Question

Problem 3-6 The following are the trial balance and the other information related to Pearl Perez, a consulting engineer. PEARL PEREZ, CONSULTING ENGINEER TRIAL BALANCE DECEMBER 31, 2017 Debit Credit Cash $29,500 Accounts Receivable 57,000 Allowance for Doubtful Accounts $815 Supplies 1,880 Prepaid Insurance 1,940 Equipment 30,300 Accumulated Depreciation-Equipment 7,575 Notes Payable 7,200 Owner’s Capital 36,778 Service Revenue 115,887 Rent Expense (13 months of rent) 10,595 Salaries and Wages Expense 34,700 Utilities Expenses 1,720 Office Expense 620 Totals $168,255 $168,255 1. Fees received in advance from clients $5,980, which were recorded as revenue. 2. Services performed for clients that were not recorded by December 31, $4,558. 3. Bad debt expense for the year is $1,328. 4. Insurance expired during the year $519. 5. Equipment is being depreciated at 10% per year. 6. Pearl Perez gave the bank a 90-day, 10% note for $7,200 on December 1, 2017. 7. Rent of the building is $815 per month. The rent for 2017 has been paid, as has that for January 2018, and recorded as Rent Expense. 8. Office salaries and wages earned but unpaid December 31, 2017, $2,616.

From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit 1. 2. 3. 4. 5. 6. 7. 8.

Prepare an income statement for 2017. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Prepare a statement of owner’s capital for 2017. PearlPerez withdrew $16,090 cash for personal use during the year. (Drawings are recorded directly to the Owners Capital account.) (List items that increase owner's capital first.)
Prepare a classified balance sheet for 2017. (List current assets in the order of liquidity.)

Answer 1

Adjusting ent Debit credit $5980 No | Account Titles and exeplanäleon Service Revenue To Deferred Revenue C Fees Recieved in Advance) $5,980 $4,558 94558 Account Recievable To Service Revenue c service Performed not recorded) $1,328 3. $1,328 I Bad debt expense To Allowance for Doubtful Accounts c Bad debt expense recorded) 9519 $519 In surance expense - To Prepaid Insurance c Insurance expired) 1 3030 1 5. 3.30 Depreciation Expenso To Accumulated dep-equipment ( Equipment is depreciated) 940 6. Interest Expense 240 To Interest Interest Payable Expense recorded) c $815 $815 7 ] Prepaid - To 1 c rent Rent Rent expense paid in advance)

di salaries and wages expense $2616 - 92616 - Te Tu salaries and wages Payable salaries and wages unpaid) Balance Adjusted Trial Dec 31, 2017 credit Debit $29500 61,558 2,143 [ 815 + 1328) 1,880 1421 30,300 Cash Accounts Recievable (51,000 + 4,558 ) Accounts . Allowance for Doubtful Supplies prepaüd Insurance [ 1940- 519) Equipment Accumulated depreciation equipment [ 7,575+ 3,030) Notes Payable owner's capital Service Revencee [ 115,987 -5980 + 7 19605 7200 36,778 114,465 - 4558 9780 37,316 1,720 620 5 980 Rent expense [10,595- &15) salaries and wages expense (34700 + 2616) utilities Expense office expense Deferred Revenue Baod debt expense Insurance expense Depreciation expena Interest expense 1328 519 3,030 २५०

२५० Interest Prepaid payable Rent 1815 salaries and wages payable 2616 180027 180027 Income statement 174,465 97,80 37316 17:20 620 Service Revenue Expense: - Rent expense salaries and wages expense Utilitin expense oftice expense Bal debt expense Insurance expense Depreciation expense Interest expense Total expense 1328 519 3,030 २५० 54,553 59,912 Net Income

capital .. statement of owner Dec 31,2017 owner capital (Beginning) Addi - Net Income 36778 59,912 2890 lessi- 16090 Drawings Balance leadings 80,600 Balance sheet Dec 31 2017 Amt Amaut Assets current Asstti cash (29500-18090) 13,410 7200 5486 Gliss 2143 Account Recievable کاووک Less Doubtful 1,880 Yppily 246 Equity and liabilitie. current liabilities. I | Notes payable Deferred Revenice Interest Payable salaries and wages payable Total current liability owner capital Rent Prepaid Insurance 1421 Prepaid 815 Tot of current Assets Mon-current Assets Equipment | 39300 Less.-Accumulated dep 10605 s 119.695 2,616 76,941 16036 80,600 96,530 Total Tond

WIN: - 5. Repreciation = 10%, of 30,300 = 3,030 & Interest expense a 7200 x iul = 720 x 30 Today = $240 7. Reut of building prepaid for 1 m