Question

How do I answer this? The spread sheet came with the question my professor gave me.

174 LO 3,4,5,6 Corporation (P.C.), situation begun in Exercise 2-37 of Chapter 2. E3-40. (Learning Objectives 3, 4, 5, 6: Adjust the accounts; construct the financial state- ments; close the books; analyze and evaluate liquidity and debt-paying ability) Refer to Exercise 2-37 of Chapter 2. Start from the trial balance and the posted T-accounts that Olivia Matthews, Certified Public Accountant, Professional Corporation (P.C.), prepared for her accounting practice at May 18, 2018. A professional corporation is not subject to income tax. Later in May, the business completed these transactions: May 21 22 26 28 31 Received $2,400 in advance for tax work to be performed over the next 30 days. Hired an assistant to be paid on the 15th day of cach month. Paid $900 for the supplies purchased on May 5. Collected $3,100 from the client on May 18. Declared and paid dividends of $1,200. Requirements 1. Journalize the transactions of May 21 through 31. 2. Post the May 21 to 31 transactions to the T-accounts, keying all items by date. 3. Prepare an Excel spreadsheet showing the unadjusted trial balance at May 31. Set up the worksheet to prepare the adjusted trial balance as seen in Exhibit 3-9 on page 138. 4. At May 31, Matthews gathers the following information for the adjusting entries: a. Accrued service revenue, $2,000. b. Earned $800 of the service revenue collected in advance on May 21. c. Supplies on hand, $300. d. Depreciation expense equipment, $30; furniture, $100. e. Accrued expense for assistant's salary, $900. Refer to the Excel spreadsheet you prepared in Requirement 3. Make these adjustments in the adjustments columns and complete the adjusted trial balance at May 31. 5. Journalize and post the adjusting entries. Denote each adjusting amount as Adj and an account balance as Bal 6. Prepare the single-step income statement and statement of retained earnings of Olivia Matthews, Certified Public Accountant, P.C., for the month ended May 31 and the classified balance sheet at that date. 7. Journalize and post the closing entries at May 31. Denote each closing amount as Clo and an account balance as Bal. 8. Calculate the net working capital, current ratio, and the debt ratio of Olivia Matthews, Certified Public Accountant, P.C., and determine if they indicate a strong or weak financial position.

Answer 1

1.

Date	Account Titles	Debit	Credit
May. 21	Cash	$2,400
	Unearned revenue		$2,400
May. 22	No entry required
May. 26	Accounts payable	$900
	Cash		$900
May. 28	Cash	$3,100
	Accounts receivable		$3,100
May. 31	Dividends	$1,200
	Cash		$1,200

__________________________________________________

2.

Unearned revenue May 21 $2.400 Beg. Bal May 21 May 28 Cash $9,550 May. 26 $2,400 May. 31 $3,100 $900 $1,200 End. Bal. $2,400 End. Bal. $11.950 Accounts payable $900 Beg. Bal. Dividends $1.200 May 26 $6.900 May. 31 End. Bal. $6,000 End. Bal. $1,200 Accounts receivable $3.100 May. 28 Beg Bal $3,100 End. Bal. SO

______________________________________________________

Prepare adjusted entries as follows:

Trn.	Account Titles	Debit	Credit
a)	Accounts receivable	$2,000
	Service revenue		$2,000
b)	Unearned revenue	$800
	Service revenue		$800
c)	Supplies Expense	$600
	Supplies [$900 - $300]		$600
d)	Depreciation expense-Equipment	$30
	Depreciation expense-Furniture	$100
	Accumulated depreciation-Equipment		$30
	Accumulated depreciation-furniture		$100
e)	Salaries Expense	$900
	Salaries payable		$900

________________________________________________________

Prepare T-account as follows:

End. Bal. Adj.a) Accounts receivable SO $2.000 Service revenue Beg. Bal. Adj.a) Adj.b) $3,700 $2.000 $800 Adj. Bal $2.000 Adj. Bal. $6,500 Unearned revenue $800 End. Bal. Supplies Expense $600 Adj.b) $2.400 Adj.c) Adj. Bal. $1,600 Adj. Bal. $600 Depreciation expense-Equipment $30 Depreciation expense-Furniture Adj.d) $100 Adj.d) Adj. Bal. $30 Adj. Bal $100

Accumulated depreciation-Equipment Adj.d) $30 Accumulated depreciation-furniture Adj.d) $100 Adj. Bal. $30 Adj. Bal. $100 Salaries Expense $900 Salaries payable Adj.) Adj.e) $900 Adj. Bal. $900 Adj. Bal $900 Supplies $900 Adj.c) Beg Bal $600 Adj. Bal. $300

__________________________________________________________________

Worksheet as follows:

	Unadjusted T.B			Adjustments		Adjusted T.B
Account Title	DR	CR		DR	CR	DR	CR
Cash	$12,950					$12,950
Accounts receivable	$0			$2,000		$2,000
Supplies	$900				$600	$300
Equipment	$1,800					$1,800
Furniture	$6,000					$6,000
Accumulated depreciation-Equipment		$0			$30		$30
Accumulated depreciation-Furniture		$0			$100		$100
Accounts payable		$6,000					$6,000
Unearned revenue		$2,400		$800			$1,600
Salary payable		$0			$900		$900
Common stock		$12,000					$12,000
Dividends	$1,200					$1,200
Service revenue		$3,700			$2,000		$5,700
					$800		$800
Utilities expense	$750					$750
Rent expense	$500					$500
Salary expense	$0			$900		$900
Depreciation expense-Equipment	$0			$30		$30
Depreciation expense-furniture	$0			$100		$100
Supplies expense	$0			$600		$600
	$24,100	$24,100		$4,430	$4,430	$27,130	$27,130

______________________________________________________________

Prepare Income statement and statement of retained earnings:

$6,500 Income Statement Service revenue Less: Expenses Utilities expense Rent expense Salary expense Depreciation expense-Equipment Depreciation expense-furniture Supplies expense $750 $500 $900 $30 $100 $600 $2,880 Net Income $3,620 Statement of retained earnings Beg Bal SO Add: Net Income $3,620 Less: Dividends ($1,200) End. Bal. $2,420

______________________________________________________

Balance Sheet
Cash		$12,950
Accounts receivable		$2,000
Supplies		$300
Equipment	$1,800
Accumulated depreciation-Equipment	($30)	$1,770
Furniture	$6,000
Accumulated depreciation-Furniture	($100)	$5,900
Total Assets		$22,920
Liabilities:
Accounts payable	$6,000
Unearned revenue	$1,600
Salary payable	$900
Total Liabilities		$8,500
Stockholders' Equity:
Common stock	$12,000
Retained earnings	$2,420
Total Stockholders' Equity		$14,420
Total Liabilities and Stockholders' Equity		$22,920

___________________________________________________

7.

Prepare closing entries as follows:

Date	Account Titles	Debit	Credit
May. 31	Service revenue	$6,500
	Income summary		$6,500
May. 31	Income summary	$2,880
	Utilities expense		$750
	Rent expense		$500
	Salary expense		$900
	Depreciation expense-Equipment		$30
	Depreciation expense-furniture		$100
	Supplies expense		$600
May. 31	Income summary [$6500 - $2880]	$3,620
	Retained Earnings		$3,620
May. 31	Retained Earnings	$1,200
	Dividends		$1,200

Dear student, Please feel free to ask any query regarding the solution. Give your valuable rating. Thank You!