Question

Assessing Financial Statement Effects of Adjustments The following information relates to December 31 accounting adjustments for Fulton Fast Print Company. The firm's fiscal year ends on December 31. 1. Weekly salaries for a five-day week total $6,480, payable on Fridays. December 31 of the current year is a Tuesday. 2. Fulton Fast Print has $36,000 of notes payable outstanding at December 31. Interest of $360 has accrued on these notes by December 31 but will not be paid until the notes mature next year. 3. During December, Fulton Fast Print provided $1,620 of printing services to clients who will be billed on January 2. The firm uses the fees receivable account to reflect amounts earned but not yet billed. 4. Starting December 1, all maintenance work on Fulton Fast Print's equipment is handled by Richardson Repair Company under an agreement whereby Fulton Fast Print pays a fixed monthly charge of $720. Fulton Fast Print paid six months' service charge of $4,320 cash in advance on December 1 and increased its Prepaid maintenance account by $4,320. 5. The firm paid $1,620 cash on December 15 for a series of radio commercials to run during December and January. One-third of the commercials aired by December 31. The $1,620 payment was recorded in its prepaid advertising account 6. Starting December 16, Fulton Fast Print rented 1440 square feet of storage space from a neighboring business. The monthly rent of $0.80 per square foot is due in advance on the first of each month. Nothing was paid in December, however, because the neighboring business agreed to add the rent -half of December to the January 1 payment. 7. Fulton Fast Print invested $9,000 cash in securities on December 1 and earned interest of $68 on these securities by December 31. No interest will be received until January. 8. Annual depreciation on the firm's equipment is $3,915. No depreciation has been recorded during the year. Prepare Fulton Fast Print Company's accounting adjustments required at December 31 using the financial statement effects template. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount.

Answer 1

Transaction Cash Asset + Non Cash Asset 1 0 0 = Liabilities 6480 Salrary payable 360 Interest payable 0 + Contri. Capita + earned Capital -6480 Salary expense -360 2 0 0 = Income -6480 retained earning -360 retained earning 1620 retained earning -720 Revenue |- Expense 0 6480 Salary expense 0 360 Interest expense 1620 0 Fees receivable 0 0 720 Maintence expe 0 540 Interets expense 3 0 1620 1620 Account receivable -720 Fees receivable -720 4 0 0 Mainte. Exp retained earning Prep. Maintenance exp -540 5 o 0 -540 -540 Prep. Advertisement exp Adver. Exp -576 retained earning -576 6 0 0 576 0 Adver. Exp 576 Rent expen 0 Rent expe Rent payable 0 7 0 68 68 68 retained earning 68 retained earning -3915 Interest receivable Interest income Intrest income 8 0 0 3915 -3915 0 3915 Accumulated depreciation Depreciation expense Depreciation expense retained earning or 8 0 -3915 0 -3915 0 3915 -3915 Accumulated depreciation Depreciation expense Depreciation expense retained earning

working note /explanation

1	Salary Expense a/c	6480
	To salary payable		6480
	(recording of salary is payable that will increase expense and current liabilty
2	Interest expense a/c	360
	To interest payable		360
	(interest payable on note that will increase current expense and liabilty)
3	Account/ Fees receivable	360
	To Service revenue		360
	(revenue earned but not billed will increase non cash asset as cash is yet to receive and income)
4	Maintenance Exp	720
	To prepaid manitenance exp		720
	(as paid main. Exp in advance recognized for the month exp accrued which was paid in advance at start of the month which will reduce non cash asset i.e. prepaid main exp. Balance and increase expense)
5	Advertisement Exp	540
	to Prep. Advertisement		540
	(1/3 of 1620 adve. Exp is for dec. month for which amount was paid in advance)
6	Rent expense	576
	To rent payable		576
	($0.8 * 1440 * 1/2 = 576 expense due but will be paid in january hence will increase expense and lability)
7	Interest Receivable	68
	Interest Income		68
	(interest is due but not received that will increase revenue and non cash asset)
8	Depreciation expense	3915
	To accumulated depreciation		3915
	(depreciation expense recorded which will increase expense and increase liability or say decrease non cash asset)