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a. SUKSES SELALU General Journal December 31, 2009 (1) Dec. 31 Accounts Receivable 25, Consulting Services Revenue 25, To record revenue accrued at the end of Dec.
(2) 31 Unearned Consulting Services Revenue 15, Consulting Services Revenue 15, To convert unearned revenue to earned revenue in Dec.
(3) 31 Office Supplies Expense 500 Office Supplies 500 To record offices supplies used in December.
(4) 31 Depreciation Expense: Office Equipment 1, Accumulated Depreciation: Office Equip. 1, To record depreciation expense in December.
(5) 31 Rent Expense 1, Prepaid Rent 1, To record December rent expense.
(6) 31 Insurance Expense 250 Unexpired Insurance 250 To record portion of insurance policies expired in December.
(7) 31 Salaries Expense 12, Salaries Payable 12, To record accrued but unpaid salaries in Dec.
(8) 31 Interest Expense 200 Interest Payable 200 To record interest expense accrued in December.
(9) Income Taxes Expense 5, Income Taxes Payable 5, To record income taxes expense accrued in Dec.
a. (continued)
Computations for each of the adjusting journal entries:
1. Accounts receivable increased by the $25,000 of accrued revenue in December.
2. Unearned revenue is reduced by the $15,000 amount earned in December.
3. $800 (supplies per trial balance) - $300 at 12/31 = $500 used in December.
4. $72,000 (office equipment per trial balance ÷ 72 months = $1,000 per month.
5. $3,600 (prepaid rent per trial balance) ÷ 3 mo. remaining at 11/30 = $1,200 per month.
6. $1,500 (unexpired insurance per trial balance) ÷ 6 mo. remaining at 12/1 = $250 per month.
7. Salaries payable increased by the $12,000 of accrued salaries in December.
8. $60,000 (note payable per trial balance) x 4% x 1/12 = $200 interest expense per month.
9. $50,000 total income taxes expense - $45,000 (per trial balance) = $5,000 accrued in December.
a. (cont'd.)
SUKSES SELALU
Adjusted Trial Balance December 31, 2009
Consulting fees earned $540,
Expenses: Rent expense $15, Insurance expense 2, Office supplies expense 5, Depreciation expense: office equipment 12, Salaries expense 342, Utilities expense 4, Interest expense 3,200 385, Profit before taxes $154, Income taxes expense 50, Profit for the year $104,
SUKSES SELALU
Statement of Changes in Equity For the Year Ended December 31, 2009 Retained earnings (1/1/09) $40, Add: Profit for the year 104, Less: Dividends (3,000) Retained earnings (12/31/09) $141,
b. (cont'd)
SUKSES SELALU
Balance Sheet December 31, 2009
Assets Cash $276, Accounts receivable 115,
Liabilities
SUKSES SELALU
To close Agency Fees Earned.
- Cash $276,
- Accounts receivable 115,
- Office supplies
- Prepaid rent 2,
- Unexpired insurance 1,
- Office equipment 72,
- Accumulated depreciation: office equipment $25,
- Accounts payable 4,
- Notes payable (8-month) 60,
- Interest payable
- Income taxes payable 14,
- Dividends payable 3,
- Salaries payable 12,
- Unearned consulting fees 7,
- Share capital 200,
- Retaining earnings 40,
- Dividends 3,
- Consulting fees earned 540,
- Rent expense 15,
- Insurance expense 2,
- Office supplies expense 5,
- Depreciation expense: office equipment 12,
- Salaries expense 342,
- