Q6P The following are the trial bala... [FREE SOLUTION]

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Chapter 3: Q6P (page 140)

The following are the trial balance and the other information related to Yorkis Perez, a consulting engineer.
YORKIS PEREZ, CONSULTING ENGINEER .
TRIAL BALANCE
DECEMBER 31, 2017
Debit
Credit
Cash
$ 29,500
Accounts Receivable
49,600
Allowance for Doubtful Accounts
$ 750
Supplies
1,960
Prepaid Insurance
1,100
Equipment
25,000
Accumulated Depreciation鈥擡quipment
6,250
Notes Payable
7,200
Owner鈥檚 Capital
35,010
Service Revenue
100,000
Rent Expense
9,750
Salaries and Wages Expense
30,500
Utilities Expenses
1,080
Office Expense
720

$149,210
$149,210
Fees received in advance from clients $6,000, which were recorded as revenue.
Services performed for clients that were not recorded by December 31, $4,900.
Bad debt expense for the year is $1,430.
Insurance expired during the year $480.
Equipment is being depreciated at 10% per year.
Yorkis Perez gave the bank a 90-day, 10% note for $7,200 on December 1, 2017.
Rent of the building is $750 per month. The rent for 2017 has been paid, as has that for January 2018, and recorded as Rent Expense.
Office salaries and wages earned but unpaid December 31, 2017, $2,510.
Instructions
From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2017. (Omit explanations.)
Prepare an income statement for 2017, a statement of owner鈥檚 equity, and a classified balance sheet. Yorkis Perez withdrew $17,000 cash for personal use during the year.

Short Answer

Expert verified

Total debit and credit side of journal is $18,570
Net Income = $56,620

Owner鈥檚 equity Statement = $85,630

Balance sheet total = $101,400

Step by step solution

Meaning of Trial Balance

A worksheet used in bookkeeping is the trial balance. In this, each record鈥檚 balance is included to form aggregates for the credit and debit account columns that are always equal.

(a) Preparing Journal entry

Date	Particulars	Debit ($)	Credit ($)
Dec. 31	Service Revenue	6,000
	Unearned Service Revenue		6,000

31	Accounts Receivables	4,900
	Service revenue		4,900

31	Bad Debt expense	1,430
	Allowance for doubtful accounts		1,430

31	Insurance expense	480
	Prepaid Insurance		480

31	Depreciation expense	2,500
	Accumulated depreciation- Equipment $($ 25, 000 脳 10 %)$		2,500

31	Prepaid Rent	750
	Rent expense		750

31	Salaries and Wages expense	2,510
	Salaries and Wages Payable		2,510
		$18,570	$18,570

(b) Preparing an Income Statement, a statement of owner’s equity, and a classified balance sheet

Preparing Income Statement

PEREZ CONSULTING ENGINEERS

Income Statement

Service revenue $($ 100, 000 - $ 6, 000 + $ 4, 900)$	$98,900
Expenses
Salaries and wages expense $($ 30, 500 + $ 2, 510)$	$33,010
Rent expense $($ 9, 750 - $ 750)$	9,000

Depreciation expense	2,500
Bad debt expense	1,430
Utilities expense	1,080
Office expense	720
Insurance expense	480
Interest expense	60
Total expenses	48,280
Net Income	$50,620

Preparing statement of Owner鈥檚 Capital

YORKIS PEREZ CONSULTING ENGINEERS .

Owner鈥檚 capital, January 1, 2017	$52,010
Add: Net income .	50,620
Less: withdrawals	(17,000)
Owner鈥檚 capital, December 31, 2017	$85,630

Workings Note:

Calculation of Owners capital on January 1, 2017

Owners鈥� capital trial balance	$35,010
Withdrawals during year	17,000
Owner鈥檚 capital as of January 1, 2017	$52,010

Preparing Balance Sheet

PEREZ CONSULTING ENGINEERS .

