Question

USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (5) QUESTIONS Magic Cleaning Services has a fiscal year end of December 31st. It is in its first year of operations As of December 31, Magic has the following unadjusted trial balance Account Cash Accounts Receivable Supplies Equipment Accounts Payable Unearned Service Revenue Common Stock Retained Earnings Service Revenue Wage Expense Rent Expense Utilities Expense Administrative Expense Debit $430,900 $158,000 $111,000 $120,000 Credit $ 45,900 $ 113,600 $100,000 $649,200 $ 48,600 $ 18,000 $ 6,200 16,000 $ 908,700 TOTALS $908,700 In addition, Magic has not yet adjusted for the following 1. The equipment was purchased on March 1 of the current year. It has a 10-year life, 10% salvage value and Magic uses the double declining balance method for depreciation. Magic records depreciation to the nearest full month 2. On March 1, Magic prepaid $18,000 for 12 months of rent on an office/warehouse. The original entry was recorded as Rent Expense 3. By December 31st, 60% of the services related to the Unearned Revenues had been performed 4. Wages of $5,700 should be accrued and are scheduled to be paid on January 2 5. Supplies of $33,000 were still on hand at year end 6. Based on industry averages, it is estimated that 3% of the accounts receivable will prove to be uncollectible

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