Problem 4-4B
Pettengill Management Services Inc. began business on January 1, 2008, with an investment of $100,000.The company manages condominiums for owners (Service Revenue) and rents space in its own office building (Rent Revenue). The trial balance and adjusted trial balance columns of the worksheet at the end of the first year are as follows.
PETTENGILL MANAGEMENT SERVICES INC.
Worksheet For the Year Ended December 31, 2008
Adjusted Trial Balance Trial Balance Account Titles Dr. Cr. Dr. Cr.
Cash 11,500 11,500
Accounts Receivable 23,600 23,600
Prepaid Insurance 3,100 1,400
Land 56,000 56,000
Building 106,000 106,000
Equipment 49,000 49,000
Accounts Payable 10,400 10,400
Unearned Rent Revenue 5,000 2,800
Mortgage Note Payable 100,000 100,000
Common Stock 100,000 100,000
Retained Earnings 20,000 20,000
Dividends 18,000 18,000
Service Revenue 75,600 75,600
Rent Revenue 24,000 26,200
Salaries Expense 35,000 35,000
Advertising Expense 17,000 17,000
Utilities Expense 15,800 15,800
Totals 335,000 335,000
Insurance Expense 1,700
Depreciation Expense—Building 2,500
Accumulated Depreciation—Building 2,500
Depreciation Expense—Equipment 3,900
Accumulated Depreciation—Equipment 3,900
Interest Expense 9,000
Interest Payable 9,000
Totals 350,400 350,400
Instructions
(a) Prepare a complete worksheet.
(b) Prepare a classified balance sheet. (Note: $10,000 of the mortgage note payable is due for payment next year.)
(c) Journalize the adjusting entries.
(d) Journalize the closing entries.
(e) Prepare a post-closing trial balance.
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