Question

	Unadjusted Trial Balance
Accounts	Debit	Credit
Cash	197,683
Office Supplies/Lures	4,200
Prepaid Insurance	4,000
Equipment - Boat	32,000
Accumulated Depre - Equipment		-
Accounts Payable		3,500
Interest Payable		-
Unearned Service Revenue		14000
Notes Payable		27,500
Common Stock		46,000
Additional paid in capital in excess of par		138,000
Retained Earnings, 1/1/20		-
Service Revenue		29,000
Interest Expense	917
Salaries Expense	7,700
Utilities Expense	8,200
Boat Gas Expense	2,800
loss of sales supplies/lures	500
Depreciation Expense	-
Office Supplies Expense	-
Insurance Expense	-
Total	258,000	258,000

Prepare Adjusting Journal Entries within the General Journal

The 2/1/20 Notes Payable principle from First Hawaiian Bank is due in 5 years at an annual interest rate of 5%. Interest must be paid every 8-months.

1. 1. The boat purchased on 2/1/20 is depreciated using the straight-line method over a useful life of 10 years. Salvage is zero.
   2. Due to the use of office supplies, the Office Supplies and lures only added up to $1,000 at the end of the 2020 year
   3. Insurance expense was recorded.
   4. On 12/30/20, 25% of the services were provided early from the customers that paid cash on 9/1/20.
   5. Post adjusting journal entries to the Worksheet and then complete the rest of the worksheet
2. Prepare Financial Statements:
   1. Income Statement (Single-step)
3. 1. Statement of Retained Earnings
4. 1. 1. Paid cash dividend of $900 to owners by 12/31/20.
   2. Balance Sheet

Answer 1

Adjusting Entries:

Date	Account title and Explanation	Debit	Credit
12/31/20	Interest expense [27,500 x 5% x 3/12]	$344
	Interest payable		$344
	[To record accrued interest expense]
12/31/20	Depreciation expense [((32,000-0)/10) x 11/12]	$2,933
	Accumulated depreciation-Equipment		$2,933
	[To record depreciation expense]
12/31/20	Office Supplies expense [4,200-1,000]	$3,200
	Office Supplies		$32,000
	[To record supplies expense]
12/31/20	Insurance expense*	$4,000
	Prepaid insurance		$4,000
	[To record insurance expense]
12/31/20	Unearned Service Revenue	$3,500
	Service revenue [14,000 x 25%]		$3,500
	[To record revenue from unearned]

*Due no additional information about insurance, Assumed total insurance is belongs to the Year 2020.

Work-Sheet:

Work Sheet
	Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance		Income Statement		Balance Sheet
Accounts	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	197,683				197,683				197,683
Office Supplies/Lures	4,200			3,200	1,000				1,000
Prepaid Insurance	4,000			4,000	0				0
Equipment - Boat	32,000				32,000				32,000
Accumulated Depre - Equipment		0		2,933		2,933				2,933
Accounts Payable		3,500				3,500				3,500
Interest Payable		0		344		344				344
Unearned Service Revenue		14000	3,500			10,500				10,500
Notes Payable		27,500				27,500				27,500
Common Stock		46,000				46,000				46,000
Additional paid in capital in excess of par		138,000				138,000				138,000
Retained Earnings, 1/1/20		0				0				0
Service Revenue		29,000				29,000		29,000
Interest Expense	917		344		1,261		1,261
Salaries Expense	7,700			3,500	4,200		4,200
Utilities Expense	8,200				8,200		8,200
Boat Gas Expense	2,800				2,800		2,800
loss of sales supplies/lures	500				500		500
Depreciation Expense	0		2,933		2,933		2,933
Office Supplies Expense	0		3,200		3,200		3,200
Insurance Expense	0		4,000		4,000		4,000
Total	258,000	258,000	13,977	13,977	257,777	257,777	27,094	29,000	230,683	228,777
Net income							1,906			1,906
Total							29,000	29,000	230,683	230,683

Income Statement:

Income Statement
For the year ended Dec 31,2020
Revenues:
Service Revenue		29,000
Expenses:
Interest Expense	1,261
Salaries Expense	4,200
Utilities Expense	8,200
Boat Gas Expense	2,800
loss of sales supplies/lures	500
Depreciation Expense	2,933
Office Supplies Expense	3,200
Insurance Expense	4,000
Total expenses		27,094
Net income		1,906

Statement of retained earnings:

Statement of retained earnings
For the year ended Dec 31,2020
Retained earnings, 1/1/20	$0
Add: Net income	$19,606
	$19,606
(Less): Dividends	($900)
Retained earnings, 12/31/20	$18,706

Balance Sheet:

Balance sheet
As of December 31,2020
Assets		Liabilities
Cash [197,683-900 dividends]	196,783	Accounts Payable	3,500
Office Supplies/Lures	1,000	Interest Payable	344
Prepaid Insurance	0	Unearned Service Revenue	10,500
Equipment - Boat	32,000	Notes Payable	27,500
Accumulated Depre - Equipment	-2,933	Total liabilities	41,844
		Stockholders' equity:
		Common Stock	46,000
		Additional paid in capital in excess of par	138,000
		Retained Earnings, 1/1/20	1,006
		Total stockholders' equity	185,006
Total assets	226,850	Total liabilities and stockholders' equity	226,850