The following equation shows the transactions of West Cleaning Service during May. The business is owned by Carol West.

  

Assets

=

Liab.

+

Owner's Equity

Cash

+

Accts. Rec.

+

Supp.

+

Equip.

=

Accts. Pay.

+

C. West, Capital

+

Rev.

−

Exp.

Balances, May 1

14,000

+

2,000

+

4,800

+

32,800

=

6,000

+

47,600

+

0

−

0

Paid for utilities

− 880

+ 880

New balances

13,120

+

2,000

+

4,800

+

32,800

=

6,000

+

47,600

+

0

−

880

Sold services for cash

+ 4,880

+ 4,880

New balances

18,000

+

2,000

+

4,800

+

32,800

=

6,000

+

47,600

+

4,880

−

880

Paid a creditor

− 1,600

− 1,600

New balances

16,400

+

2,000

+

4,800

+

32,800

=

4,400

+

47,600

+

4,880

−

880

Sold services on credit

+ 2,400

+ 2,400

New balances

16,400

+

4,400

+

4,800

+

32,800

=

4,400

+

47,600

+

7,280

−

880

Paid salaries

− 8,400

+ 8,400

New balances

8,000

+

4,400

+

4,800

+

32,800

=

4,400

+

47,600

+

7,280

−

9,280

Paid telephone bill

− 304

+ 304

New balances

7,696

+

4,400

+

4,800

+

32,800

=

4,400

+

47,600

+

7,280

−

9,584

Withdrew cash for personal expenses

− 2,000

− 2,000

New balances

5,696

+

4,400

+

4,800

+

32,800

=

4,400

+

45,600

+

7,280

−

9,584

  

Prepare an income statement for the month of May 31, 2013. (Input all amounts as positive values except net loss which should be indicated with a minus sign.  Omit the "$" sign in your response.)

  

WEST CLEANING SERVICE Income Statement Month Ended May 31, 2013
Revenue
Fees income			$
Expenses
Utilities expense	$
Salaries expense
Telephone expense
Total Expenses
Net loss			$

    

Prepare a statement of owner's equity for the month of May 31, 2013. (Input all amounts as positive values except losses and decreases which should be indicated with a minus sign. Omit the "$" sign in your response.)

   

WEST CLEANING SERVICE Statement of Owner's Equity Month Ended May 31, 2013
Carol West, Capital, May 1, 2013			$
Net loss for May	$
Less: Withdrawal for May
Decrease in capital
Carol West, Capital, May 31, 2013			$

  

Prepare a balance sheet for May 31, 2013. (Be sure to list the accounts in order of their liquidity. Omit the "$" sign in your response.)

   

WEST CLEANING SERVICE Balance Sheet May 31, 2013
Assets
Cash	$
Accounts receivable
Supplies
Equipment
Total Assets	$
Liabilities
Accounts payable	$
Owner's Equity
Carol West, Capital
Total Liabilities and Owner's Equity	$

  

Analyze:

Which amount was transferred from the statement of owner's equity? (Omit the "$" sign in your response.)

  

Owner's equity

$

 

Valdez Equipment Repair Service is owned by Francisco Valdez.     

Cash	$	33,300		Equipment	$	77,000
Supplies		5,380		Accounts Payable		23,000
Accounts Receivable		12,200

  

Use the above figures to prepare a balance sheet dated February 28, 2013. (Be sure to list the accounts in order of their liquidity. Omit the "$" sign in your response.)

   

VALDEZ EQUIPMENT REPAIR SERVICE Balance Sheet February 28, 2013
Assets
Cash	$
Accounts receivable
Supplies
Equipment
Total Assets	$
Liabilities
Accounts payable	$
Owner's Equity
Francisco Valdez, Capital
Total Liabilities and Owner's Equity	$

  

Analyze:

What is the net worth, or owner's equity, at February 28, 2013 for Valdez Equipment Repair Service? (Omit the "$" sign in your response.)

  

Owner's equity

$

The following information relates to Ponte Manufacturing Company’s workers’ compensation insurance

The following information relates to Ponte Manufacturing Company’s workers’ compensation insurance premiums for 2013. On January 15, 2013, the company estimated its premium for workers’ compensation insurance for the year on the basis of that data.

 

Work Classification	Amount of Estimated Wages			Insurance Rates
Office work	$	54,000		$	0.40/$100
Shop work		298,000		$	5.00/$100

 

1.	Compute the estimated premiums. (Omit the "$" sign in your response.)

 

Work Classification	Estimated Premiums
Office work	$
Shop work
Total	$

 

2.	Record in general journal form payment of the estimated premium on January 15, 2013. (Omit the "$" sign in your response.)

