Begin with the following account balances for University Street Parking Garage (assume all accounts have normal balances) at December 31, 2019: Accounts payable $16,700
Accounts receivable 39,200
Accumulated depreciation (equipment) 36,800
Cash 6,700
Common stock (20,000 shares) 100,000
Depreciation expense (equipment) 12,300
Dividends 6,300
Equipment 269,500
Income taxes expense 2,700
Income taxes payable 1,100
Interest expense 16,500
Interest payable 0
Interest income 4,100
Inventory 4,900
Investments 35,000
Notes payable (due May 2, 2025) 160,000
Prepaid rent (4 months) 36,400
Rent expense 94,400
Retained earnings, 12/31/2018 43,000
Service revenue, parking 224,600
Service revenue, repair 208,100
Supplies expense 36,900
Wages expense 233,600
Wages payable 0
1. For the following transactions, provide the necessary adjusting entries and update the account balances to appropriately reflect these adjusting entries:
a. The only lease held by University Street Parking required a rental payment of $9, 100 per month. University Street Parking has prepaid rent through March 31, 2019.
b. At December 31, 2018, University Street Parking owes employees wages of $12, 500.
c. University Street Parking should have total depreciation expense on equipment for 2018 of $14, 300.
d. The note payable of $160,000 has an interest rate of 6.75%. University Street Parking has paid interest through October 31, 2018.
2. Prepare a properly classified statement of earnings for 2018, a statement of retained earnings for 2018, and a properly classified statement of financial position as of December 31, 2018, using the post-adjustment account balances.