Question

can you please mark the explanations while answering this practice problem?

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Magness Delivery Service has completed closing entries and the accounting cycle for 2016. The business is now ready to record January 2017 transactions. Collected $1,000 cash from customer on account. 5 Purchased office supplies on account, $600. 12 Performed delivery services for a customer and received $2,000 cash. 15 Paid employee salary including the amount owed on December 31, $2,500. 18 Performed delivery services on account, $950. 20 Paid $200 on account. 24 Purchased fuel for the truck, paying $250 cash. 27 Completed the remaining work due for Unearned Revenue. 28 Paid office rent, $1,600, for the month of January. 30 Collected $3,200 in advance for delivery service to be performed later 31 Magness withdrew cash of $2,000. Jan. 3 Requirements 1. Record each January transaction in the journal. Explanations are not required. 2. Post the transactions in the T-accounts. Don't forget to use the December 31, 2016, ending balances as appropriate. 3. Prepare an unadjusted trial balance as of January 31, 2017. 4. Prepare a worksheet as of January 31, 2017. (optional) 5. Journalize the adjusting entries using the following adjustment data and also by reviewing the journal entries prepared in Requirement 1. Post adjusting entries to the T-accounts. Adjustment data: a. Office Supplies on hand, $120 b. Accrued Service Revenue, $1,200. c. Accrued Salaries Expense, $1,000. d. Prepaid Insurance for the month has expired. e. Depreciation was recorded on the truck for the month. 6. Prepare an adjusted trial balance as of January 31, 2017. 7. Prepare Magness Delivery Service's income statement and statement of owner's ty for the month ended January 31, 2017, and the classified balance sheet on equi that date. On the income statement, list expenses in decreasing order by amount- that is, the largest expense first, the smallest expense last 8. Calculate the following ratios as of January 31, 2017, for Magness Delivery Service: return on assets, debt ratio, and current ratio. Magness Delivery Service completed the following transactions during December 2016: Magness Delivery Service began operations by receiving $10,000 cash and a truck with a fair value of $20,000 from Robert Magness. The business gave Magness capital in exchange for this contribution. Dec. 1 1 Paid $1,000 cash for a four-month insurance policy. The policy begins December 1 4 Paid $500 cash for office supplies. 12 Performed delivery services for a customer and received $2,000 cash. 15 Completed a large delivery job, billed the customer, $2,500, and received a promise to collect the $2,500 within one week. 18 Paid employee salary, $1,000. 20 Received $15,000 cash for performing delivery services. 22 Collected $800 in advance for delivery service to be performed later 25 Collected $2,500 cash from customer on account. 27 Purchased fuel for the truck, paying $300 on account. (Credit Accounts Payable) 28 Performed delivery services on account, $700. 29 Paid office rent, $1,600, for the month of December. 30 Paid $300 on account. 31 Magness withdrew cash of $3,000. 1. Record each transaction in the journal using the following chart of accounts. Explanations are not required. Cash Accounts Receivable Office Supplies Prepaid Insurance Truck Accumulated Depreciation-Truck Accounts Payable Salaries Payable Unearned Revenue Magness, Capital Magness, Withdrawals Income Summary Service Revenue Salaries Expense Depreciation Expense-Truck nsurance Expense Fuel Expense Rent Expense Supplies Expense 2. Post the transactions in the T-accounts. 3. Prepare an unadjusted trial balance as of December 31, 2016. 4. Prepare a worksheet as of December 31, 2016. 5. Journalize the adjusting entries using the following adjustment data and also by reviewing the journal entries prepared in Requirement 1. Post adjusting entries to the T-accounts. Adjustment data: a. Accrued Salaries Expense, $1,000. b. Depreciation was recorded on the truck using the straight-line method. Assume a useful life of five years and a salvage value of $5,000. c. Prepaid Insurance for the month has expired d. Office Supplies on hand, $100. e. Unearned Revenue earned during the month, $300. f Accrued Service Revenue, $650. 6. Prepare an adjusted trial balance as of December 31, 2016. 7. Prepare Magness Delivery Service's income statement and statement of owners ended December 31, 2016, and the classified balance sheer equity for the month on that date. On the income statement, list expenses in decreasing order by amount-that is, the largest expense first, the smallest expense last. 8. Journalize the closing entries, and post to the T-accounts 9. Prepare a post-closing trial balance as of December 31, 2016.