Balance Sheet

Assets .
Current assets
Cash $29,500
Accounts receivable $($ 49, 600 + $ 4, 900)$ $54,500
Less: Allowance for doubtful accounts 2,180 52,320 $($ 750 + $ 1, 430)$
Supplies 1,960
Prepaid Insurance $($ 1, 100 - $ 480)$ 620
Prepaid rent 750
Total current assets	$85,150
Equipment 25,000
Less: Accumulated depreciation 8,750 $($ 6, 250 + $ 2, 500)$	16,250
Total assets	$101,400

Liabilities and Owner鈥檚 equity .
Current liabilities
Notes payable $7,200
Unearned service revenue 6,000
Salaries and wages payable 2,510
Interest payable 60	$15,770

Common stock $88,630	$85,630
Total liabilities and owners鈥� equity	$101,400

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BELLEMY FASHION CENTER TRIAL BALANCE NOVEMBER 30, 2017
	Debit	Credit
Cash	\( 28,700
Accounts Receivable	33,700
Inventory	45,000
Supplies	5,500
Equipment	133,000
Accumulated Depreciation鈥擡quipment		\) 24,000
Notes Payable		51,000
Accounts Payable		48,500
Common Stock		90,000
Retained Earnings		8,000
Sales Revenue		757,200
Sales Returns and Allowances	4,200
Cost of Goods Sold	495,400
Salaries and Wages Expense	140,000
Advertising Expense	26,400
Utilities Expenses	14,000
Maintenance and Repairs Expense	12,100
Delivery Expense	16,700
Rent Expense	24,000
	\(978,700	\)978,700

Supplies
Beg. Bal	800	10 鈦� 31	470

Salaries and Wages Expense
10 鈦� 15	800
10 鈦� 31	600

Unearned Service Revenue
10 鈦� 31	400	10 鈦� 20	650

Service Revenue
	10 鈦� 17	2,400
	10 鈦� 31	1,650
	10 鈦� 31	400

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Short Answer

Step by step solution

Meaning of Trial Balance

(a) Preparing Journal entry

(b) Preparing an Income Statement, a statement of owner’s equity, and a classified balance sheet

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MASON ADVERTISINGTRIAL BALANCEDECEMBER 31, 2017
	Unadjusted		Adjusted
	Dr.	Cr.	Dr.	Cr.
Cash	\( 11,000		\) 11,000
Accounts Receivable	20,000		23,500
Supplies	8,400		3,000
Prepaid Insurance	3,350		2,500
Equipment	60,000		60,000
Accumulated Depreciation鈥擡quipment		\( 28,000		\) 33,000
Accounts Payable		5,000		5,000
Interest Payable		鈥�0鈥�		150
Notes Payable		5,000		5,000
Unearned Service Revenue		7,000		5,600
Salaries and Wages Payable		鈥�0鈥�		1,300
Common Stock		10,000		10,000
Retained Earnings		3,500		3,500
Service Revenue		58,600		63,500
Salaries and Wages Expense	10,000		11,300
Insurance Expense			850
Interest Expense	350		500
Depreciation Expense			5,000
Supplies Expense			5,400
Rent Expense	4,000		4,000
	\(117,100	\)117,100	\(127,050	\)127,050

SANTO DESIGN ADJUSTED TRIAL BALANCE DECEMBER 31, 2017
	Dr.	Cr.
Cash	\( 11,350
Accounts Receivable	21,500
Supplies	5,000
Prepaid Insurance	2,500
Equipment	60,000
Accumulated Depreciation鈥擡quipment		\) 35,000
Accounts Payable		5,000
Interest Payable		150
Notes Payable		5,000
Unearned Service Revenue		5,600
Salaries and Wages Payable		1,300
Common Stock		10,000
Retained Earnings		3,500
Service Revenue		61,500
Salaries and Wages Expense	11,300
Insurance Expense	850
Interest Expense	150
Depreciation Expense	7,000
Supplies Expense	3,400
Rent Expense	4,000
	\(127,050	\)127,050