Accounting

P3-4B Rebecca Sherrick Management Services Inc. began business on
January 1, 2002, with

a capital investment of $120,000. The company manages condominiums for
owners (Service

Revenue) and rents space in its own office building (Rent Revenue). The
trial balance and adjusted

trial balance columns of the work sheet at the end of the first year are
as follows.

REBECCA SHERRICK MANAGEMENT SERVICES INC.

Work Sheet

For the Year Ended December 31, 2002

Trial Adjusted

Balance Trial Balance

Account Titles Dr. Cr. Dr. Cr.

Cash 14,500 14,500

Accounts Receivable 23,600 23,600

Prepaid Insurance 3,100 1,600

Land 56,000 56,000

Building 106,000 106,000

Equipment 48,000 48,000

Accounts Payable 10,400 10,400

Unearned Rent Revenue 5,000 1,800

Mortgage Payable 100,000 100,000

Common Stock 90,000 90,000

Retained Earnings 30,000 30,000

Dividends 20,000 20,000

Service Revenue 75,600 75,600

Rent Revenue 23,000 26,200

Salaries Expense 30,000 30,000

Advertising Expense 17,000 17,000

Utilities Expense 15,800 15,800

Totals 334,000 334,000

Insurance Expense 1,500

Depreciation Expense—Building 2,500

Accumulated Depreciation—Building 2,500

Depreciation Expense—Equipment 3,900

Accumulated Depreciation—Equipment 3,900

Interest Expense 10,000

Interest Payable 10,000

Totals 350,400 350,400

Instructions

(a) Prepare a complete work sheet.

(b) Prepare a classified balance sheet. (Note: $10,000 of the mortgage
payable is due for payment

next year.)

(c) Journalize the adjusting entries.

(d) Journalize the closing entries.

(e) Prepare a post-closing trial balance.