Question

$ 300 Assets: Cash Accounts Receivable Supplies $12,500 700 630 FAST DELIVERIES, INC. Balance Sheet at January 1 Liabilities: Accounts Payable Stockholders' Equity: Common Stock Retained Earnings Total Liabilities and Stockholders' Equity 11,770 1,760 $13,830 Total Assets $13,830 Two employees have been hired, at a monthly salary of $2,300 each. The following transactions occurred during January of the current year. Ch. 2 2 2 January 1 2 3 نہ یہ کہ یہ یہ بیا بیا بیا بیا 4 5 6 7 8 9 10 16 20 $5,100 is paid for 12 months' insurance starting January 1. (Record as an asset.) $3,600 is paid for 12 months of rent beginning January 1. (Record as an asset.) FDI borrows $36,000 cash from First State Bank at 6% annual interest; this note is payable in two years. A delivery van is purchased using cash. Including tax, the total cost was $24,000. Stockholders contribute $7,000 of additional cash to FDI for its common stock. Additional supplies costing $1,100 are purchased on account and received. $600 of accounts receivable arising from last year's December sales are collected. $400 of accounts payable from December of last year are paid. Performed services for customers on account. Sent invoices totaling $10,900. $7,500 of services are performed for customers who paid immediately in cash. $2,300 of salaries are paid for the first half of the month. FDI receives $3,800 cash from a customer for an advance order for services to be provided later in January and in February. $4,800 is collected from customers on account (see January 9 transaction). 3 25

Answer 1

Fast Deliveries, Inc. Journal entries Date Account 1-Jan Prepaid Insurance Cash Credit Calculation Debit $ 5,100 $ 5,100 $ 3,600 2-Jan Prepaid Rent Cash $ 3,600 $36.000 3-Jan Cash Notes payable (long term) $ 36,000 $ 24,000 4-Jan Equipment Cash $ 24,000 $ 7,000 5-Jan Cash Common Stock $ 7,000 $ 1,100 6-Jan Supplies Accounts Payable $ 1,100 $ 600 7-Jan Cash Accounts Receivable $ 600 $ 400 8-Jan Accounts Payable Cash $ 400 $ 10,900 9-Jan Accounts Receivable Service revenue $ 10,900 $ 7,500 10-Jan Cash Service revenue $ 7,500 $ 2,300 16-Jan Salaries & Wages expense Cash $ 2,300 20-Jan Cash $ 3,800 Deferred Revenue $ 3,800 $ 4,800 $ 4,800 25-Jan Cash Accounts Receivable Adjusting entries 31a Utilities expense Accounts Payable $ 1,400 $ 1,400 31b $ 1,460 =630+1, 100-270 Supplies expense Supplies $ 1,460 31c $ 2,280 =3,800*60% Deferred Revenue Service revenue $ 2,280 31d $ 180 Interest expense Interest Payable =36,000*6%*1/12 $ 180 31e $ 500 = 24,000/4*1/12 Depreciation expense Accumulated Depreciation $ 500 31f $ 2,300 =1,150*2 Salaries & Wages expense Salaries & Wages Payable $ 2,300 31g $ 425 =5,100/12 Insurance expense Prepaid Insurance $ 425 31g $ 300 =3,600/12 Rent expense Prepaid Rent $ 300

Credit Date Credit Date Credit Date Credit Debit Date Accounts Receivable 700 7-Jan Fast Deliveries, Inc. T Accounts Date Debit Date Cash Op bal 12,500 1-Jan 3-Jan 36,000 2-Jan 5-Jan 7,000 4-Jan 7-Jan 600 8-Jan 10-Jan 7,500 16-Jan 20-Jan 3,800 25-Jan 4,800 Debit Date Prepaid Insurance 5,100 31g 1-Jan Debit Date Supplies 630 1,100 31b 600 Op bal 4,800 10,900 25-Jan 6-Jan 5,100 Op bal 3,600 9-Jan 24,000 400 2,300 425 1,460 Bal. Bal. Bal. Bal. 36,800 Prepaid Rent 3,600 318 6,200 Equipment 24,000 270 Accumulated Depreciation 31e 4,675 Accounts Payable 400 Op bal 6-Jan 2-Jan 300 4-Jan 500 8-Jan 300 1,100 1,400 31a Bal. Bal. 500 2,400 3,300 Deferred Revenue 2,280 25-Jan 24,000 Notes payable (long term) 3-Jan Bal. Interest Payable 31d Bal. Salaries & Wages Payable 311 31c 3,800 36,000 180 2,300 1,520 36,000 Bal. 180 Bal. 2,300 Bal. Retained Earnings Bal. Common Stock Op bal 5-Jan Op bal 1,760 11,770 7,000 1,760 Bal. Service revenue 9-Jan 18,770 Bal. Salaries & Wages expense 10,900 16-Jan 2,300 7,500 31f 2,300 2,280 Utilities expense 1,400 Supplies expense 1,460 31a 31b 10-Jan 310 Bal. 20,680 Bal. Bal. 1,400 Bal. Interest expense 180 4,600 Insurance expense 425 Rent expense 300 1,460 Depreciation expense 500 31d 31g 31g 31e Bal. 180 Bal. 425 Bal. 300 Bal. 500

Unadjusted TB Debit Credit 36,800 6,200 1,730 3,600 5,100 24,000 Fast Deliveries, Inc. Account Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Equipment Accumulated Depreciation Accounts Payable Deferred Revenue Salaries & Wages Payable Interest Payable Notes payable (long term) Common Stock Retained Earnings Service revenue Salaries & Wages expense Utilities expense Supplies expense Depreciation expense Insurance expense Rent expense Interest expense Totals 1,000 3,800 Adjusted TB Debit Credit 36,800 6,200 270 3,300 4,675 24,000 500 2,400 1,520 2,300 180 36,000 18,770 1,760 20,680 4,600 1,400 1,460 500 Post closing TB Debit Credit 36,800 6,200 270 3,300 4,675 24,000 500 2,400 1,520 2,300 180 36,000 18,770 13,575 36,000 18,770 1,760 18,400 2,300 425 300 180 84,110 84,110 79,730 79,730 75,245 75,245

20,680 Fast Deliveries, Inc. Income Statement For the month ended January 31 Revenue Service revenue Expenses Salaries & Wages expense Utilities expense Supplies expense Depreciation expense Insurance expense Rent expense Interest expense Net Income 4,600 1,400 1,460 500 425 300 180 8,865 11,815 Statement of Retained Earnings For the month ended January 31 Beginning balance Net Income Ending Balance 1,760 11,815 13,575

Fast Deliveries, Inc. Balance Sheet As of January 31 Assets Current Assets: Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Total Current Assets Liabilities Current Liabilities: 36,800 Accounts Payable 6,200 Deferred Revenue 270 Salaries & Wages Payable 3,300 Interest Payable 4,675 51,245 Total Current Liabiltiies 2,400 1,520 2,300 180 6,400 36,000 Fixed Assets: Equipment Accumulated Depreciation Equipment, net Non-Current Liabilities: 24,000 Notes payable (long term) (500) 23,500 Total Liabilties 42,400 Stockholders Equity: Common Stock Retained Earnings Total Stockholders Equity 18,770 13,575 32,345 Total Assets 74,745 Total Liabilities & Stockholders Equity 74,745