Page 1 of 14
Name: ____________________ Due Date: December 12, 2011
Score: _____ out of a possible 47 Course value: 7.5%
Assignment 6: Adjusting Journal Entries and
Worksheets
A series of transactions are presented and their journal entries are also presented. Your task will be as follows:
A) Complete the adjusting journal entries (the initial journal entries are already completed) 15 marks
B) Complete the T-accounts/General Ledger – include the credit and debit totals for each account. The journal entries made prior to your adjusting journal entries are already included (but not totaled). Make sure the credit or debit balance of each account is presented – this total should reflect the balance of the account AFTER the adjusting journal entries and match the adjusted trial balance on the worksheet. 8 marks
C) Complete the following elements of the worksheet: 18 marks a. Adjustments
b. Adjusted Trial Balance c. Income Statement d. Balance Sheet
The Unadjusted Trial Balance has already been completed for you. This is based on the journal entries / general ledger entries made BEFORE the required adjusting journal entries (that you will complete).
D) Complete a fully labeled Income Statement and Balance Sheet for WestShore Car Rental: 6 Marks
Accounting 11
Page 2 of 14 Company Name: WestShore Car Rental
Background: WestShore Car Rental (WCR) is a brand new company that is hoping to make big money in the exciting field of car rental. The owner of the company, Jane Smith, has high hopes and has contributed her own money to start the business. The business mainly rents to individuals but has one big client, the airport
Chart of Accounts:
Assets
1000 Cash
1001 Accounts Receivable 1002 Prepaid Insurance 1003 Vehicles
1004 Accumulated Depreciation:
Vehicles
1005 Investments – Bonds 1006 Interest Receivable
Liabilities
2000 Accounts Payable 2001 Wages Payable
2002 Unearned Rental Revenue Revenues
3000 Rental Revenue 3001 Interest Revenue
Expenses
4000 Depreciation Expense 4001 Insurance Expense 4002 Wages Expense
Equity
5000 Owner – Contributed Capital (the money the owner
contributed to start the business)
5001 Retained Earnings 5002 Owner - Withdrawals 5003 Income Summary
The company only makes adjusting journal entries once per
year (lazy accountant!) at the fiscal year end (December 31).
Your job is to make the required adjusting journal entries in
the General Journal and reflect this in the General Ledger / T-
accounts and complete the worksheet.
Page 3 of 14
Selected 2010 Transactions (recorded):
These transactions have already been recorded in the general journal (see page 5).
January 1: The owner, Jane Smith, deposits $100,000 into a bank account for the purposes of starting the business.
January 1: WCR (WestShore Car Rental) purchases $24,000 of insurance for the next 2 years on credit.
January 1: WCR purchases a vehicle for $20,000 in cash. The vehicle uses the declining balance method of depreciation at a percentage rate of 10%.
January 4: WCR purchases (with cash) an extremely risky $10,000 investment bond.
This bond will pay the company $4,000 interest in two years time (in other words they will receive a cheque at the end of 2011)
January 8: The Airport writes a cheque to WCR for $200,000 for a two year rental agreement.
March 10: Pays the insurance company the full amount for the prepaid insurance (writes a cheque)
June 1: Customer rents a car (on account) for $1,000
June 20: Customer from June 1 pays outstanding balance ($1,000)
Nov. 30: Wages paid for period of January to November equal to $50,000 (paid by cheque).
Dec. 1 The owner takes $10,000 in cash from the business (a withdrawal)
Adjusting Journal Entries (not yet recorded):
Dec. 31 Wages that are payable to WCR employees at year end are equal to
$6,000, the company will write cheques next year.
Dec. 31 In addition, adjusting journal entries are also required for the following:
Prepaid insurance
Depreciation expense
Investment bond revenue
Rental Revenue from the Airport customer
Accounting 11
Page 4 of 14
Work Area:
Page 5 of 14
Recorded journal entries in the General Journal (all 2010
entries)
Date Accounts and Descriptions Debit Credit
January 1 Cash 100,000
Owner – Contributed Capital 100,000 Startup capital from owner
1 Prepaid Insurance 24,000
Accounts Payable 24,000
Purchasing prepaid insurance
1 Vehicles 20,000
Cash 20,000
Purchase of vehicle expected to last 10 years with no salvage value
4 Investments - Bond 10,000
Cash 10,000
Purchase of investment bond, will pay
$4,000 in interest (by cheque) in two years (end of 2011)
8 Cash 200,000
Unearned Rental Revenue 200,000
Airport payment for contracting WCR for two years of work.
