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Sherlock Holmes PI: worksheet, adjusting entries, trial bala

P4-1B Sherlock Holmes began operations as a private investigator on January 1, 2006.The trial
balance columns of the work sheet for Sherlock Holmes P.I. at March 31 are as follows.

Work Sheet
For the Quarter Ended March 31, 2006
Trial Balance
Account Titles Dr. Cr.
Cash 11,400
Accounts Receivable 5,620
Supplies 1,050
Prepaid Insurance 2,400
Equipment 30,000
Notes Payable 10,000
Accounts Payable 12,350
Common Stock 20,000
Dividends 600
Service Revenue 13,620
Salaries Expense 2,200
Travel Expense 1,300
Rent Expense 1,200
Miscellaneous Expense 200
55,970 55,970

Other data:
1. Supplies on hand total $680.
2. Depreciation is $1,000 per quarter.
3. Interest accrued on 6-month note payable, issued January 1, $300.
4. Insurance expires at the rate of $200 per month.
5. Services provided but unbilled at March 31 total $830.

(a) Enter the trial balance on a work sheet and complete the work sheet.
(b) Prepare an income statement and a retained earnings statement for the quarter and a classified balance sheet at March 31. Stockholders purchased $20,000 of common stock for cash at the beginning of the quarter ended March 31, 2006.
(c) Journalize the adjusting entries from the adjustments columns of the work sheet.
(d) Journalize the closing entries from the financial statement columns of the work sheet.

Prepare work sheet, financial statements, and adjusting and closing entries.

Solution Summary

This solution is comprised of a detailed explanation to prepare work sheet, financial statements, and adjusting and closing entries.