Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition

EXERCISE 4-2

Purpose: (L.O. 1) This exercise illustrates the function of a worksheet.

Carl's Video Service, Inc. has a fiscal year ending on April 30. The following information is available at the end of the corporation's first year of operations:

1. Parts and supplies on hand at April 30, 2014, amount to $1,600.
2. Wages incurred but not paid at April 30, 2014, amount to $320.
3. The $540 balance in the Prepaid Insurance account represents a payment for 12 months that began on August 1, 2013.
4. The note payable bears interest of 6% per year and was issued on December 1, 2013.
5. The estimated amount of utilities consumed but unpaid as of year end amounts to $400.
6. Depreciation on equipment for the year amounts to $3,000.

Instructions

Complete the worksheet for Carl's Video Service, Inc. for the year ended April 30, 2014. The trial balance has already been put on the worksheet for you.

TIP: Remember to cross-reference (key) your adjustments by use of the appropriate letters.

TIP: Before beginning a worksheet, think about the steps involved in its completion:

• Step 1: Prepare a trial balance on the worksheet.
• Step 2: Enter the adjustments in the adjustments columns.
• Step 3: Enter adjusted balances in the adjusted trial balance columns.
• Step 4: Extend adjusted trial balance amounts to appropriate financial statement columns.
• Step 5: Total the statement columns, compute the net income (or net loss), and complete the worksheet.

TIP: The debit and credit columns for every column pair must be equal ...