Question

The account balances from the September 30, 2020 unadjusted trial balance for Washington Enterprises Inc. are presented below: Debit Credit Contributed Capital.. $110,000 Office Furniture... 72,000 Accumulated Depreciation-Furniture.. 6,000 Cash... $224,000 Rent Expense. 12,000 Retained Earnings.. 125,000 Accounts Receivable.. 71,000 Accounts Payable.. 98,000 Office Supply Inventory. 58,000 Note Payable (taken out on 9/1/20; 10% interest due annually) 30,000 Consulting Revenue. 110,000 Deferred Revenue. 20,000 Salaries Expense.. 40,000 Prepaid Insurance. 22,000 Additional information is as follows: a. The Prepaid Insurance represents the original premium of $24,000 paid on July 1, 2020 for a 2-year policy. b. The Office Furniture has an estimated five-year life with no residual (salvage) value. c. You found a utility bill that had not been included in the accounts and had not been paid. The amount was $10,000. d. For deferred revenue, consultants charged 50 hours during September to these clients. No revenue has been recognized nor have any adjustments been made. The CEO estimated that it would take another 10 hours per month for the next 20 months to complete the work. e. Office Supplies inventory totaled 18,000 at the end of September. The balance in Office Supplies at September 1, 2020 was $8,000. There was a $108,000 purchase of Office Supplies during September.

Answer 1

Washington Enterprises Inc. Journal entries Date Account Prepaid Insurance Insurance Expense Debit $ 2,750 а Credit Calculation 22000/24*3 months $ 2,750 July 1 to Sept 30 is 3 months $ 14,400 b Depreciation Expense Accumulated Depreciation - Furniture (72000-0)/5 years $ 14,400 Assuming furniture used for one full year с $ 10,000 Utilities Expense Accounts Payable $ 10,000 d $ 4,000 Deferred Revenue Consulting Revenue 20000/250 hours *50 hours $ 4,000 Total hours=10 hrs*20 mnths=200 hrs+50 hrs=250 hrs e $ 40,000 58000-18000 Supplies Expense Office Supplies Inventory $ 40,000 $ 10,000 f Dividends Dividends Payable $ 10,000 g No Entry $ $ h $ 24,000 Salaries Expense Salaries Payable =28000/7*6 $ 24,000 Saturday to Thursday is 6 days

Adjustments Debit Credit Unadjusted TB Debit Credit 224,000 71,000 58,000 22,000 72,000 6,000 98,000 40,000 2,750 14,400 10,000 24,000 10,000 4,000 Washington Enterprises Inc. Account Names Cash Accounts Receivable Office Supplies Inventory Prepaid Insurance Office Furniture Accumulated Depreciation - Furniture Accounts Payable Salaries Payable Dividends Payable Deferred Revenue Notes Payable Contributed Capital Retained Earnings Dividends Consulting Revenue Salaries Expense Rent Expense Insurance Expense Depreciation Expense Utilities Expense Supplies Expense Totals 20,000 30,000 110,000 125,000 Adjusted TB Debit Credit 224,000 71,000 18,000 19,250 72,000 20,400 108,000 24,000 10,000 16,000 30,000 110,000 125,000 10,000 114,000 64,000 12,000 2,750 14,400 10,000 40,000 557,400 557,400 10,000 110,000 4,000 24,000 40,000 12,000 2,750 14,400 10,000 40,000 105,150 105,150 499,000 499,000

114,000 Washington Enterprises Inc. Income Statement For the Period Ended September 30, 2020 Consulting Revenue Expenses Salaries Expense Rent Expense Insurance Expense Depreciation Expense Utilities Expense Supplies Expense Total Expenses Net Income (Loss) 64,000 12,000 2,750 14,400 10,000 40,000 143,150 (29,150)

Washington Enterprises Inc. Statement of Stockholders Equity For the Period Ended September 30, 2020 Contributed Capital Retained Earnings Total Equity Beginning Balance 110,000 125,000 235,000 Net Income (Loss) (29,150) (29,150) Dividends (10,000) (10,000) Ending Balance 110,000 85,850 195,850

Washington Enterprises Inc. Balance Sheet As of September 30, 2020 Assets Current Assets Cash Accounts Receivable Office Supplies Inventory Prepaid Insurance Total Current Assets 224,000 71,000 18,000 19,250 332,250 Property, Plant & Equipment Office Furniture Accumulated Depreciation - Furniture Total Property, Plant & Equipment Total Assets 72,000 (20,400) 51,600 383,850 Liabilities & Stockholders Equity Current Liabilities Accounts Payable Salaries Payable Dividends Payable Deferred Revenue Total Current Liabilities 108,000 24,000 10,000 16,000 158,000 Non-Current Liabilities Notes Payable Total Liabilities 30,000 188,000 Stockholders Equity Contributed Capital Retained Earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 110,000 85,850 195,850 383,850