Answer 1

Magness Delivery Services ournal Enteries Date 1.12.2016 Cash a/c Debit in $Credit in $ Particulars 10000 Truck a/c Dr. To Magness, Capital 30000 (Capital Introduced 1.12.2016 Prepaid Insurance a/c Dr 1000 To Cash 1000 (Insurance paid in advance 4.12.2016 Office Supplies a/cDr 500 To Cash (Purchased office supplies) 12.12.2016 Cash a/c 2000 To Service Revenue 2000 (Services performed for cash) 15.12.2016 Accounts Receivable a/c Dr 2500 To Service Revenue 2500 (Services performed on account 18.12.2016 Salary Expense a/cDr 1000 To Cash 1000 (Salary paid in cash) 20.12.2016 Cash a/c Dr. To Service Revenue (Services performed for cash) 22.12.2016 Cash a/c Dr. 800 To Unearned Revenue 800 (Advance received from clients)

Debit in $Credit in $ Date Particulars 25.12.2016 Cash a/c Dr. 2500 To Accounts Receivable 2500 (Cash received from debtors 27.12.2016 Fuel Expense a/c 300 Dr. To Accounts Payable 300 (Fuel purchased on account) 28.12.2016 Accounts Receivable a/c Dr 700 To Service Revenue 700 (Services performed on account 29.12.2016 Rent Expense a/c Dr. 1600 To Cash 1600 (Rent paid in cash) 30.12.2016 Accounts Payable a/c Dr 300 To Cash 300 (Cash paid to creditors) 31.12.2016 Magness, Withdrawals a/c Dr To Cash 3000 3000 (Cash withdrawan for personal use)

Adjusting Enteries Date 31.12.2016 Salary Expense a/cDr Debit in $ Credit in $ Particulars 1000 To Salary Payable 1000 (Salary Expense accrued) 31.12.2016 Depreciation Expense Truck a/c Dr 250 To Accum. - Depre Truck 250 (To record Depreciation ) (20000-5000)/(5*12) 31.12.2016 Insurance Expense a/c 250 To Prepaid Insurance 250 (Insurance Expensed 31.12.2016 Supplies Expense a/c To Supplies 400 (Supplies Expensed) 500-100-400 31.12.2016 Unearned Revenue a/c 300 300 To Service Revenue (Revenue recognized) 31.12.2016 Accounts Receivable a/c Dr 650 To Service Revenue 650 (Services performed on account Closing Enteries Date 30.6.2016 Income Summary a/c Debit in $ Credit in $ Particulars To Salary Expense To Fuel Expense To Rent Expense To Depreciation Expense Truck To Insurance Expense To Supplies Expense 300 1600 250 250 400 (Expense accounts closed 30.6.2016 Service Revenue a/c 21150 To Income Summa 21150 (Revenue accounts closed) 30.6.2016 Income Summary a/c 16350 To Magness, Capital 16350 Profits transferred 30.6.2016Magness, Capital a/c 3000 To Magness, Withdrawals 3000 (Drawings for personal use)

Worksheet For the month ending 31.12.2016 Post Closing Unadjusted Adjustments Adjusted Debit in $ Credit in $ Debit in $ Credit in Debit in $ Credit in $ Debit in Credit in $ Particulars Cash Accounts Receivable Prepaid Insurance Office Supplies Truck Accum. - Depre Truck Accounts Payable Unearned Revenue Salary Payable Magness, Capital Magness, Withdrawals Service Revenue Salary Expense Fuel Expense Rent Expense Depreciation Expense Truck Insurance Expense Supplies Expense Totals 650 1350 1350 1000 250 100 100 0 800 1000 1000 1000 30000 30000 43350 3000 3000 20200 950 21150 1000 300 1600 1000 300 1600 250 250 400 52900 400 51000 51000 2850 2850 52900 45100 45100

Statement of Income For the month ending 31.12.2016 Service Revenue Less: Salary Expense Fuel Expense Rent Expense Depreciation Expense Truck Insurance Expense Supplies Expense Net Income 21150 2000 300 1600 250 250 400 4800 16350 Statement of Owners Capital For the month ending 31.12.2016 Magness, Capital Net Income 30000 16350 46350 3000 43350 Less:Magness, Withdrawals

Balance sheet As at 31.12.2016 Assets Current Assets Cash Accounts Receivable Prepaid Insurance Office Supplies Amounts in$ Amounts in $ Liabilities Amounts in $ Amounts in $ Current Liabilities Unearned Revenue Salary Payable 22900 1350 750 100 500 1000 1500 25100 Non Current Assets Truck Owners Equity 20000 ccum. - Depre - Truck Total Assets 250 19750 Magness, Capital 44850 Total Liabilities & Equity 43350 44850