CHAPTER 3 Adjusting the Accounts

Answer
BRIEF EXERCISES
1.
July 1 Prepaid Insurance............................
Dec. 31

Cash.................................
Insurance Expense.......................
Prepaid Insurance.....................

2.
July 1 Cash......................................
Dec. 31

Unearned Insurance Revenue............

Unearned Insurance Revenue..............
Insurance Revenue.....................

3.
1. Dec. 31 Interest Expense........................
Interest Payable.....................
Accounts Receivable...................
2.
31
Service Revenue....................
3.
31 Salaries Expense...........................
Salaries Payable....................

15,000
15,000
2,500
2,500

15,000
15,000
2,500
2,500

300
300
1,250
1,250
900
900

4.
LUMAS COMPANY
Incomes Statement
For the Year Ended December 31, 2002
Revenues
Service revenue......................................................................
Expenses
Salaries expense.....................................................................
Rent expense..........................................................................
Insurance expense..................................................................
Supplies expense....................................................................
Depreciation expense.............................................................

$38,400
$13,000
4,000
2,000
1,500
1,300

Total expenses...............................................................
Net income...................................................................................

21,800
$16,600

5.
LUMAS COMPANY
Owners Equity Statement
For the Year Ended December 31, 2002
Capital, January 1...............................................................................
Add: Net income...............................................................................
Less: Drawings..................................................................................
Capital, December 31.........................................................................

$15,600
16,600
32,200
6,000
$26,200

EXERCISES
1. Mar. 31 Depreciation Expense ($2503).........
Accumulated Depreciation
2.

31

Equipment.........................
Unearned Rent.......................
Rent Revenue($9,9001/3)..........

3,300
3.
31 Interest Expense.........................
Interest Payable..................
4.
31 Supplies Expense.......................
Supplies($2,800$650)............
2,150
5.
31
Insurance Expense($3003)...........
Prepaid Insurance...................

750
750
3,300

500
500
2,150

900
900