Long-Term Notes Payable
Retained Earnings (1/1/2013)
Bad Debt Expense
Loss on Disposal
Income Tax Expense
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Prepare adjusting journal entries using the unadjusted trial
balance on the previous page and the information provided below. Use only the
account names provided on the previous page (do not create any new account
1. On Dec. 31, 2013 Silver, Inc. sold merchandise on account for $18,500 with a cost of
$6,500 terms 3/10 net 30.
2. Silver, Inc. loaned Jackson Co. $50,000 (already on the TB) on Oct. 1, 2013 using a 6
month, 8% interest note. All interest and principal will be paid back at the end of the 6
months. Write the adjusting journal entry required by Silver, Inc. for its financial statements
as of Dec. 31, 2013.
3. Uncollectable Accounts Receivables of $500, $100, and $420 need to be written off for the
year ended 2013 (write off the total amount in one entry).
4. Management estimates that of the remaining accounts receivable balance, $560 will be
uncollectible. Record the adjustment based on this information. Hint: Use the AFDA
balance AFTER the above write off during 2013.
5. Equipment was retired on Dec. 31, 2013. The equipment originally cost $30,000 and has
related A/D of $24,000 as of Jan. 1, 2013. Additional depreciation of $3,000 needs to be
recorded at Dec. 31, 2013. Update the depreciation.
6. And record the retirement of the equipment (from #5) including the gain or loss.
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Part 2: Post the adjusting journal entries to t-accounts:
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Part 3: Prepare the Adjusted Trial Balance (i.e., use ending balances after
the previous journal entries are posted)
December 31, 2013
Adjusted Trial balance
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Part 4: Prepare a Multi-step Income Statement
(Be sure to include all the necessary headings, totals and subtotals as outlined in
Chapter 5. You may not need to use all the lines provided.)
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Prepare a Statement of Retained Earnings.
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Prepare a Classified Balance Sheet (Follow the example in Chapter 2. You may not need
to use all of the lines provided.)
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Part 5: Answer the following questions using the above completed
What is the Gross Profit?
What is Income from Operations?
What is Income before for Income Tax?
What is Total Current Assets?
What is Total Current Liabilities?
What is Net PPE?
If the company FAILS to record depreciation expense in the adjusting entries:
What is the impact to the income statement?
What is the impact to the balance sheet?