ACCT504 Case Study 1 (Part B): P3-77B Consider the unadjusted trial balance of Princess, Inc

Case Study 1 (Part B)

(Learning Objectives 3, 4: Adjust the accounts; construct the financial statements)
Consider the unadjusted trial balance of Princess, Inc., at August 31, 2012, and the related month-end adjustment data.
Princess, Inc.
Trial Balance Work Sheet
August 31, 2012
Trial Balance Adjustments Adjusted Trial Balance
Account Debit Credit Debit Credit Debit Credit
Cash 8,300
Accunts Receivable 1,900
Prepaid Rent 2,100
Supplies 2,400
Furniture 63,000
Accumulated Depreciation 3,700
Accounts Payable 4,000
Salary Payable
Common Stock 13,000
Retained Earnings 53,430
Dividends 4,300
Service Revenue 11,000
Salary Expense 2,600
Rent Expense
Utilities Expense 530
Depreciation Expense
Supplies Expense
Total $85,130 $85,130 $- $- $- $-

Adjustment data at August 31, 2012, include the following:
a. Accrued advertising revenue at August 31, $2,100.
b. Prepaid rent expired during the month. The unadjusted prepaid balance of $2,100 relates to the period August 2012 through October 2012.
c. Supplies used during August, $2,090.
d. Depreciation on furniture for the month. The furniture’s expected useful life is three years.
e. Accrued salary expense at August 31 for Monday, Tuesday, and Wednesday. The five-day weekly payroll is $5,100 and will be paid on Friday.

Requirements (40 points)
1. Using Exhibit 3-9 as an example, prepare the adjusted trial balance of Princess, Inc., at August 31, 2012. Key each adjusting entry by letter.
2. Prepare the monthly income statement, the statement of retained earnings, and the classified balance sheet. Draw arrows linking the three statements.
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