Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
Name: ____________________
Score: _____ out of a possible 47
Due Date: December 12, 2011
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.
b.
c.
d.
Adjustments
Adjusted Trial Balance
Income Statement
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
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Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
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
1001
1002
1003
1004
1005
1006
Cash
Accounts Receivable
Prepaid Insurance
Vehicles
Accumulated Depreciation:
Vehicles
Investments – Bonds
Interest Receivable
Liabilities
2000 Accounts Payable
2001 Wages Payable
2002 Unearned Rental Revenue
Expenses
4000 Depreciation Expense
4001 Insurance Expense
4002 Wages Expense
Equity
5000
5001
5002
5003
Owner – Contributed Capital
(the money the owner
contributed to start the
business)
Retained Earnings
Owner - Withdrawals
Income Summary
Revenues
3000 Rental Revenue
3001 Interest Revenue
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 / Taccounts and complete the worksheet.
Page 2 of 14
Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
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
Page 3 of 14
Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
Work Area:
Page 4 of 14
Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
Recorded journal entries in the General Journal (all 2010
entries)
Date
January
Accounts and Descriptions
1
Cash
Debit
100,000
Owner – Contributed Capital
Startup capital from owner
1
1
4
8
100,000
Prepaid Insurance
Accounts Payable
Purchasing prepaid insurance
24,000
Vehicles
Cash
Purchase of vehicle expected to last 10
years with no salvage value
20,000
Investments - Bond
Cash
Purchase of investment bond, will pay
$4,000 in interest (by cheque) in two
years (end of 2011)
10,000
Cash
200,000
24,000
20,000
10,000
Unearned Rental Revenue
Airport payment for contracting WCR
for two years of work.
March
June
June
200,000
10 Accounts Payable
Cash
Paying insurance company for prepaid
insurance
24,000
1
1,000
Accounts Receivable
Rental Revenue
Customer rents a car, pays on credit
20 Cash
Accounts Receivable
Customer from June 1 pays their
outstanding invoice
Credit
24,000
1,000
1,000
1,000
Page 5 of 14
Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
Date
Accounts and Descriptions
November 30 Wages Expense
Cash
Company pays wages workers earned
January through November
Debit
50,000
December
10,000
1
Owner - Withdrawals
Cash
Owner withdrawing $10,000 in cash
from the company.
Credit
50,000
10,000
On the following page, record the
required adjusting journal entries.
Page 6 of 14
Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
Part A: Adjusting Journal Entries:
(15 Marks)
General Journal Page
Date
Accounts and Descriptions
Debit
Credit
Page 7 of 14
Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
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
500,000
200,000
Posted from
an adjusting
journal entry
200,000
Balance
100,000
Debit
Or
Credit?
Page 8 of 14
Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
General Ledger/T-Accounts
Cash
100,000
200,000
20,000
10,000
Accounts
Receivables
Prepaid Insurance
24,000
1,000
1,000
50,000
24,000
1,000
10,000
Balance
Balance
Debit
Or
Credit?
Debit
Or
Credit?
Accumulated
Depreciation:
Vehicles
Vehicles
20,000
Balance
Balance
Investments Bonds
10,000
Debit
Or
Credit?
Interest Receivable
Balance
Debit
Or
Credit?
Wages Payable
Balance
Debit
Or
Credit?
Balance
Debit
Or
Credit?
Debit
Or
Credit?
Accounts Payable
24,000
Balance
Debit
Or
Credit?
Balance
24,000
Debit
Or
Credit?
Page
9 of 14
Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
Unearned Rental
Revenue
Rental Revenue
200,000
Balance
Debit
Or
Credit?
Depreciation
Expense
Interest Revenue
1,000
Balance
Debit
Or
Credit?
Insurance Expense
Balance
Debit
Or
Credit?
Wages Expense
50,000
Debit
Or
Credit?
Balance
Owner - Contributed
Capital
Balance
Debit
Or
Credit?
Retained Earnings
Balance
Debit
Or
Credit?
Income Summary
100,000
Balance
Debit
Or
Credit?
Owner - Withdrawals
10,000
Balance:
Page 10 of 14
Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
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
Page 11 of 14
Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
Worksheet for WestShore Car Rental
Cash
Accounts Receivable
Prepaid Insurance
Vehicles
Accumulated Depreciation:
Vehicles
Investments - Bonds
Interest Receivable
Accounts Payable
Wages Payable
Unearned Rental Revenue
Owner - Contributed Capital
Owner - Withdrawals
Retained Earnings
Unadjusted Trial
Balance
Debit
Credit
187,000
0
24,000
20,000
Adjusted Trial
Balance
Debit
Credit
Income Statement
Debit
Credit
Balance Sheet
Debit
Credit
0
10,000
0
0
0
200,000
100,000
10,000
+++++++++++++++++++ Not Relevant for this Worksheet Solution ++++++++++++++++
+++++++++++++++++++ Not Relevant for this Worksheet Solution ++++++++++++++++
1,000
0
Income Summary
Rental Revenue
Interest Revenue
Depreciation Expense
Insurance Expense
Wages Expense
Totals
Net Income (not an actual
account, will eventually end
up in Retained Earnings with
journal entries)
Adjustments
Debit
Credit
0
0
50,000
301,000
301,000
Financial Statement Totals
Page 12 of 14
Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
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
Page 13 of 14
Assignment 6 – Adjusting Journal Entries and Worksheets
Accounting 11
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
Page 14 of 14