Question

Trial Balance December 31, 2020 Debit Credit $ 29,500 49,600 $ 750 1,960 1,100 25,000 6,250 Cash Accounts Receivable Allowance for Doubtful Accounts Supplies Prepaid Insurance Equipment Accumulated Depreciation Equipment Notes Payable Common Stock Retained Earnings Service Revenue Rent Expense Salaries and Wages Expense Utilities Expenses Office Expense 7,200 10,000 25,010 100,000 9,750 30,500 1,080 720 $149,210 $149,210

1. Fees received in advance from clients $6,000, which were recorded as revenue.
2. Services performed for clients that were not recorded by December 31, $4,900.
3. Bad debt expense for the year is $1,430.

4. Insurance expired during the year $480.
5. Equipment is being depreciated at 10% per year.
6. Perez gave the bank a 90-day, 10% note for $7,200 on December 1, 2020.
7. Rent of the building is $750 per month. The rent for 2020 has been paid, as has that for January 2021,
and recorded as Rent Expense.
8. Office salaries and wages earned but unpaid December 31, 2020, $2,510.

Question: Using the TB and information provided, prepare a classified Balance Sheet. Knowing that the company paid $17,000 cash dividend during the year (recorded in Retained Earnings)

Answer 1

Answer:

Balance Sheet
At December 31,2020
Assets
Current assets:
Cash		$29,500
Accounts Receivable	$54,500
(Less): Allowance for Doubtful Accounts	($2,180)
Net accounts receivable		$52,320
Supplies		$1,960
Prepaid insurance		$620
Prepaid rent		$750
Total current assets			$85,150
Property,plant and Equipment:
Equipment		$25,000
Accumulated Depreciation-Equipment		($8,750)
Total property,plant, and equipment			$16,250
Total assets			$101,400
Liabilities and stock holders' Equity
Current liabilities:
Unearned revenue		$6,000
Interest payable		$60
Salaries and wages payable		$2,510
Total current liabilities			$8,570
Notes Payable			$7,200
Total liabilities			$15,770
Stockholders' equity:
Common Stock		$10,000
Retained Earnings		$75,630
Total stockholders' Equity			$85,630
Total liabilities and stockholders' Equity			$101,400

Calculation

Adjusted Trial Balance
	Debit	Credit
Cash	$29,500
Accounts Receivable [49600+4900]	$54,500
Allowance for Doubtful Accounts [750+1430]		$2,180
Supplies	$1,960
Prepaid insurance [1100-480]	$620
Prepaid rent	$750
Equipment	$25,000
Accumulated Depreciation-Equipment [6250+2500]		$8,750
Unearned revenue		$6,000
Interest payable		$60
Salaries and wages payable		$2,510
Notes Payable		$7,200
Common Stock		$10,000
Retained Earnings		$25,010
Service Revenue [100,000 - 6000+4900]		$98,900
Rent Expenses [9750-750]	$9,000
Salaries and Wages Expenses [30500+2510]	$33,010
Utilities Expenses	$1,080
Office expense	$720
Bad debt expense	$1,430
Insurance expense	$480
Depreciation expense	$2,500
Interest expense [7,200 x 10% x 30/360]	$60
Total	$160,610	$160,610
Income Statement'
Service Revenue		$98,900
Expenses:
Rent Expenses	$9,000
Salaries and Wages Expenses	$33,010
Utilities Expenses	$1,080
Office expense	$720
Bad debt expense	$1,430
Insurance expense	$480
Depreciation expense	$2,500
Interest expense	$60
Total expenses		$48,280
Net income		$50,620
Statement of retained earnings
Retained earnings, Beginning		$42,010
Add: Net income		$50,620
(Less): Dividends		($17,000)
Retained earnings, Ending		$75,630