Question

Question #1. (70 marks) RTS began business on December 1, 2019. Its December transactions are: Dec. 1 Invested $40,000 in the business in exchange for common stock 2 Paid $1,500 cash for December rent. 3 Purchased S1,880 of supplies for cash. 4 Purchased $19,000 of office equipment; paying $12,700 cash with the balance due in 30 days. 14 Paid $1,850 cash for assistant's wages. 20 Performed consulting services for $6,000 cash 30 Billed clients $14,400 for December consulting services 31 Paid $2,800 cash for dividends a(10 marks) Record these transactions in journal entry form Assume December 31, 2019 fiscal year end. b. Prepare the unadjusted trial balance (10 marks) Cash Fees Receivable Supplies Office Equipment Accounts Payable Share Capital Retained Earnings (Dividend) Consulting Revenue Wages Expense Rent Expense Journalize the following adjusting entries at December 31: (10 marks) 1 Supplies available at December 31 are $1,410. 2 Accrued wages payable at December 31 are $670 3 Depreciation for December is $240. 4 RTS has spent 60 hours on a tax fraud case during December. When completed in January, his work will be billed at $75 per hour. (Use Fees Receivable) d. Prepare the adjusted trial balance (10 marks) Prepare the underlying financials: the income statement for the month of December (10 marks) and the Balance sheet (20 marks) at December 31, 2019. e.

Answer 1

1 Journal Entries Unadjusted Trial Balance Adjusting Entries: Credit Credit Sl.no Date 1 Dec. 1 Account title Cash Share Capital Debit $ 40,000 Sl.no 1 Debit $ 470 Date Account title Dec.31 Supplies Expense Supplies [$1,880-1,410) $ 40,000 $ 470 2 Dec. 2 $ 1,500 Rent Expense Cash $ 1,500 2 Account Info Cash Fees Receivable Supplies Office Equipment Accounts Payable Share Capital Retained Earnings(Dividend) Consulting Revenue Wages Expense Rent Expense TOTAL 3 $ 670 Debit Credit $ 25,270 $ 14,400 $ 1.880 $ 19,000 $ 6,300 $ 40,000 $ 2,800 $ 20,400 $ 1,850 $ 1.500 $ 66,700$ 66,700 Dec.31 Wages Expense Wages Payable $ 670 3 Dec.3 $ 1,880 Supplies Cash $ 1,880 3 $ 240 Dec.31 Depreciation Expense Accumulated Depreciation $ 240 4 Dec. 4 $ 19,000 Office Equipment Cash Accounts Payable 4 $ 4,500 $ 12,700 $ 6,300 Dec.31 Fees Receivable Consulting Revenue [60 hours* $75 per hour $ 4,500 5 Dec. 14 $ 1,850 Wages Expense Cash $ 1,850 *Cash=$40,000-1,500-1,880-12,700-1,850+6,000-2,800 *Consulting Revenue = $6,000+14,400 6 Dec. 20 $ 6,000 Cash Consulting Revenue $ 6,000 7 Dec. 30 Fees Receivable Consulting Revenue $ 14,400 $ 14,400 8 Dec.31 $ 2,800 Dividends Cash $ 2,800

Adjusted Trial Balance Account Info Cash Fees Receivable Supplies Office Equipment Accumulated Depreciation Accounts Payable Wages Payable Share Capital Retained Earnings (Dividend) Consulting Revenue Wages Expense Rent Expense Supplies Expense Depreciation Expense TOTAL RTS Statement of Retained Earnings For the year ended Dec 31, 2019 Retained Earnings $ plus: Net income $ 20,170 Less: Dividend paid $ 2,800 Ending Retained earnings $17,370 RTS Income Statement For the year ended Dec 31,2019 Revenue: Consulting Revenue $ 24,900 Expenses: Wages Expense $ 2,520 Rent Expense $ 1,500 Supplies Expense $ 470 Depreciation Expense $ 240 Total Expenses $ 4.730 Net Profit $ 20,170 Debit Credit $ 25,270 $ 18,900 $ 1,410 $ 19,000 $ 240 $ 6,300 $ 670 $ 40,000 $ 2,800 $ 24,900 $ 2,520 $ 1,500 $ 470 $ 240 $ 72,110 $ 72,110 *Cash=$40,000-1,500-1,880-12,700-1,850+6,000-2,800 *Fees Receivable=$14,400+4,500 *Supplies=$1,880-470 *Consulting Revenue = $6,000+14,400 *Wages Expense=$1,850+670

$ 6,300 $ 670 RTS Balance sheet Dec, 31,2021 Assets Liabilities Current Asset: Current Liabilities: Cash $ 25,270 Accounts Payable Fees Receivable $ 18,900 Wages Payable Supplies $ 1,410 Total Current Asset $ 45,580 Total Current Liabilities Long-term Assets: Shareholder's Equity Office Equipment $ 19,000 Share Capital Less: Accu. Depreciation $ -240 Retained earnings Total Long-term Asset $ 18,760 Total Stockholders Equity Total Assets $ 64,340 Total Liabilities and SHE $ 6,970 $ 40,000 $ 17,370 $ 57,370 $ 64,340

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