March 10 Accounts Payable 24,000
Cash 24,000
Paying insurance company for prepaid insurance
June 1 Accounts Receivable 1,000
Rental Revenue 1,000
Customer rents a car, pays on credit
June 20 Cash 1,000
Accounts Receivable 1,000
Customer from June 1 pays their outstanding invoice
Accounting 11
Page 6 of 14
Date Accounts and Descriptions Debit Credit
November 30 Wages Expense 50,000
Cash 50,000
Company pays wages workers earned January through November
December 1 Owner - Withdrawals 10,000
Cash 10,000
Owner withdrawing $10,000 in cash from the company.
On the following page, record the
required adjusting journal entries.
Page 7 of 14
Part A: Adjusting Journal Entries:
(15 Marks)
General Journal Page
Date Accounts and Descriptions Debit Credit
Accounting 11
Page 8 of 14
Part B: General Ledger/T-Accounts
(8 Marks)
On the following pages “post” your journal
entries to the appropriate T-Account (General
Ledger). The journal entries that were recorded
prior to December 31 have already been
“posted”.
Include the total balance for each of the accounts
after the adjusting journal entries have been
posted. Circle debit or credit to indicate the type
of balance.
Example:
An Account
Balance 100,000
Debit Or Credit?
500,000
200,000
200,000 Posted from
an adjusting journal entry
Page 9 of 14
General Ledger/T-Accounts
Prepaid Insurance Cash
Accounts Receivables
Investments - Bonds Accumulated
Depreciation:
Vehicles Vehicles
Accounts Payable Wages Payable
Interest Receivable 100,000
20,000 10,000 200,000
24,000 1,000
10,000 50,000
1,000
1,000
24,000
20,000 10,000
24,000 24,000
Balance Debit Or Credit?
Balance Debit Or Credit?
Balance Debit Or Credit?
Balance Debit Or Credit?
Balance Debit Or Credit?
Balance Debit Or Credit?
Balance Debit Or Credit?
Balance Debit Or Credit?
Balance Debit Or Credit?
Accounting 11
Page 10 of 14 Interest Revenue Rental Revenue
Unearned Rental Revenue
Wages Expense Insurance Expense
Depreciation Expense
Income Summary Retained Earnings
Owner - Contributed Capital
Owner - Withdrawals
Balance:
200,000 1,000
50,000
100,000
10,000
Balance Debit Or Credit?
Balance Debit Or Credit?
Balance Debit Or Credit?
Balance Debit Or Credit?
Balance Debit Or Credit?
Balance Debit Or Credit?
Balance Debit Or Credit?
Page 11 of 14
Part C: Worksheet (18 marks)
The Unadjusted Trial Balance has been provided for you. Fill
in the remainder of the 10 column worksheet including the
following:
Adjustments
Adjusted Trial Balance
Income Statement
Balance Sheet
Accounting 11
Page 12 of 14
Worksheet for WestShore Car Rental
Unadjusted Trial
Balance Adjustments
Adjusted Trial
Balance Income Statement Balance Sheet
Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 187,000
Accounts Receivable 0
Prepaid Insurance 24,000
Vehicles 20,000
Accumulated Depreciation:
Vehicles 0
Investments - Bonds 10,000
Interest Receivable 0
Accounts Payable 0
Wages Payable 0
Unearned Rental Revenue 200,000
Owner - Contributed Capital 100,000
Owner - Withdrawals 10,000
Retained Earnings +++++++++++++++++++ Not Relevant for this Worksheet Solution ++++++++++++++++
Income Summary +++++++++++++++++++ Not Relevant for this Worksheet Solution ++++++++++++++++
Rental Revenue 1,000
Interest Revenue 0
Depreciation Expense 0
Insurance Expense 0
Wages Expense 50,000
Totals 301,000 301,000
Net Income (not an actual account, will eventually end up in Retained Earnings with
journal entries)
Financial Statement Totals
Page 13 of 14
Part D: Income Statement and Balance Sheet (6 marks)
1) Income Statement – Take the information from your completed worksheet and create an income statement (based on a format outlined in Section 4 of the course).
3 Marks
Accounting 11
Page 14 of 14 Part D continued …
1) Balance Sheet – Take the information from your completed worksheet and create a balance sheet (based on a format outlined in Section 4 of the course). 3 Marks
