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    Preparation of a work sheet, financial statements, and adjusting

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    P 4. At the end of fiscal year, the trial balance of Reed delivery service appeared as shown below.

    Reed delivery service
    Trial balance
    August 31, 2010

    Cash $10,072
    Accounts receivable 29,314
    Prepaid insurance 5,340
    Delivery supplies 14,700
    Office supplies 2,460
    Land 15,000
    Building 196,000
    Accumulated depreciation-building $53,400
    Trucks 103,800
    Accumulated depreciation-trucks 30,900
    Office equipment 15,900
    Accumulated depreciation-office equipment 10,800
    Accounts payable 9,396
    Unearned lockbox fees 8,340
    Mortgage payable 72,000
    N. Reed, capital 128,730
    N. Reed, withdrawals 30,000
    Delivery service revenue 283,470
    Lockbox fees earned 28,800
    Truck drivers' wage expense 120,600
    Office salaries expense 44,400
    Gas, Oil, and truck repairs expense 31,050
    Interest expense 7,200
    $625,836 $625,836

    1. Enter the trial balance amounts in the trial balance columns of a work sheet and complete the work sheet using the information that follows:
    a) Expired insurance, $3,060
    b) Inventory of unused delivery supplies, $1,430
    c) Inventory of unused office supplies, $186
    d) Estimated depreciation on the building, $14,400
    e) Estimated depreciation on the truck, $15,450
    f) Estimated depreciation on the office equipment, $2,700
    g) The company credits the lockbox fees account. Of the amount credited to this account during the year, $5,630 had been earned by August 31.
    h) Lockbox fees earned but not recorded and uncollected at the end of the accounting period, $816
    i) Accrued but unpaid truck drivers' wages at the end of the year, $1,920
    2. Prepare an income statement, a statement of owner's equity, and a balance sheet for the company. Assume the owner, Natalie Reed, made no additional investments.
    3. Prepare adjusting, closing, and, when necessary, reversing entries from the work sheet
    4. Can the work sheet be used as a substitute for the financial statements? Explain your answer.

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    Solution Summary

    A preparation of a work sheet, financial statements and adjusting are examined.