Question

I have a homework and I am having a hard time with few of the answers and I would like to get some guidance.I answer questions 1-4 but I am get confused with 5,6 and 7. Could you please someone help me?

Transactions for Blackberry Mountain Inc for the month of January is as follows:

1 Company issued common stock for $21,000

2a Supplies are purchased for $3,000.

2b Insurance is paid for 6 months beginning January 1: $5,400 (record as an asset)

2c Rent is paid for 3 months beginning in January: $4,500 (record as an asset)

3 Blackberry Mountain Inc borrows $45,000 from 1st State Bank at 12% annual interest.

6 An equipment is purchased for $22,500 cash. It will be used for 3 years and will be depreciated monthly using straight-line depreciation with no salvage value. A full month of depreciation will be charged in January. 9 Services are performed for customers on account. Invoices totaling $9,800 are mailed.

10 Services are performed for cash customers: $7,600.

15 Blackberry Mountain Inc borrows $16,000 from 2nd State Bank at 9% annual interest. 16 Wages for the first half of the month are paid on January

16: $4,200

20 The company receives $3,000 from a customer for an advance order for services to be provided in January and February.

25 Collections from customers on account (see January 9 transaction): $4,500.

30 A $3,100 utility bill for January arrived. It is due on February 15.

Additional information for the adjusting entries at January 31:

a. The company completed 60% of the deliveries for the customer that paid in advance on January 20th.

b. Interest is accrued for the two bank loans (assume a full month for the 1st State Bank loan and ½ month for the 2nd State Bank loan).

c. The last 2 weeks wages earned by employees are $4,200 and will be paid on February 3rd.

d. Record January depreciation.

e. Adjust the prepaid asset accounts as needed.

Instructions

1. journal entries for each event.

2. the t-accounts

3. unadjusted Trial Balance.

4. Record Adjusting Entries.

5. Adjusting Trial Balance.

6. Income Statement, Balance sheet, and Statement of Retained Earnings.

7. closing Entries.

I did question 1-4 but I quite do not understand what criteria I should consider to prepare those tables.(5-7)

Answer 1

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Part 5 Adjusting Trial Balance:				Part 7 Closing Entries:
Cash	$     57,500			Event	Account	Debit	Credit
Accounts Receivable	$       5,300
Prepaid Insurance	$       4,500			c1	Service Revenue	$   19,200
Prepaid Rent	$       3,000				Income Summary		$   19,200
Supplies	$       3,000				(To close service revenue account)
Equipment	$     22,500
Accumulated Depreciation-Delivery Van		$       6,250		c2	Income Summary	$   20,660
Accounts Payable		$       3,100			Utility Expense		$     3,100
Interest Payable		$           510			Depreciation Expense		$     6,250
Salaries and Wages Payable		$       4,200			Insurance Expense		$         900
Unearned Revenue		$       1,200			Rent Expense		$     1,500
Note Payable-Long Term		$     61,000			Salaries and Wages Expense		$     8,400
Common Stock		$     21,000			Interest Expense		$         510
Service Revenue		$     19,200			(To close expense account)
Utility Expense	$       3,100
Depreciation Expense	$       6,250			cc	Retained Earning	$     1,460
Insurance Expense	$           900				Income Summary		$     1,460
Rent Expense	$       1,500				(To close income summary)
Salaries and Wages Expense	$       8,400
Interest Expense	$           510
Total	$ 116,460	$ 116,460
Part 6 Income Statement
Service Revenue		$     19,200
Less: Expense
Utility Expense	$       3,100
Depreciation Expense	$       6,250
Insurance Expense	$           900
Rent Expense	$       1,500
Salaries and Wages Expense	$       8,400
Interest Expense	$           510
Total Expense		$ (20,660)
Net Income/(Loss)		$     (1,460)
Statement of Retained Earning:
Beginning Balance		$              -
Add:: Net Income/(Loss)		$     (1,460)
Ending Retained Earning		$     (1,460)
Balance Sheet:
Assets:
Current Assets:
Cash		$     57,500
Accounts Receivable		$       5,300
Prepaid Insurance		$       4,500
Prepaid Rent		$       3,000
Supplies		$       3,000
Total Current Assets		$     73,300
Equipment	$     22,500
Accumulated Depreciation-Delivery Van	$     (6,250)	$     16,250
Total Assets		$     89,550
Liabilities and Equity:
Current Liabilities:
Accounts Payable		$       3,100
Interest Payable		$           510
Salaries and Wages Payable		$       4,200
Unearned Revenue		$       1,200
Total Current liabilties		$       9,010
Note Payable-Long Term		$     61,000
Total Liabilities		$     70,010
Stockholder's Equity:
Common Stock	$     21,000
Retained Earning	$     (1,460)	$     19,540
Total Liabilities and Equity		$     89,550	$           -