March 31. $175 of supplies had been used up in March.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / + $175 & - $175
B) / + $425 / + $425
C) / + $425 / + $425
D) / - $175 / - $175
E) / - $175 / - $175

6.Fox Limousine Service's unadjusted trial balance as of March 31 is shown below. By addition and subtraction, show the effects of the following information on Fox Limousine Service's resources and sources of resources. The prepaid rent represents $650 Fox Limousine Service paid to Chishti Auto Rental to rent a limousine for Fox Limousine Service to use in providing services to Fox's clients in March and $650 to rent it for April. $650 of the prepaid rent had been used up by the end of March.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / + $650 & - $650
B) / + $650 / + $650
C) / - $1,300 / - $1,300
D) / - $650 / - $650
E) / + $650 / + $650

7.Fox Limousine Service's unadjusted trial balance as of March 31 is shown below. By addition and subtraction, show the effects of the following information on Fox Limousine Service's resources and sources of resources. $850 of insurance had not been used up by March 31. $600 of insurance had been used up in March.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / + $600 / - $600
B) / + $850 / + $850
C) / + $850 & - $850
D) / - $600 / - $600
E) / - $850 / - $850

8.Fox Limousine Service's unadjusted trial balance as of March 31 is shown below. By addition and subtraction, show the effects of the following information on Fox Limousine Service's resources and sources of resources. By March 31, $740 of services had been provided to clients who had paid $1,600 in advance (unearned fees). At the end of March, $860 of services was still owed to customers who had paid in advance.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / - $860 / - $860
B) / + $860 / - $860
C) / - $740 / + $740
D) / + $860 / + $860
E) / - $740 / - $740

9.Fox Limousine Service's unadjusted trial balance as of March 31 is shown below. By addition and subtraction, show the effects of the following information on Fox Limousine Service's resources and sources of resources. Wages earned by employees but unpaid to them as of March 31 were $325. $2,900 of total wages had been earned by employees in March.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / + $325 / - $325
B) / - $325 / - $325
C) / + $325 / + $325
D) / - $2,900 / - $2,900
E) / + $2,900 / - $2,900

10.Fox Limousine Service's unadjusted trial balance as of March 31 is shown below. By addition and subtraction, show the effects of the following information on Fox Limousine Service's resources and sources of resources. Federal income taxes for March were estimated to be $375. Taxes will be paid in April.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
Resources / Sources of Borrowed Resources / Sources of Owner Invested Resources / Sources of Management Generated Resources
Assets / Liabilities / Stockholders’ Equity
A) / - $375 / - $375
B) / + $375 / + $375
C) / - $375 / - $375
D) / - $375 / + $375
E) / + $375 / - $375

11. Fox Limousine Service's unadjusted trial balance as of March 31 is shown below. An examination of the supplies revealed that only $425 of supplies were on hand on March 31. $175 of supplies had been used up in March. Prepare the adjusting entry required to account for this information.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
A) / Supplies Expense / $175
Supplies / $175
B) / Supplies / $425
Cash / $425
C) / Supplies / $425
Accounts Payable / $425
D) / Supplies / $175
Supplies Expense / $175
E) / Supplies Expense / $425
Supplies / $425

12.Fox Limousine Service's unadjusted trial balance as of March 31 is shown below. The prepaid rent represents $650 Fox Limousine Service paid to Chishti Auto Rental to rent a limousine for Fox Limousine Service to use in providing services to Fox's clients in March and $650 to rent it for April. $650 of the prepaid rent had been used up by the end of March. Prepare the adjusting entry required to account for this information.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
A) / Rent Expense / $1,300
Prepaid Rent / $1,300
B) / Rent Expense / $650
Cash / $650
C) / Rent Expense / $650
Prepaid Rent / $650
D) / Prepaid Rent / $1,300
Rent Expense / $1,300
E) / Prepaid Rent / $650
Rent Expense / $650

13.Fox Limousine Service's unadjusted trial balance as of March 31 is shown below. $850 of insurance had not been used up by March 31. $600 of insurance had been used up in March. Prepare the adjusting entry required to account for this information.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
A) / Prepaid Insurance / $600
Insurance Expense / $600
B) / Insurance Expense / $850
Prepaid Insurance / $850
C) / Prepaid Insurance / $850
Cash / $850
D) / Insurance Expense / $600
Prepaid Insurance / $600
E) / Prepaid Insurance / $850
Insurance Expense / $850

14.Fox Limousine Service's unadjusted trial balance as of March 31 is shown below. By March 31, $740 of services had been provided to clients who had paid $1,600 in advance (unearned fees). At the end of March, $860 of services were still owed to customers who had paid in advance. Prepare the adjusting entry required to account for this information.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
A) / Fees Revenue / $740
Unearned Fees / $740
B) / Unearned Fees / $740
Fees Revenue / $740
C) / Fees Revenue / $860
Unearned Fees / $860
D) / Unearned Fees / $860
Fees Revenue / $860
E) / Cash / $740
Fees Revenue / $740

15.Fox Limousine Service's unadjusted trial balance as of March 31 is shown below. Wages earned by employees but unpaid to them as of March 31 were $325. $2,900 of total wages had been earned by employees in March. Prepare the adjusting entry required to account for this information.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
A) / Wages Expense / $325
Cash / $325
B) / Wages Payable / $325
Wages Expense / $325
C) / Wages Expense / $2,900
Wages Payable / $2,900
D) / Wages Expense / $325
Wages Payable / $325
E) / Wages Payable / $2,900
Wages Expense / $2,900

16.Fox Limousine Service's unadjusted trial balance as of March 31 is shown below. Federal income taxes for March were estimated to be $375. Taxes will be paid in April. Prepare the adjusting entry required to account for this information.

