1. Adjusting Journal Entries
The Blitz Corporation has a December 31 year end. The following events occurred during Blitz Corporation's first year of operations.
1. Blitz Corporation's depreciation expense per year is $15,000.
2. On September 1, 2015, paid cash in the amount of $9,000 for a one-year property insurance policy. Blitz debited prepaid insurance when the cash was paid.
3. On November 1, 2015, received $180,000 in cash for services to be provided evenly during the next six months. Blitz credited the revenue account when the cash was received.
4. On December 31, 2015, it was determined that the company had performed the equivalent of $7,500 of services that had not yet been billed to its customers.
5. Blitz Corporation's employees earn $10,000 per week (for a five day work week) and payday is every Friday. This year December 31, 2015 falls on a Thursday.
Prepare the necessary adjustments for the year ending December 31, 2015 in the journal below:
2. Closing Journal Entries
Given below are the accounts from McSweeney Corporation's ledger after adjustments have been posted at December 31, 2015.
|
Sales Revenue
|
$60,000
|
Accounts Receivable
|
$ 8,000
|
|
Accounts Payable
|
1,500
|
Rent Expense
|
2,000
|
|
Cash
|
25,000
|
Prepaid Rent
|
1,500
|
|
Interest Expense
|
3,000
|
Accumulated Depreciation
|
1,000
|
|
Retained Earnings, Jan. 1, 2015
|
22,000
|
Dividends
|
5,500
|
|
Depreciation Expense
|
1,000
|
Equipment
|
21,000
|
|
Supplies Expense
|
2,500
|
Cost of Goods Sold
|
40,000
|
|
Notes Payable
|
3,000
|
Common Stock
|
22,000
|
Prepare the necessary closing entries
3. Cash Flows
The Hamada Company sales for 2016 totaled $150,000 and purchases totaled $95,000. Selected January 1, 2016, balances were: accounts receivable, $18,000; inventory, $14,000; and accounts payable, $12,000. December 31, 2016, balances were: accounts receivable, $16,000; inventory, $15,000; and accounts payable, $13,000. Net cash flows from these activities were: