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Adjustments and Balance Sheet Classification

I attached the information and the questions in Word format. Please assist me.
Selected amounts at December 31, 2003 from the Hay and Barnabas Company's information system appear as follows:

Cash paid employees for salaries and wages
$
300,000

Cash collected from sales customers

1,850,000

Bonds payable

500,000

Cash

150,000

Common stock

60,000

Equipment

840,000

Prepaid insurance

30,000

Inventory

250,000

Prepaid rent

140,000

Retained earnings

130,000

Salaries and wages expense

328,000

Sales

2,000,000

1. There are five adjustments that need to be made before the financial statements can be prepared at year end. Show the effect of each of the following (a - e) on the accounting equation.
a. The equipment (purchased on January 1, 2003) has a useful life of 12 years with no salvage value (Straight-line method is used).
b. Interest accrued on the bonds payable is $20,000 as of December 31, 2003.
c. Unexpired insurance at December 31, 2003 is $7,000.
d. The rent payment of $140,000 covered the four months from December 1, 2003 through March 31, 2004.
e. Salaries and wages of $28,000 were earned but unpaid at December 31, 2003.

2. Indicate the proper balance sheet classification of each of the preceding 12 financial statement items on the December 31, 2003 balance sheet. If the account title would not appear on the balance sheet, indicate the financial statement on which it would be found.
a. Current assets
b. Property, plant and equipment
c. Current liabilities
d. Long-term liabilities
e. Stockholders' equity

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Selected amounts at December 31, 2003 from the Hay and Barnabas Company's information system appear as follows:

Cash paid employees for salaries and wages
$
300,000

Cash collected from sales customers

1,850,000

Bonds payable

500,000

Cash

150,000

Common stock

60,000

Equipment

840,000

Prepaid insurance

30,000

Inventory

250,000

Prepaid rent

140,000

Retained earnings

130,000

Salaries and wages expense

328,000

Sales

2,000,000

1. There are five adjustments that need to be made before the financial statements can be prepared at year end. Show the effect of each of the following (a - e) on the accounting equation.

The accounting equation is Assets = Liabilities + Equity
a. The equipment (purchased on January 1, 2003) has a useful life of 12 years with no salvage value (Straight-line method is used).

For equipment, the adjustment is to be made for the depreciation for the year. The cost of the equipment is 840,000 and the life ...

Solution Summary

The solution explains the impact of the given transactions on the accounting equation and also explains the balance sheet classification of the given accounts.

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