? Part 1: Post the Unadjusted Trial Balance totals to the T-Accounts on the sheet labeled "T-Accounts."

Part 2: Record the adjusting journal entries required for items AND post them to the T-accounts.

Part 3: Post an Adjusted Trial Balance for Gatsby, Inc. using the updated T-Accounts. Adjusted TB check figure: $1,121,138

Part 4: Prepare, in good form, financial statements on each specified sheet in the following order:

a: Multi-Step Income Statement and post a bar AND a pie chart for a visual representation of expenses.

b: Statement of Stockholders' Equity

c: Classified Balance Sheet Total Assets check figure: $724,450

Part 5: Using the financial statements, calculate the following ratios on the specified sheet and briefly (2 ?or 3 ?sentences) ?interpret the ratios for Gatsby, Inc.

a: Working Capital

b: Current Ratio

c: Quick Ratio (Acid Test)

d: Debt to Equity

e:Times Interest Earned

Part 6: Record closing journal entries AND post them to the T-accounts.

Part 7: Post a Post-Closing Trial Balance using the updated T-accounts. Total debit check figure: 798,450

Gatsby, Inc.

Unadjusted Trial Balance:

12/31/XX

Debit Credit

Cash 43,550

Accounts Receivable146,000

Prepaid Insurance 12,000

Supplies 3,300

Inventory 80,000

Land 85,000

Building 250,000

Accumlated Depreciation- ?Building 40,000

Equipment 160,000

Accumlated Depreciation- ?Equipment 8,000

Accounts Payable 90,500

Interest Payable 0

Wages Payable 0

Unearned Revenue - ?Alarm Systems 60,000

Long-Term Bank Note Payable 150,000

Common Stock 200,000

Retained Earnings 123,950

Dividends 8,000

Revenue 390,000

Cost of the Goods Sold 142,000

Depreciation Expense 0

Insurance Expense 9,000

Interest Expense 0

Rent Expense 30,000

Supplies Expense 0

Utilities Expense 18,300

Vehicle Expense 26,900

Wage Expense 48,400.

Totals $1,062,450 ?$1,062,450

The following information relates to Gatsby, Inc. as of December 31 ?of the current year. The company uses the calendar year as its annual reporting period and the Accrual Method of Accounting. Prepaid and unearned items are recorded as Gatsby, Inc.

Work out all necessary adjusting journal entries and post to the T-accounts.

Account Debit Credit

1 ?The company's weekly payroll is $5,000 ?and is paid each Friday for a five-day work week. Assume

December 31st falls on a Tuesday, but the employees will not be paid their wages until Friday, January 3rd.

2 ?Eighteen months earlier, on July 1st the company purchased equipment that cost $160,000. ?Its useful life is predicted to be ten years, at which time the equipment is expected to have a zero salvage/residual value.

Gatsby, Inc. uses the straight-line depreciation method. Depreciation has NOT been recorded for this year.

3: On September 1st of the current year Gatsby, Inc. was paid $60,000 ?in advance of future installation of alarm systems in 4 ?new homes. The amount was credited to the Unearned Revenue - ?Alarms account. Between September 1st and December 31st an alarm system was installed in 1 ?home, completing that job.

4: On October 1st of the current year the company purchased a 12-month insurance policy for $18,000. ?The transaction was recorded with a debit to the Prepaid Insurance account. Insurance expense has not been recorded for

October, November nor December.

5: On December 30 ?of the current year the company completed an $26,000 ?job that has not been billed/invoiced and therefore has not been recorded.

6: A $150,000 ?long-term note payable was signed on August 1st of the current year. It is a five-year note with a 7.5% ?interest rate. Interest expense as not been accrued for this year. Round your answer to the nearest dollar.

7: Supplies at the beginning of the current year had a balance of $ 500. ?Supplies valued at $2,800 ?were purchased throughout the year. The current balance in the account is $400.

8: Depreciation on the building is calculated using the straight-line depreciation method. Gatsby estimates depreciation on the building over a 25 ?year period and a zero salvage/residual value.

Transcribed Image Text:

Use the format button to add dollar signs, underlining and double underlining when appropriate. DO NOT put dollar signs on every line as it will cost you points. REQUIREMENTS: Part 1 Post the Unadjusted Trial Balance totals to the T-Accounts on the sheet labeled "T-Accounts." These numbers will represent your beginning balances. Part 2 Record the adjusting journal entries required for items AND post them to the T-accounts. Add or extend lines on any T-Accounts if necessary. Part 3 Prepare an Adjusted Trial Balance for Gatsby, Inc. using the updated T-Accounts. Part 4 Prepare, in good form, financial statements on each specified sheet in the following order: a Multi-Step Income Statement and prepare a bar AND a pie chart for a visual representation of expenses. b Statement of Stockholders' Equity c Classified Balance Sheet Total Assets check figure: Adjusted TB check figure: $1,121,138 $724,450 Part 5 Using the financial statements, calculate the 5 following ratios on the specified sheet and briefly (2 or 3 sentences) interpret the ratios for Gatsby, Inc. Be sure to compare them to the industry averages which are given on the specified sheet. a Working Capital b Current Ratio c Quick Ratio (Acid Test) d Debt to Equity e Times Interest Earned Part 6 Record closing journal entries AND post them to the T-accounts. Part 7 Prepare a Post-Closing Trial Balance using the updated T-accounts. Total debit check figure: $798,450 Use the format button to add dollar signs, underlining and double underlining when appropriate. DO NOT put dollar signs on every line as it will cost you points. REQUIREMENTS: Part 1 Post the Unadjusted Trial Balance totals to the T-Accounts on the sheet labeled "T-Accounts." These numbers will represent your beginning balances. Part 2 Record the adjusting journal entries required for items AND post them to the T-accounts. Add or extend lines on any T-Accounts if necessary. Part 3 Prepare an Adjusted Trial Balance for Gatsby, Inc. using the updated T-Accounts. Part 4 Prepare, in good form, financial statements on each specified sheet in the following order: a Multi-Step Income Statement and prepare a bar AND a pie chart for a visual representation of expenses. b Statement of Stockholders' Equity c Classified Balance Sheet Total Assets check figure: Adjusted TB check figure: $1,121,138 $724,450 Part 5 Using the financial statements, calculate the 5 following ratios on the specified sheet and briefly (2 or 3 sentences) interpret the ratios for Gatsby, Inc. Be sure to compare them to the industry averages which are given on the specified sheet. a Working Capital b Current Ratio c Quick Ratio (Acid Test) d Debt to Equity e Times Interest Earned Part 6 Record closing journal entries AND post them to the T-accounts. Part 7 Prepare a Post-Closing Trial Balance using the updated T-accounts. Total debit check figure: $798,450