The adjusted trial balance of Kobe Repairs on December 31, 2005, follows

Problem 4-3A Preparing trial balances, closing entries, and financial statements

The adjusted trial balance of Kobe Repairs on December 31, 2005, follows:

KOBE REPAIRS
Adjusted Trial Balance
December 31, 2005
No. Account Title Debit Credit
101 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,000
124 Office supplies . . . . . . . . . . . . . . . . . . . . . . . . . 1,200
128 Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . 1,950
167 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,000
168 Accumulated depreciation—Equipment . . . . . . . $ 4,000
201 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 12,000
210 Wages payable . . . . . . . . . . . . . . . . . . . . . . . . . 500
301 S. Kobe, Capital . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
302 S. Kobe, Withdrawals . . . . . . . . . . . . . . . . . . . . . 15,000
401 Repair fees earned . . . . . . . . . . . . . . . . . . . . . . 77,750
612 Depreciation expense—Equipment . . . . . . . . . . 4,000
623 Wages expense . . . . . . . . . . . . . . . . . . . . . . . . . 36,500
637 Insurance expense . . . . . . . . . . . . . . . . . . . . . . . 700
640 Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . 9,600
650 Office supplies expense . . . . . . . . . . . . . . . . . . . 2,600
690 Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . 1,700
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $134,250 $134,250

Required
1. Prepare an income statement and a statement of owner’s equity for the year 2005, and a classified balance sheet at December 31, 2005. There are no owner investments in 2005.
2. Enter the adjusted trial balance in the first two columns of a six-column table. Use columns three and four for closing entry information and the last two columns for a post-closing trial balance. Insert an Income Summary account as the last item in the trial balance.
3. Enter closing entry information in the six-column table and prepare journal entries for them.

Analysis Component
4. Assume for this part only that:
a. None of the $700 insurance expense had expired during the year. Instead, assume it is a prepayment of the next period’s insurance protection.
b. There are no earned and unpaid wages at the end of the year. (Hint: Reverse the $500 wages payable accrual.) Describe the financial statement changes that would result from these two assumptions.

Check (1) Ending capital balance, $47,650
(2) P-C trial balance totals, $64,150

Click here for the solution: The adjusted trial balance of Kobe Repairs on December 31, 2005, follows

Emil Skoda Company had the following adjusted trial balance

E4-7 Emil Skoda Company had the following adjusted trial balance.

EMIL SKODA COMPANY
Adjusted Trial Balance
June 30, 2008

Adjusted Trial Balance
Account Titles Debits Credits
Cash $3,712
Accounts Receivable 3,904
Supplies 480
Accounts Payable $1,792
Unearned Revenue 160
Common Stock 5,000
Retained Earnings 760
Dividends 300
Service Revenue 4,064
Salaries Expense 1,344
Miscellaneous Expense 256
Supplies Expense 2,228
Salaries Payable 448
$12,224 $12,224

Instructions
(a) Prepare closing entries at June 30, 2008.
(b) Prepare a post-closing trial balance.

Click here for the solution: Emil Skoda Company had the following adjusted trial balance

Jerry transfers property having a $32,000 adjusted basis and a $50,000 FMV to Emerald Corporation in exchange for all of Emerald’s stock

C:2-44. Jerry transfers property having a $32,000 adjusted basis and a $50,000 FMV to Emerald Corporation in exchange for all of Emerald’s stock worth $15,000 and Emerald’s assumption of a $35,000 mortgage on the property.

a. What is the amount of Jerry’s recognized gain or loss?
b. What is Jerry’s basis in the Emerald stock?
c. What is Emerald’s basis in the property?
d. How would your answers to Parts a through c change if the mortgage assumed by Emerald were $15,000 and the Emerald stock were worth $35,000?


Click here for the solution: Jerry transfers property having a $32,000 adjusted basis and a $50,000 FMV to Emerald Corporation in exchange for all of Emerald’s stock

The adjusted trial balance of Eastwood Company and other related information for the year 2010 are presented on the next page

P5-3 (Balance Sheet Adjustment and Preparation) The adjusted trial balance of Eastwood Company and other related information for the year 2010 are presented on the next page.

EASTWOOD COMPANY
ADJUSTED TRIAL BALANCE
DECEMBER 31, 2010
Debits Credits
Cash $ 41,000
Accounts Receivable 163,500
Allowance for Doubtful Accounts $ 8,700
Prepaid Insurance 5,900
Inventory 208,500
Long-term Investments 339,000
Land 85,000
Construction Work in Progress 124,000
Patents 36,000
Equipment 400,000
Accumulated Depreciation of Equipment 240,000
Unamortized Discount on Bonds Payable 20,000
Accounts Payable 148,000
Accrued Expenses 49,200
Notes Payable 94,000
Bonds Payable 200,000
Common Stock 500,000
Paid-in Capital in Excess of Par—Common Stock 45,000
Retained Earnings 138,000
$1,422,900$1,422,900

Additional information:
1. The LIFO method of inventory value is used.
2. The cost and fair value of the long-term investments that consist of stocks and bonds is the same.
3. The amount of the Construction Work in Progress account represents the costs expended to date on a building in the process of construction. (The company rents factory space at the present time.) The land on which the building is being constructed cost $85,000, as shown in the trial balance.
4. The patents were purchased by the company at a cost of $40,000 and are being amortized on a straight-line basis.
5. Of the unamortized discount on bonds payable, $2,000 will be amortized in 2011.
6. The notes payable represent bank loans that are secured by long-term investments carried at $120,000. These bank loans are due in 2011.
7. The bonds payable bear interest at 8% payable every December 31, and are due January 1, 2021.
8. 600,000 shares of common stock of a par value of $1 were authorized, of which 500,000 shares were issued and outstanding.

Instructions
Prepare a balance sheet as of December 31, 2010, so that all important information is fully disclosed.

Click here for the solution: The adjusted trial balance of Eastwood Company and other related information for the year 2010 are presented on the next page