Question

Prepare adjusting entries and financial statements. (LO 2,3,4) P3-3A Alena Co. was organized on July 1, 2017. Quarterly financial statements are pre- pared. The unadjusted and adjusted trial balances as of September 30 are shown below. Adjusted Dr. Cr. $ 8,700 11,500 650 500 18,000 ALENA CO. Trial Balance September 30, 2017 Unadjusted Dr. Cash $ 8,700 Accounts Receivable 10,400 Supplies 1,500 Prepaid Rent 2,200 Equipment 18,000 Accumulated Depreciation-Equipment $ -0- Notes Payable 10,000 Accounts Payable 2,500 Salaries and Wages Payable -0- Interest Payable Unearned Rent Revenue 1.900 Owner's Capital 22,000 Owner's Drawings 1,600 Service Revenue 16,000 Rent Revenue 1,410 Salaries and Wages Expense 8,000 Rent Expense 1,900 Depreciation Expense Supplies Expense Utilities Expense 1,510 Interest Expense $53,810 $53,810 $ 700 10,000 2,500 725 100 450 22,000 1,600 17,100 2,860 8,725 3,600 700 850 1,510 100 $56,435 S56.4 (b) Net income $4,475 Ending capital 524,875 Total assets $38,650 Instructions (a) Journalize the adjusting entries that were made. (b) Prepare an income statement and an owner's equity statement for the 3 months ending September 30 and a balance sheet at September 30. (c) If the note bears interest at 12%, how many months has it been outstanding?

Answer 1

Solution:

1)

Particulars	Debit	Credit
Accounts Receivable	1,100
Service Revenue		1,100
Rent Expense	1,700
Prepaid Rent		1,700
Supplies Expense	850
Supplies		850
Depreciation Expense	700
Accum. Depreciation		700
Interest Expense	100
Interest Payable		100
Unearned Rent Revenue	1,450
Rent Revenue		1,450
Salaries and Wages Expense	725
Salaries/Wages Payable		725

Income Statement
Revenues	17,100
Service revenue	2,860
Rent revenue		19,960
Total
Expenses
Salaries and Wages	8,725
Rent Expense	3,600
Utilities Expense	1,510
Supplies Expense	850
Depreciation Exp	700
Interest Expense	100
Total		15,485
Net income		4,475

Owners Equity Statement
Owners Capital, July 1, 2017
Add: Investments	22,000
Net Income	4,475
	26,475
Owners Drawings	1,600
Owners Capital September 30, 2017	24,875

Balance sheet
Assets
Cash		8,700
Accounts receivable		11,500
Supplies		650
Prepaid rent		500
Equipment	18,000
Less: Accumulated Depreciation - Equip	-700	17,300
Total assets		38,650
Liabilities and Owners Capital Equity
Liabilities
Notes Payable		10,000
Accounts Payable		2,500
Salaries and Wages Payable		725
Unearned Rent Revenue		450
Interest Payable		100
Owners Equity
Owner's Capital		24,875
Total Liabilities and Equity		38,650