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    Sherlock Holmes PI: worksheet, adjusting entries, trial bala

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    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.

    SHERLOCK HOLMES P.I.
    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.

    Instructions
    (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.

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    Solution Summary

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

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