Question

.. Beeline KG 09:28 55% Done Assignment 1 Accounting Finance... Economics, Inc. has started its operation in late 2016. At the beginning it was generating revenue from sales commission and after it expanded its operation by providing management services. By the end of 2017 the company has hired you as independent consultant to help with comprising final balance sheet and income statement. Required: 1. Provide ALL adjustments by the end of 2017. 2. Fill in the worksheet. 3. Prepare closing entries, income statement, statement of retained earnings, and balance sheet for 2017. The following information has been presented to you by the end of the year: 1. On November 01, 2017 the company paid USD 600 insurance fee for 1 year. At that time the company debited Prepaid rent account. 2. The beginning balance of office tools on December 01, 2017 were equaled to USD 720. All purchases of office tools were debited on account Expenses on office tools. The ending balance of office tools by the end of year was USD 319. 3. In January 01, 2017 the company purchased a building, The company has accrued depreciation only for first months of USD 150. The non-accrued balance of depreciation for 2017 is USD 1,650. 4. On January 01, 2017 the company also purchased an equipment for USD 5,400. The depreciation also was not recognized for 11 months of USD 495. 5. On September 2017 the company has signed contract with client for 6 month period. The client has paid this amount on September 30, 2017. 6. On November 21 the company obtained a loan from local bank of USD 3,000. The term is 3 years and interest rate 36.5%. Interest is paid every three months and accrued on 365 daily basis. 7. On December 20 the company hired a new accountant. She worked for 20 days at rate of USD 30 per day. The salary for December will be paid in January 5, 2018. 8. In December the company also hired a new employee. His salary is comprised form sales commissions. By the end of the year he did not sell anything. 9. On December 31 the company declared dividends of USD 900.

Answer 1

Answer:-

Account Titles Trial Balance Balance Sheet Report on stock holder equity Dr. Cr. Cr. Cr. Dr. $ 22,240 $ 16,990 $ 1,500 $ 319 $ 500 $ 130,000 $ 36,000 $ 150 $ 1,800 $ 5,400 ECONOMICS INC. WORKSHEET For the year ended December 31, 2017 Adjusted Income Adjustment entries Trial balance Statement Dr. Cr. Dr. Cr. Dr. Cr. $ 22,240 $ $ 16,990 $ 1,500 401 $ 319 100 $ 500 $ 130,000 $ 36,000 $ 1,650 $ 1,800 $ 5,400 495 $ 540 $ 23,595 $ 1,800 123 $ 123 600 $ 600 $ 900 $ 900 $ 3,000 $ 180,000 $ 2,771 $ 15,484 $ 15,484 $ 1,275 $ 1,275 $ 9,425 $ 9,425 495 $ 540 $ 540 600 $ 600 $ 600 401 $ 1,901 $ 1,901 | Dr. Cash $ 22,240 Account receivable $ 16,990 Other Account receivable $ 1,500 Office tools $ 720 Prepaid insurance $ 600 Land $ 130,000 Building $ 36,000 Accumulated depreciation-building Equipment $ 5,400 Accumulated depreciation-equipment Account payable Unearned revenue Accrued interest (payable) Accrued salary (payable) Dividend payable Bank loan capital introduced Retained profit Sales commission Advertising expense $ 1,275 Salary expenses for seller $ 9,425 Depreciation of equipment $ 45 Salary expense (administrative staff) Expenses on office tools $ 1,500 S $ $ $ 45 23,595 1,800 $ $ $ $ $ $ $ 540 23,595 1,800 123 600 900 3,000 $ $ $ $ 3,000 180,000 2,771 15,484 $ $ 180,000 2,771 $

$ 1,000 $ 150 Telephone expense Insurance expense Depreciation-building Interest expense Dividend expense Net loss Stock holder's equity Total $ $ $ $ $1,000 $ 100 $ 1,800 $ 123 100 1,650 123 900 $ $ $ $ $ 1,000 100 1,800 123 900 $ 1,280 $ 900 $ 1,280 $ 180,591 $ 182,771 $ 182,771 $ 212,949 $ 180,591 $ 212,949 $ 226,845 $ 226,845 $ 4,269 $ 4,269 $ 230,613 $ 230,613 $ 16,764 $ 16,764

Note:-For transaction number 5, there is no mention of amount involved. Hence it has been ignored in above worksheet.

Also information for rate of income tax is not there in the question. So income tax can not be calculated.

(i) Interest expense = $3,000 × 36.5% × 41 days / 365 days = $123

(ii) Calculation of office tool expense:

        Beginning office tool        $720

Add: purchased made           $1,500

                  Total                     $2,220

Less: Ending office tools          $319

   Office tool expense               $401