Question

P3-6 The trial balance and other information for consulting engineers Mustang Rovers Consulting Limited follow: XLS FIRI MUSTANG ROVERS CONSULTING LIMITED Trial Balance December 31, 2017 Credit Debit $ 83,700 81,100 $ 750 1,960 85,000 Cash Accounts receivable Allowance for doubtful accounts Supplies Equipment Accumulated depreciation equipment Notes payable Common shares Retained earnings Service revenue Rent expense Salaries and wages expense Insurance expense Utilities expense Miscellaneous expense 6,250 7,200 35,010 161,100 100,000 9,750 28,500 18,500 1,080 720 $310,310 $310,310 Additional information: 1. Service revenue includes fees received in advance from clients of $6,900. 2. Services performed for clients that were not recorded by December 31 were $7,300. 3. Bad debt expense for the year is $6,300.

Answer 1

a.

No.	General Journal	Debit	Credit
		$	$
1.	Service Revenue	6,900
	Unearned Revenue		6,900
2.	Accounts Receivable	7,300
	Service Revenue		7,300
3.	Bad Debt Expense	6,300
	Allowance for Doubtful Accounts		6,300
4.	Prepaid Insurance	6,000
	Insurance Expense		6,000
5.	Depreciation Expense	7,000
	Accumulated Depreciation : Equipment		7,000
6.	Interest Expense	72
	Interest Payable		72
7.	Prepaid Rent	750
	Rent Expense		750
8.	Salaries and Wages Expense	2,598
	Salaries and Wages Payable		2,598
9.	Dividends	80,000
	Dividends Payable		80,000

b.

Mustang Rovers Consulting Limited Adjusted Trial Balance December 31, 2017
Account Titles	Debit	Credit
	$	$
Cash	83,700
Accounts Receivable	88,400
Allowance for Doubtful Accounts		7,050
Supplies	1,960
Prepaid Insurance	6,000
Prepaid Rent	750
Equipment	85,000
Accumulated Depreciation : Equipment		13,250
Salaries and Wages Payable		2,598
Unearned Revenue		6,900
Dividends Payable		80,000
Interest Payable		72
Notes Payable		7,200
Common Shares		35,010
Dividends	80,000
Retained Earnings		161,100
Service Revenue		100,400
Rent Expense	9,000
Bad Debt Expense	6,300
Insurance Expense	12,500
Salaries and Wages Expense	31,098
Utilities Expense	1,080
Depreciation Expense	7,000
Interest Expense	72
Miscellaneous Expense	720
Totals	$ 413,580	$ 413,580

c.

Mustang Rovers Consulting Limited Income Statement For the year ended December 31, 2017
Service Revenue		$ 100,400
Expenses
Rent Expense	9,000
Bad Debt Expense	6,300
Insurance Expense	12,500
Salaries and Wages Expense	31,098
Utilities Expense	1,080
Depreciation Expense	7,000
Interest Expense	72
Miscellaneous Expense	720
Total Expenses		67,770
Net Income		$ 32,630

Mustang Rovers Consulting Limited Statement of Retained Earnings For the year ended December 31, 2017
Retained earnings, Jan 1	$ 161,100
Add: Net income	32,630
Less: Dividends	(80,000)
Retained Earnings, Dec 31	$ 113,730

Mustang Rovers Consulting Limited Balance Sheet December 31, 2017
Assets		Liabilities
Cash	$83,700	Salaries and Wages Payable	$ 2,598
Accounts Receivable, net	81,350	Unearned Revenue	6,900
Supplies	1,960	Dividends Payable	80,000
Prepaid Insurance	6,000	Interest Payable	72
Prepaid Rent	750	Notes Payable	7,200
Equipment, net	71,750	Total Liabilities	96,770
		Shareholders Equity
		Common Shares	35,010
		Retained Earnings	113,730
		Total Shareholders Equity	148,740
Total Assets	$245,510	Total Liabilities and Shareholders Equity	$245,510