Question

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: Assets: Cash Accounts Receivable Supplies FAST DELIVERIES, INC. Balance Sheet at January 1 Liabilities: $11,300 Accounts Payable 650 Stockholders' Equity: 200 Common Stock Retained Earnings $12,150 Total Liabilities and Stockholders' Equity $ 300 11,550 300 Total Assets $12,150 Two employees have been hired, at a monthly salary of $2,720 each. The following transactions occurred during January of the current year. Ch. 2 2 2 January 1 2 3 2 2. 2 2 2 3 3 3 3 4 5 6 7 8 9 10 16 20 $4,200 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 $28,800 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 $8,000 of additional cash to FDI for its common stock. Additional supplies costing $1,200 are purchased on account and received. $800 of accounts receivable arising from last year's December sales are collected. $800 of accounts payable from December of last year are paid. Performed services for customers on account. Sent invoices totaling $10,300. $7,900 of services are performed for customers who paid immediately in cash. $2,720 of salaries are paid for the first half of the month. PDI receives $4,000 cash from a customer for an advance order for services to be provided later in January and in February. $4,900 is collected from customers on account (see January 9 transaction). 3 25

Answer 1

		Cash
Particulars	Amount	Particulars	Amount
Beg balance	11300	Prepaid insurance	4200
Long term note oayable	28800	Prepaid rent	3600
Additional paid in capital	8000	Delivery van	24000
Accounts receivable	800	Accounts payable	800
Revenue	7900	Salaries payable	2720
Unearned revenue	4000	Balance	30380
Accounts receivable	4900
	65700		65700
		Accounts receivable
Particulars	Amount	Particulars	Amount
Beg balance	650	Cash	800
Revenue	10300	Cash	4900
		Balance	5250
	10950		10950
		Supplies
Particulars	Amount	Particulars	Amount
Beg balance	200	Supplies expense	1130
Account payable	1200	Balance	270
	1400		1400
		Salaries
Particulars	Amount	Particulars	Amount
Salaries payable	5440	income statement	5440
	5440		5440
		Prepaid Insurance
Particulars	Amount	Particulars	Amount
Cash	4200	Insurance expense	350
		Balance	3850
	4200		4200
		Prepaid rent
Particulars	Amount	Particulars	Amount
Cash	3600	Rent expense	300
		Balance	3300
	3600		3600
		Long term note payable
Particulars	Amount	Particulars	Amount
Balance	28800	Cash	28800
	28800		28800
		Delivery Van
Particulars	Amount	Particulars	Amount
Cash	24000	Balance	24000
	24000		24000
		Utility bill
Particulars	Amount	Particulars	Amount
Accrued expenses	1400	Income statement	1400
	1400		1400
		Supplies expense
Particulars	Amount	Particulars	Amount
Suplies	1130	income statement	1130
	1130		1130
		Bank loan interest
Particulars	Amount	Particulars	Amount
Accrued interest	144	income statement	144
	144		144
		Depreciation expense
Particulars	Amount	Particulars	Amount
Accumulated depreciation-delivery van	400	income statement	400
	400		400
		Rent expense
Particulars	Amount	Particulars	Amount
Prepaid rent	300	Income statement	300
	300		300
		Insurance expense
Particulars	Amount	Particulars	Amount
Prepaid insurance	350	income statement	350
	350		350

		Accounts payable
Particulars	Amount	Particulars	Amount
Cash	800	Beg balance	300
balance	700	Supplies	1200
	1500		1500
		Common stock
Particulars	Amount	Particulars	Amount
Balance	11550	Beg balance	11550
	11550		11550
		Retained earnings
Particulars	Amount	Particulars	Amount
Balance	11736	Beg balance	300
		Net profit	11436
	11736		11736
		Salaries payable
Particulars	Amount	Particulars	Amount
Cash	2720	Salaries	5440
Balance	2720
	5440		5440
		Additional paid in capital
Particulars	Amount	Particulars	Amount
Balance	8000	Cash	8000
	8000		8000
		Revenue
Particulars	Amount	Particulars	Amount
Income statement	20600	Accounts receivable	10300
		Cash	7900
		Unearned revenue	2400
	20600		20600
		Unearned revenue
Particulars	Amount	Particulars	Amount
Revenue	2400	Cash	4000
Balance	1600
	4000		4000
		Accrued expenses
Particulars	Amount	Particulars	Amount
Balance	1400	Utility bill	1400
	1400		1400
		Accrued interest
Particulars	Amount	Particulars	Amount
Balance	144	interest expense	144
	144		144
		Accumulated depreciation-delivery van
Particulars	Amount	Particulars	Amount
balance	400	Depreciation expense	400
	400		400

Income statement
Revenue	20600
Operating expenses
Rent expense	300
Insurance expense	350
Utility Bill	1400
Depreciation	400
Salaries	5440
Supplies expense	1130
Total expenses	9020
opearting income	11580
Interest expense	144
Net income	11436

Balance sheet
Assets
Current assets
Cash	30380
accounts receivable	5250
supplies	270
Prepaid insurance	3850
Prepaid rent	3300
Total current assets	43050
Delivery Van	24000
Total Assets	67050
Liabilities
Current libailities
Accounts payable	700
Accrued expenses	1400
Salaries payable	2720
Unearned revenue	1600
Accrued interest	144
Total current liabilities	6564
long term note payable	28800
Accumulated depreciation	400
Total liabilities	35764
Common Stock	11550
Additional paid in capital	8000
Retained earnings	11736
Total equity	31286
Total equity+liabilities	67050

In the question it is given that payment is done to accounts payable and received from accounts receivable 800 of their last years balace, but last year balances are 300 and 650, if they are taken the balance sheet and T accounts will be as follows

		Cash
Particulars	Amount	Particulars	Amount
Beg balance	11300	Prepaid insurance	4200
Long term note oayable	28800	Prepaid rent	3600
Additional paid in capital	8000	Delivery van	24000
Accounts receivable	650	Accounts payable	300
Revenue	7900	Salaries payable	2720
Unearned revenue	4000	Balance	30730
Accounts receivable	4900
	65550		65550
		Accounts receivable
Particulars	Amount	Particulars	Amount
Beg balance	650	Cash	650
Revenue	10300	Cash	4900
		Balance	5400
	10950		10950

		Accounts payable
Particulars	Amount	Particulars	Amount
Cash	300	Beg balance	300
balance	1200	Supplies	1200
	1500		1500

Balance sheet
Assets
Current assets
Cash	30730
accounts receivable	5400
supplies	270
Prepaid insurance	3850
Prepaid rent	3300
Total current assets	43550
Delivery Van	24000
Total Assets	67550
Liabilities
Current libailities
Accounts payable	1200
Accrued expenses	1400
Salaries payable	2720
Unearned revenue	1600
Accrued interest	144
Total current liabilities	7064
long term note payable	28800
Accumulated depreciation	400
Total liabilities	36264
Common Stock	11550
Additional paid in capital	8000
Retained earnings	11736
Total equity	31286
Total equity+liabilities	67550