The accountant for Villa Way, Inc., posted adjusting entries (a) through (e) to the accounts at December 31, 2012. Selected balance sheet accounts and all the revenues and expenses of the entity follow in T-account form.

Requirements
1. Explain the purpose for each adjusting entry.
2. Calculate ending balances in the accounts and use the appropriate accounts to prepare the income statement of Villa Way, Inc., for the year-ended December 31,
2012. List expenses in order from largest to smallest.
3. Were the 2012 operations successful? Give the reason for youranswer.

Transcribed Image Text:

Accounts Receivable Supplies 2,600 (a) Accumulated Accumulated 1,000 Depreciation, Equipment Depreciation, Building 9,000 900 (e) 3,800 (b) 200 46,000 (c) 3000 Salaries Payable Service Revenue 14,400 (e) 900 (d) 800 Salaries Expense Supplies Expense (a) 1,000 Depreciation Expense, Depreciation Expense, Equipment Building 10,000 (d) 1800 (b) 1,200 (c) 3.000