Question

2 MIX Inc. is a service business incorporated on January, 2018 to provide personal training for athletes aspiring to play college sports. The following is a simplified list of accounts and amounts reported in its accounting records at the beginning of its second quarter of operations on April 1, 2018(the amounts are in thousands of dollars). The accounts have normal debit or credit balances. Accounts Payable $ 600 Notes Payable (long-term) $ 200 Accounts Receivable 300 Notes Payable (short-term) 500 Accumulated Depreciation 900 Prepaid Rent 100 Cash 300 Rent Expense 400 Common Stock 200 Retained Earnings 1,500 Deferred Revenue 200 Salaries and Wages Expense 2,200 Depreciation Expense 300 Service Revenue 6,200 Equipment 3,200 Supplies 500 Income Tax Expense 300 Supplies Expense 200 Interest Revenue 100 Travel Expense 2,600 After the first quarter, MIX had the following transactions: a) Issued additional shares of common stock for $50 on April 15. b) Purchased equipment for $250 cash on May 1 c) Received $400 cash for future services on May 25. d) Borrowed $220 cash on July 1, 2018, signing a six-month note payable. e) Paid two-year insurance premium on equipment in the amount of $600 on July 1, 2018, and debited in full to Prepaid Insurance on that date. Coverage began on July 1. f) Purchased software on July 4, $30 cash. g) Purchased supplies on July 5 on account for future use, $7. h) Recorded revenues on December 6 of $550, including $80 on credit and $470 received in cash. i) Recognized salaries and wages expense on December 7 of $30; paid in cash. j) Collected accounts receivable on December 8, $90. k) Paid accounts payable on December 9, $100. Data for adjusting journal entries on December 31: 1) Amortization for 2018, $5. m) A physical count of supplies on December 31 showed Supplies costing $300 were still on hand. n) Depreciation for 2018, $40. 0) Accrued interest of $5 on notes payable. p) Salaries and wages incurred but not yet paid or recorded, $30. 9) Service provided but to be collected in January 2019, $45 r) Income tax expense for 2018 was $4 and will be paid in 2019. s) Six months of insurance on equipment has been used.

1) Prepare journal entry for the transactions given above (a through k).

2) Summarize the transactions data from the journal to a general ledger (the T-accounts are provided)

3) Prepare the Trail Balance

4) Prepare the adjusting Entries and post them to leggier accounts (l to r) above. Determine new account balances.

5) Prepare the ADJUSTED Trial Balance.

6) From the ADJUSTED Trial Balance, prepare the following financial statement

a) Income Statement

b) Statement of Retained Earnings

c) Classified Balance Sheet

Answer 1

1. & 4 : In the books of Mix Inc. :

Transaction / Event	Account Titles	Debit	Credit
		$	$
a.	Cash	50
	Common Stock		50
b.	Equipment	250
	Cash		250
c.	Cash	400
	Deferred Revenue		400
d.	Cash	220
	Notes Payable ( short term )		200
e.	Prepaid Insurance	600
	Cash		600
f.	Software	30
	Cash		30
g.	Supplies	7
	Accounts Payable		7
h.	Cash	470
	Accounts Receivable	80
	Service Revenue		550
i.	Salaries and Wages Expense	30
	Cash		30
j.	Cash	90
	Accounts Receivable		90
k.	Accounts Payable	100
	Cash		100
Adjusting Entries
l.	Amortization Expense	5
	Accumulated Amortization		5
m.	Supplies Expense	207
	Supplies		207
n.	Depreciation Expense	40
	Accumulated Depreciation		40
o.	Interest Expense	5
	Interest Payable		5
p.	Salaries and Wages Expense	30
	Salaries and Wages Payable		30
q.	Accounts Receivable	45
	Service Revenue		45
r.	Income Tax Expense	4
	Income Taxes Payable		4
s.	Insurance Expense	150
	Prepaid Insurance		150

5.

Mix Inc. Adjusted Trial Balance For the year ended December 31
Account Titles	Debit	Credit
	$	$
Cash	520
Accounts Receivable	335
Supplies	300
Prepaid Insurance	450
Prepaid Rent	100
Equipment	3,450
Accumulated Depreciation		940
Software	30
Accumulated Amortization		5
Accounts Payable		507
Salaries and Wages Payable		30
Deferred Revenue		600
Interest Payable		5
Income Taxes Payable		4
Notes Payable ( short term )		720
Notes Payable ( long term )		200
Common Stock		250
Retained Earnings		1,500
Service Revenue		6,795
Interest Revenue		100
Salaries and Wages Expense	2,260
Supplies Expense	407
Rent Expense	400
Insurance Expense	150
Travel Expense	2,600
Depreciation Expense	340
Amortization Expense	5
Interest Expense	5
Income Tax Expense	304
Totals	$ 11,656	$ 11,656