Assessment InstructionsFor this assessment complete Problems 2-4 2-5 and 2-6. You may use Word or Excel to complete the assessments throughout this course but you will find Excel to be most helpful for creating spreadsheets. Tutorials for using Excel are provided in the Supplemental Resources in the left navigation menu. If you use Excel submit the assessment in one Excel document using separate tabs for each spreadsheet.Problem 2-4: Adjusting the Books Using Adjusting EntriesHuntington Company’s annual accounting year ends on December 31. It is December 31 2011 and all of the 2011 entries except the following adjusting entries have been made:On September 1 2011 Huntington collected six months of rent worth $9 000 on storage space. At that date Zimmerman debited Cash and credited Unearned rent Revenue for $9 000.On October 1 2011 the company borrowed $30 000 from a local bank and signed a 12 percent note for that amount. The principal and interest are payable on the maturity date September 30 2012.Depreciation of $5 000 must be recognized on a service truck purchased on July 1 2011 at a cost of $30 000.Cash of $4 800 was collected on November 1 2011 for services to be rendered evenly over the next year beginning on November 1. Unearned Service Revenue was credited when the cash was received.On November 1 2011 Huntington paid a one-year premium for fire insurance of a total of $12 000 for one year of coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount.The company earned service revenue of $6 000 on a special job that was completed December 24 2011. Collection will be made during January 2012. No entry has been recorded.At December 31 2011 wages earned by employees totaled $17 500. The employees will be paid on the next payroll date January 15 2012.On December 31 2011 the company estimated it owed $16 000 for 2011 property taxes on land. The tax will be paid when the bill is received in January 2012.Using the information above prepare the adjusting entry required for each transaction at December 31 2011. To complete this problem you may wish to use the Excel template provided in the resources.Problem 2-5: Analyzing the Effects of Adjusting Entries on the Accounting ModelFor this problem you will fill in the Problem 2-5 Assessment Template linked in the assessment resources and submit the Excel document for grading. You will also need to refer to Problem 2-4. Using for increase – for decrease and NE for no effect indicate in the table provided the effect of each adjusting entry in Problem 2-4 (a through h) and the amount of the effect. Reminder: Assets = Liabilities Stockholders’ Equity; Revenues – Expenses = Net Income; and Net Income accounts are closed to Retained Earnings a part of Shareholders’ Equity.Problem 2-6: Locating Information on Published Financial StatementsRefer to the Lowe’s 2011 10-K. You should have located these statements for previous assessment problems. Use the financial statements and your prior knowledge of accounting supplemented by textbooks or other references of your choosing to answer the following questions. Reference the source of each answer including the page number from the 2011 10-K if applicable.How much is in the Prepaid Expenses and Other Current Assets account at the end of fiscal year 2012? Where did you find this information?What did the company report for Deferred Rent and Other liabilities at the end of fiscal year 2012? Where did you find this information?What is the difference between prepaid rent and deferred rent?Describe in general terms what accrued liabilities are.What would generate the interest income that is reported on the income statement?What company accounts would not have balances on a post-closing trial balance?Give the closing entry if any for Prepaid Expenses.What are the company’s earnings per share (basic only) for the three years reported?Compute the company’s net profit margin for the three years reported. What does the trend suggest to you about Lowe’s.