 

Date		General Journal	Debit	Credit
Jan.	15	Prepaid workers’ compensation insurance
		Cash

 

3.

On January 4, 2014, an audit of the firm’s payroll records showed that it had actually paid wages of $59,960 to its office employees and wages of $305,320 to its shop employees. Compute the actual premium for the year and the balance due the insurance company or the credit due the firm. (Input all amounts as positive values. Round your answers to 2 decimal places. Omit the "$" sign in your response.)

 

Work Classification	Actual Premiums
Office work	$
Shop work
Total
Estimated premiums paid
Additional premium due	$

 

4.	Prepare the general journal entry on December 31, 2013, to adjust the Workers’ Compensation Insurance Expense account. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

 

Date		General Journal	Debit	Credit
Dec.	31	Workers’ compensation insurance expense
		Workers’ compensation insurance payable
		Workers’ compensation insurance expense
		Prepaid workers' compensation insurance

Analyze:

If all wages were attributable to shop employees, what premium estimate would have been calculated and recorded on January 15, 2013? (Omit the "$" sign in your response.)

Premium estimate

$

Explanation:

1.

Work Classification	Estimated Earnings			Insurance Rate			Estimated Premiums
Office work	$	54,000		$	0.40/$100		$	216
Shop work	$	298,000		$	5.00/$100			14,900
Total							$	15,116

 
3.

Work Classification	Actual Earnings			Insurance Rate			Actual Premiums
Office work	$	59,960		$	0.40/$100		$	239.84
Shop work	$	305,320		$	5.00/$100			15,266.00
Total								15,505.00
Estimated premiums paid								15,116.00
Additional premium due							$	389.84

Analyze:

The premium estimate would have been $17,600 [($54,000 + $298,000) × ($5.00/$100)]

 

The following information relates to Ponte Manufacturing Company’s workers’ compensation insurance

The following information relates to Ponte Manufacturing Company’s workers’ compensation insurance premiums for 2013. On January 15, 2013, the company estimated its premium for workers’ compensation insurance for the year on the basis of that data.

 

Work Classification	Amount of Estimated Wages			Insurance Rates
Office work	$	54,000		$	0.40/$100
Shop work		298,000		$	5.00/$100

 

1.	Compute the estimated premiums. (Omit the "$" sign in your response.)

 

Work Classification	Estimated Premiums
Office work	$
Shop work
Total	$

 

2.	Record in general journal form payment of the estimated premium on January 15, 2013. (Omit the "$" sign in your response.)

 

Date		General Journal	Debit	Credit
Jan.	15	Prepaid workers’ compensation insurance
		Cash

 

3.

On January 4, 2014, an audit of the firm’s payroll records showed that it had actually paid wages of $59,960 to its office employees and wages of $305,320 to its shop employees. Compute the actual premium for the year and the balance due the insurance company or the credit due the firm. (Input all amounts as positive values. Round your answers to 2 decimal places. Omit the "$" sign in your response.)

 

Work Classification	Actual Premiums
Office work	$
Shop work
Total
Estimated premiums paid
Additional premium due	$

 

4.	Prepare the general journal entry on December 31, 2013, to adjust the Workers’ Compensation Insurance Expense account. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

 

Date		General Journal	Debit	Credit
Dec.	31	Workers’ compensation insurance expense
		Workers’ compensation insurance payable
		Workers’ compensation insurance expense
		Prepaid workers' compensation insurance

Analyze:

If all wages were attributable to shop employees, what premium estimate would have been calculated and recorded on January 15, 2013? (Omit the "$" sign in your response.)

Premium estimate

$

Explanation:

1.

Work Classification	Estimated Earnings			Insurance Rate			Estimated Premiums
Office work	$	54,000		$	0.40/$100		$	216
Shop work	$	298,000		$	5.00/$100			14,900
Total							$	15,116

 
3.

Work Classification	Actual Earnings			Insurance Rate			Actual Premiums
Office work	$	59,960		$	0.40/$100		$	239.84
Shop work	$	305,320		$	5.00/$100			15,266.00
Total								15,505.00
Estimated premiums paid								15,116.00
Additional premium due							$	389.84

Analyze:

The premium estimate would have been $17,600 [($54,000 + $298,000) × ($5.00/$100)]