Question

atries and P3-3A Alena Co. was organized on July 1, 2017. Quarterly financial statements are pre- pared. The unadjusted and adjusted trial balances as of September 30 are shown below. ALENA CO. Trial Balance September 30, 2017 Unadjusted Dr. Cr. Cash $ 8,700 Accounts Receivable 10,400 Supplies 1,500 Prepaid Rent 2,200 Equipment 18,000 Accumulated Depreciation Equipment $ 0- Notes Payable 10,000 Accounts Payable 2,500 Salaries and Wages Payable -0- Interest Payable -0- Unearned Rent Revenue 1,900 Owner's Capital 22,000 Owner's Drawings 1,600 Service Revenue 16,000 Rent Revenue 1,410 Salaries and Wages Expense 8,000 Rent Expense 1,900 Depreciation Expense Supplies Expense Utilities Expense 1,510 Interest Expense $53,810 $53,810 Adjusted Dr. $ 8,700 11,500 650 500 18,000 $ 700 10,000 2,500 725 100 450 22,000 1,600 17.100 2,860 8,725 3,600 700 850 1,510 100 $56,435 $56,435 Instructions (a) Journalize the adjusting entries that were made. (b) Prepare an income statement and an owner's equity statement for the 3 months ending September 30 and a balance sheet at September 30. (e) If the note bears interest at 12%, how many months has it been outstanding? 24,875 650

Answer 1

a) Credit Debit $1,100 ($11,500 - $10,400] $1,100 $850 [$1,500 - $650] $850 $1,700 [$2,200 - $500] $1,700 Adjusting Entries: Date Account Titles and Explanation Sep. 30 Accounts Receivable Service Revenue (To record service revenue earned but not billed) Sep. 30 Supplies Expense Supplies (To record supplies used) Sep. 30 Rent Expense Prepaid Rent (To record prepaid rent expired) Sep. 30 Depreciation Expense Accumulated Depreciation - Equipment (To record depreciation expense) Sep. 30 Salaries and Wages Expense Salaries and Wages Payable (To record salaries and wages expense accrued) Sep. 30 Interest Expense Interest Payable (To record interest expense accrued) Sep. 30 Unearned Rent Revenue Rent Revenue (To record unearned rent revenue expired) $700 $700 $725 $725 $100 $100 $1,450 ($1,900 - $450] $1,450

b) ALENA CO. Statement of Owners' Equity For Three Months Ended, September 30 Owner's Capital, Beginning Bal. $22,000 Add: Net Income $4,475 [Ref: Income Statement] Less: Withdrawals $1,600 Net Increase in Owners' Equity $2,875 Owner's Capital, Ending Bal. $24,875 ALENA CO. Income Statement For Three Months Ended, September 30 Revenues: Service Revenue $17,100 Rent Revenue $2,860 $19,960 Expenses: Salaries and Wages Exp. $8,725 Rent Expense $3,600 Depreciation Expense $700 Supplies Expense $850 Utilities Expense $1,510 Interest Expense $100 $15,485 Net Income $4,475

Assets Current Assets: Cash Accounts Receivable Supplies Prepaid Rent Total Current Assets Plant, Property & Equipment: Equipment Less: Accum. Depreciation - Equip. Plant, Property & Equipment, Net Total Assets ALENA CO. Classified Balance Sheet September 30 Liabilities & Owners' Equity Liabilities: $8,700 Accounts Payable $2,500 $11,500 Sal. & Wages Payable $725 $650 Interest Payable $100 $500 Unearned Rent Revenue $450 $21,350 Notes Payable $10,000 Total Liabilities $18,000 Owners' Equity: $700 Owner's Capital, Ending B $17,300 $38,650 Total Liabilities & Owners' equity $13,775 $24,875 [Ref: Statement of Owners' Equity] $38,650

c) Interest payable accrued Monthly interest rate Note Payable outstanding Number of months for which interest is outstanding $100 1% (12% / 12 months) $10,000 1 [($100 / 1%) / $10000 = $10000 / $10000 = 1]