On September 30, 2016, after one month of operation, the general ledger of Cross Timbers Company contained

Question:

On September 30, 2016, after one month of operation, the general ledger of Cross Timbers Company contained the accounts and balances shown below.
ACCOUNTS AND BALANCES

INSTRUCTIONS
1. Prepare a partial worksheet with the following sections: Trial Balance, Adjustments, and Adjusted Trial Balance. Use the data about the firm€™s accounts and balances to complete the Trial Balance section.
2. Enter the adjustments described below in the Adjustments section. Identify each adjustment with the appropriate letter. (Some items may not require adjustments.)
3. Complete the Adjusted Trial Balance section.

ADJUSTMENTS
a. On September 30, an inventory of the supplies showed that items costing $705 were on hand.
b. On September 1, the firm paid $4,200 in advance for six months of rent.
c. On September 1, the firm signed a six-month advertising contract for $3,750 and paid the full amount in advance.
d. On September 1, the firm paid $450 interest in advance on a three-month note that it issued to the bank.
e. On September 1, the firm purchased office furniture for $4,840. The furniture is expected to have a useful life of five years and a salvage value of $340.
f. On September 3, the firm purchased equipment for $9,000. The equipment is expected to have a useful life of five years and a salvage value of $1,200.
g. On September 1, the firm issued a two-month, 8 percent note for $5,250.
h. During September, the firm received $22,000 fees in advance. An analysis of the firm€™s records shows that $7,000 applies to services provided in September and the rest pertains to future months.

Analyze:
What was the net dollar effect on income of the adjustments to the accounting records of thebusiness?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...