Khuzama Alotaibi 201702048- Jana Almansour 201700340

Exercise 2

Mommy’s Landry is a small business owned by Sophie Perez. She provided us with
the documents for the year ended June, 30, 2014. She is concerned that there are a
number of errors in all documents made by her accountants (at least 15 wrong
amounts).

Required: Determine what those errors are and correctly recalculate amounts in all
documents. You can use an end-of-period spreadsheet as a correct initial data.

MOMMY’S Laundry
End-of-period Spreadsheet (Work Sheet)
For the Year Ended June 30, 2014
Unadjusted TB Adjustments Adjusted TB
Account Title Debit Credit Debit Credit Debit Credit
Cash 11,000 11,000
Laundry Supplies 21,500 17,900 3,600
Prepaid Insurance 9,600 5,700 3,900
Laundry Equipment 232,600 232,600
Accum. Depreciation 125,400 6,500 131,900
Accounts Payable 11,800 11,800
Wages Payable 1,100 1,100
Sophie Perez, Capital 105,600 105,600
Sophie Perez, Drawing 10,000 10,000
Laundry Revenue 232,200 232,200
Wages Expense 125,200 1,100 126,300
Rent Expense 40,000 40,000
Utilities Expense 19,700 19,700
Laundry Supplies Exp. 17,900 17,900
Depreciation Expense 6,500 6,500
Insurance Expense 5,700 5,700
Miscellaneous Expense 5,400 5,400
475,000 475,000 31,200 31,200 482,600 482,600
 MOMMY’S LAUNDRY
Income Statement
For the Year Ended June 30, 2014
Laundry revenue $232,200
Expenses:
Wages expense $126,300
Rent expense 40,000
Utilities expense 19,700
Laundry 17,900
supplies 6,500
expense 5,700
Depreciation 5,400
expense 221,500
Insurance $ 10,700
expense
Miscellaneo
us expense MOMMY’S LAUNDRY
Tot
al
expenses
Net
income
Statement of Owner's Equity
For the Year Ended June 30, 2014
Sophie Perez, capital, July 1, 2013
0
Net income for the year $10,700
Less withdrawals 10,000
Increase in owner's equity
106,300
Sophie Perez, capital, June 30, 2014
$106,300
 MOMMY’S LAUNDRY
Balance Sheet
June 30, 2014
Assets Liabilities
Current assets: Current liabilities:
Cash $ 11,000 Accounts payable $11,800
Laundry supplies 3,600 Wages payable 1,100
Prepaid insurance 3,900 Total liabilities $ 12,900
Total current assets $ 19,500
Property, • land, and equipment:
Laundry equipment $232,600
Less accumulated depreciation 131,900 Owner's Equity
Total property, plant, and Sophie Perez, capital 106,300
equipment 100,700 Total liabilities and owner's
Total assets $119,200 equity $119,200
 Closing Entries
2014
June 30 Laundry Revenue 232,200
Income Summary 232,200

30 Income Summary 221,500

Wages Expense 126,300
Rent Expense 40,000
Utilities Expense 19,700
Laundry Supplies Expense 17,900
Depreciation Expense 6,500
Insurance Expense 5,700
Miscellaneous Expense 5,400

30 Income Summary 10,700

Sophie Perez, Capital 10,700

30 Sophie Perez Capital 10,000

Sophie Perez, Drawing 10,000

MOMMY’S LAUNDRY
Post-Closing Trial Balance
June 30, 2014
Debit Credit
Balances Balances
Cash 11,000
Laundry Supplies 3,600
Prepaid Insurance 3,900
Laundry Equipment 232,600
Accumulated Depreciation 131,900
Accounts Payable
131,900
Wages Payable 1,100
Sophie Perez, Capital 106,300

Total 251,100 251,100