Selected Data from RuthCo

question 195

Essay

Selected data from RuthCo.'s accounting system are provided below.All balances are BEFORE year-end adjustments and all data relate to the year ended December 31,2011.Determine the amount that will be reported for each of the items in the table below,after the appropriate adjustments have been made using the following information.Also indicate the financial statement where each item appears,using IS for the income statement and BS for the balance sheet.The table does NOT include all accounts that will be adjusted.
a.A $40,000 note payable has been unpaid all year and bears interest at 9%.
b.Equipment that was owned and used all year has a historical cost of $35,000,a 6-year estimated useful life,and a $5,000 estimated residual value.
c.$400 of the supplies were consumed during the year.
d.The prepaid insurance balance relates to a 12-month policy purchased on July 1,2011.
e.$18,000 of the unearned revenue is now earned.
f.Salaries expense does not include $15,000 of employee salaries that have been earned but not yet paid.

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Definitions:

Monthly Service Charge

A fee charged by a financial institution to maintain an account, often depending on the type of account or the balance maintained.

Bank Reconciliation

The process of comparing and adjusting the balance shown in a company’s bank statement with the amount appearing in the company’s own records.

Days' Cash on Hand

A financial metric that indicates how many days a company can continue to pay its operating expenses using only its available cash, without additional income or financing.

Short-Term Investments

Financial assets that are expected to be converted into cash or sold within a year, such as stocks and bonds.