Question

Required information C4-6 Recording/Posting Transactions and Adjustments, and Preparing Trial Balances and Financial Statements-Requires Calculating Depreciation and Interest (Chapters 2, 3, and 4) [LO 2-3, LO 3-3, LO 4. 2, LO 4-4) Fast Deliveries, Inc. (FDI), was organized in December last year and had limited activity last year. The resulting balance sheet at the beginning of the current year is provided below. $ 700 Assets: Cash Accounts Receivable Supplies $12,600 600 720 FAST DELIVERIES, INC. Balance Sheet at January 1 Liabilities: Accounts Payable Stockholders' Equity: Common Stock Retained Earnings Total Liabilities and Stockholders' Equity 11,900 1,320 $13,920 Total Assets $13,920 Two employees have been hired, at a monthly salary of $2.960 each. The following transactions occurred during January of the current year. Ch. January 1 2 3 56,000 is paid for 12 months insurance starting Danuary 1. (Record as an asset. $4,800 is paid for 12 months of rent beginning January 1. (Record as an asset.) FDI borrows $30,000 cash from First State Bank at 5% annual interest; this note is payable

Answer 1

Fast Deliveries Inc. Journal Enteries Date Particulars Jan-01 Prepaid Insurance a/c To Cash (12 months insurance paid) Dr. Debit in $ Credit in $ 6000 6000 Dr. 4800 Jan-02 Prepaid Rent a/c To Cash (12 months rent paid) 4800 Jan-03 Dr. 30000 Cash a/c To Note Payable (Cash borrowed) 30000 Work sheet For the period ending Jan 31 Unadjusted Adjustments Adjusted Particulars Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Cash 19040 19040 Accounts Receivable 7000 7000 Supplies 2120 1840 280 Prepaid Insurance 6000 500 5500 Prepaid Rent 4800 400 4400 Delivery Van 28800 28800 Accum. Depre - Van 625 625 Accounts Payable 1800 1100 2900 Salary Payable 2960 2960 Interest Payable 125 125 Unearned Revenue 3700 2220 1480 Note Payable 30000 30000 Common Stock 15900 15900 Retained Earnings 1320 1320 Service Revenue 18000 2220 20220 Salaries Expense 2960 2960 5920 Supplies Expense 1840 1840 Interest Expense 125 125 Depreciation Expense 625 625 Utility Expense 1100 1100 Insurance Expense 500 500 Rent Expense 400 400 Totals 70720 70720 9770 9770 75530 75530 Dr. 28800 Jan-04 Delivery Van a/c To Cash (Delivery Van purchased) 28800 4000 Jan-05 Cash a/c Dr. To Common Stock (Common stock issued for cash) 4000 Dr. 1400 Jan-06 Supplies a/c To Accounts Payable (Supplies on account) 1400 700 Jan-07 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 700

Date Jan-08 Debit in $ Credit in $ 300 Dr. Particulars Accounts Payable a/c To Cash (Creditors paid) 300 Jan-09 10600 Accounts Receivable a/c Dr. To Service Revenue (Services performed on account) 10600 Jan-10 7400 Cash a/c Dr. To Service Revenue (Services performed for cash) 7400 Jan-16 Dr. 2960 Salaries Expense a/c To Cash (Salaries paid) 2960 3700 Jan-20 Cash a/c Dr. To Unearned Revenue (Advance from client) 3700 Jan-25 3500 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 3500 Adjusting Enteries Date Particulars Jan-31 Utility Expense a/c Dr. To Accounts Payable (Expense on account) Debit in $ Credit in $ 1100 1100 1840 Jan-31 Supplies Expense a/c Dr. To Supplies (Supplies Expensed) 720 + 1400 - 280 1840 Jan-31 2220 Unearned Revenue a/c Dr. To Service Revenue (Revenue recognized) 3700 x 60% = 2220 2220 Jan-31 125 Interest Expense a/c Dr. To Interest Payable (Interest accrued) 30000 x 5% x 1/12 125 625 Jan-31 Depreciation Expense a/c Dr. To Accum. Depre - Van (To record depreciation) 28800 / (4 x 12) 625 Dr. 2960 Jan-31 Salary Expense a/c To Salary Payable (Salary accrued) 1480 X 2 2960 Jan-31 500 Insurance Expense a/c Dr. To Prepaid Insurance (Insurance Expensed) 6000/12 500 400 Jan-31 Rent Expense a/c Dr. To Prepaid Rent (Insurance Expensed) 4800/12 400

Unearned Revenue Cash 3700 6000 4800 Cash 12600 Prepaid Insurance 30000 Prepaid Rent 4000 Delivery Van 700 Accounts Payable 7400 Salaries Expense 3700 28800 Bal. Bal. Note Payable Common Stock Accounts Receivable Service Revenue Unearned Revenue Accounts Receivable 3700 300 3700 3700 2960 3500 30000 Note Payable Cash 30000 30000 19040 Bal. Bal. 61900) 61900 30000 Common Stock Bal. 700 Bal. 11900 Service Revenue Accounts Receivable 600 Cash 10600 Cash Bal. 11200 3500 Bal. 4000 15900 Cash 15900 7000 15900 11200 Retained Earnings Bal. 1320 Supplies 720 Bal. 1320 Bal. Accounts Payable 1400 1320 1320 Bal. 2120 2120 2120 Cash Prepaid Insurance 6000 Bal. 6000 Service Revenue Accounts Receivable 18000 Cash 18000 10600 7400 Bal. 6000 6000 18000 Cash Cash Prepaid Rent 4800 Bal. 4800 Salaries Expense 2960 Bal. 2960 4800 2960 4800 2960 Cash Delivery Van 288001 Bal. 28800 28800 28800 Cash Accounts Payable 300 Bal. Supplies 1800 2100 700 1400 Bal. 2100

20220 Statement of Income For the period ending Jan 31 Service Revenue Less: Salaries Expense 5920 Supplies Expense 1840 Interest Expense 125 Depreciation Expense 625 Utility Expense 1100 Insurance Expense 500 Rent Expense 400 Net Income Statement of Financial Position As at April 30 Assets Amount in $ Amount in $ Liabilities Amount in $ Amount in $ Current Assets Current Liabilities Cash 19040 Accounts Payable 2900 Accounts Receivable 7000 Salary Payable 2960 Supplies 280 Interest Payable 125 Prepaid Insurance 5500 Unearned Revenue 1480 7465 Prepaid Rent 4400 36220 Non Current Liabilities Non Current Assets Note Payable 30000 Delivery Van 28800 Accum. Depre - Van -625 28175 Shareholders Equity Common Stock 15900 Retained Earnings 11030 26930 Total Assets 64395 Total Liabilities & Equity 64395 10510 9710 Statement of Retained Earnings For the period ending Jan 31 Beginning Balance 1320 Net Income 9710 11030