Fox Limousine Service
Unadjusted Trial Balance

March 31

Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $600
Prepaid Insurance / $0
Prepaid Rent / $1,300
Accounts Payable / $900
Wages Payable / $0
Income Taxes Payable / $0
Unearned Fees / $1,600
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $4,750
Supplies Expense / $0
Insurance Expense / $1,450
Rent Expense / $0
Wages Expense / $2,575
Telephone Expense / $90
Income Taxes Expense / $0
Totals / $12,950 / $12,950
A) / Income Taxes Expense / $375
Accounts Payable / $375
B) / Income Taxes Payable / $375
Income Taxes Expense / $375
C) / Income Taxes Expense / $375
Income Taxes Payable / $375
D) / Cash / $375
Income Taxes Expense / $375
E) / Income Taxes Expense / $375
Cash / $375

17.The Fox Limousine Service's March 31 adjusted trial balance is shown below. Based on the adjusted trial balance, determine the Fox Limousine Service's net income (loss) for March.

Fox Limousine Service
Adjusted Trial Balance
March 31
Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $425
Prepaid Insurance / $850
Prepaid Rent / $650
Accounts Payable / $900
Wages Payable / $325
Income Taxes Payable / $375
Unearned Fees / $860
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $5,490
Supplies Expense / $175
Insurance Expense / $600
Rent Expense / $650
Wages Expense / $2,900
Telephone Expense / $90
Income Taxes Expense / $375
Totals / $13,650 / $13,650
A) / $700
B) / $5,490
C) / $425
D) / $4,790
E) / $2,125

18.Based on the adjusted trial balance, determine Fox Limousine Service's total assets on March 31.

Fox Limousine Service
Adjusted Trial Balance
March 31
Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $425
Prepaid Insurance / $850
Prepaid Rent / $650
Accounts Payable / $900
Wages Payable / $325
Income Taxes Payable / $375
Unearned Fees / $860
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $5,490
Supplies Expense / $175
Insurance Expense / $600
Rent Expense / $650
Wages Expense / $2,900
Telephone Expense / $90
Income Taxes Expense / $375
Totals / $13,650 / $13,650
A) / $2,460
B) / $5,560
C) / $13,650
D) / $6,125
E) / $8,585

19.Based on the adjusted trial balance, determine Fox Limousine Service's total liabilities on March 31.

Fox Limousine Service
Adjusted Trial Balance
March 31
Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $425
Prepaid Insurance / $850
Prepaid Rent / $650
Accounts Payable / $900
Wages Payable / $325
Income Taxes Payable / $375
Unearned Fees / $860
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $5,490
Supplies Expense / $175
Insurance Expense / $600
Rent Expense / $650
Wages Expense / $2,900
Telephone Expense / $90
Income Taxes Expense / $375
Totals / $13,650 / $13,650
A) / $13,650
B) / $900
C) / $1,225
D) / $2,460
E) / $1,600

20.Based on the adjusted trial balance, determine Fox Limousine Service's total stockholders’ equity on March 31.

Fox Limousine Service
Adjusted Trial Balance
March 31
Account Name / Debits / Credits
Cash / $5,560
Accounts Receivable / $1,100
Supplies / $425
Prepaid Insurance / $850
Prepaid Rent / $650
Accounts Payable / $900
Wages Payable / $325
Income Taxes Payable / $375
Unearned Fees / $860
Common Stock / $4,000
Retained Earnings / $1,700
Dividends / $275
Fees Revenue / $5,490
Supplies Expense / $175
Insurance Expense / $600
Rent Expense / $650
Wages Expense / $2,900
Telephone Expense / $90
Income Taxes Expense / $375
Totals / $13,650 / $13,650
A) / $8,585
B) / $6,125
C) / $2,460
D) / $5,700
E) / $4,000

21.Determine the dollar amount of the Fox Limousine Service’s total resources on March 31.

A) / $5,560
B) / $8,585
C) / $2,460
D) / $6,125
E) / $13,650

22.Determine the dollar amount of March 31 resources that the Fox Limousine Service obtained through borrowing.

A) / $900
B) / $13,650
C) / $1,600
D) / $2,460
E) / $1,225

23. Determine the dollar amount of March 31 resources that the Fox Limousine Service obtained from owners.

A) / $6,125
B) / $8,585
C) / $4,000
D) / $2,125
E) / $5,700

24. Determine the net dollar amount of resources that the Fox Limousine Service generated through management operations in March.

A) / $5,490
B) / $4,790
C) / $425
D) / $2,125
E) / $700

1. Determine the dollar amount of March 31 resources that the Fox Limousine Service generated through management operations since the company was formed (not just in March) and kept in the company.

A) / $2,125
B) / $8,585
C) / $1,700
D) / $6,125
E) / $2,460