Question : 169. You evaluate loan requests as part of your job at : 1239733

 

169. You evaluate loan requests as part of your job at Beach Front National Bank.  One loan request you received is from Surfer Dude Supplies, a small company.  Tracy Roberts, the manager, is requesting $75,000 and brings you a trial balance (or Statement of Accounts) of the first year of operations ended December 31, 2010.REQUIRED: While you are willing to work with Tracy, how would you explain to him that a complete set of financial statements from his accountant would be more useful for evaluating the loan request? 

 

 

 

 

 

170. Tracy Roberts, the sole stockholder of Surfer Dude Supplies, is requesting a $75,000 loan from the bank where you work as a loan officer. He brings to you the following trial balance (or statement of accounts) as of the end of his first year of operations.What three accounts do you think should be relabeled for greater clarity? 

Surfer Dude SuppliesStatement of AccountsDecember 31, 2011

Cash

2,050

 

Billings Due from Others

15,070

 

Office Supplies

7,470

 

Trucks

26,370

 

Equipment

8,090

 

Amounts Owed to Others

 

2,850

Investment in Business

 

23,500

Service Revenues

 

73,650

Wages Expense

30,050

 

Rent Expense

7,330

 

Insurance Expense

2,400

 

Utilities Expenses

700

 

Miscellaneous Expenses

      470

           

 

100,000

100,000

 

 

 

 

 

 

 

 

 

 

 

 

171. Tracy Roberts, the sole stockholder of Surfer Dude Supplies, is requesting a $75,000 loan from the bank where you work as a loan officer. He brings to you the following trial balance (or statement of accounts) as of the end of his first year of operations.What adjustments might be necessary before an accurate set of financial statements could be prepared? 

Surfer Dude SuppliesStatement of AccountsDecember 31, 2011

Cash

2,050

 

Billings Due from Others

15,070

 

Office Supplies

7,470

 

Trucks

26,370

 

Equipment

8,090

 

Amounts Owed to Others

 

2,850

Investment in Business

 

23,500

Service Revenues

 

73,650

Wages Expense

30,050

 

Rent Expense

7,330

 

Insurance Expense

2,400

 

Utilities Expenses

700

 

Miscellaneous Expenses

      470

           

 

100,000

100,000

 

 

 

 

 

 

 

 

 

 

 

 

172. Hakik Enterprises offers rug cleaning services to business clients.  Below is the work sheet containing the trial balance for the month ended July 31, 2012.   

Hakik EnterprisesWork SheetFor the Month Ended July 31, 2012

 

Trial Balance

Adjustments

Adjusted Trial Balance

 

Debit

Credit

Debit

Credit

Debit

Credit

Cash

36

 

 

 

 

 

Prepaid Insurance

12

 

 

 

 

 

Fees Receivable

56

 

 

 

 

 

Supplies

12

 

 

 

 

 

Equipment

60

 

 

 

 

 

Accum. Depreciation

 

12

 

 

 

 

Unearned Revenue

 

20

 

 

 

 

Accounts Payable

 

32

 

 

 

 

Wages Payable

 

 

 

 

 

 

Capital Stock

 

30

 

 

 

 

Retained Earnings

 

54

 

 

 

 

Dividends

4

 

 

 

 

 

Service Revenue

 

80

 

 

 

 

Advertising Expense

28

 

 

 

 

 

Wage Expense

20

 

 

 

 

 

Insurance Expense

 

 

 

 

 

 

Supplies Expense

 

 

 

 

 

 

Depreciation Expense

 

 

 

 

 

 

Totals

228

228

 

 

 

 

 

 

 

 

 

 

 

Enter the adjustments in the work sheet based on the data provided below. Then enter the adjusted account balances in the Adjusted Trial Balance columns.a)  The equipment is estimated to last for 5 years with no salvage value.  The asset will be depreciated evenly over its useful life. Record one month’s depreciation.b)  Accrued wages, $2.c)  Unused supplies on hand, $8.d)  Of the unearned revenue, 75% has been earned.e)  Unexpired insurance remaining at the end of the month, $9.