ACCOUNTING CYCLE PROBLEM
The following is a trial balance and certain other information relating to Mr. I. Spend Freely, a financial consultant operating as a corporation.
I. SPEND FREELY, FINANCIAL CONSULTANT
TRIAL BALANCE
DECEMBER 31, 2016
Debit Credit
Cash $ 31,500
Accounts receivable 49,600
Allowance for doubtful accounts mce_markernbsp; 750
Supplies Inventory 1,960
Prepaid insurance 1,100
Furniture & Equipment 25,000
Accumulated depreciation - equipment 6,250
Notes payable 7,200
Common stock 20,000
Retained earnings 15,010
Service revenue 100,000
Rent expense 9,750
Salaries and wages expense 28,500
Utilities expense 1,080
Office expense 720
$149,210 $149,210
The following information is available as of December 31, 2016.
Fees were received in advance from clients and treated as revenue: $6,000
Services performed for clients that were not recorded by 12/31/16 or paid by clients: $4,900
Bad debt expense for the year: $1,430
Insurance premiums expired during the year: $480
Equipment is being depreciated at 10% per year.
Mr. Freely gave the bank a 90-day note on December 1, 2016 for $7,200. The note has an interest rate of 10% annually.
Rent on the building is $750 per month. The rent for all of 2016 and January, 2017 has been paid.
Office salaries and wages earned but unpaid as of 12/31/16: $2,510
Mr. Freely withdrew dividends of $17,000 during the year. The dividends were debited to retained earnings at the time the disbursements were made.
Assume the corporation has no income tax liability.
Required:
From the trial balance and other information given, please prepare the following as of December 31, 2016.
Adjusting entry general journal
10-column worksheet (use of MSExcel required on this part of the problem)
Income statement
Statement of retained earnings
Balance sheet
Closing entry general journal