Question

Selected amounts (at December 31, 2010) from Solar Power, Inc.’s information system appear as follows:
Cash paid to employees for salaries and wages ........ $ 600,000
Cash collected from customers for service rendered ...... 2,500,000
Long-term notes payable ................... 225,000
Cash .......................... 375,000
Common stock ...................... 100,000
Equipment ....................... 750,000
Prepaid insurance ..................... 45,000
Inventory ........................ 175,000
Prepaid rent ....................... 75,000
Retained earnings ................... 150,000
Salaries and wages expense ............... 625,000
Service revenues .................... 2,750,000

Requirements
1. There are five adjustments that need to be made before the financial statements can be prepared at year end. For each, show the adjustment in the accounting equation.
a. The equipment (purchased on January 1, 2010) has a useful life of 10 years with no salvage value. (An equal amount of depreciation is taken each year.)
b. Interest accrued on the notes payable is $2,500 as of December 31, 2010.
c. Unexpired insurance at December 31, 2010, is $11,000.
d. The rent payment of $75,000 covered the six months from December 1, 2010, through May 31, 2011.
e. Employees had earned salaries and wages of $25,000 that were unpaid at December 31, 2010.
2. Prepare an income statement for the year ended December 31, 2010, for Solar Power, Inc.



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  • CreatedSeptember 01, 2014
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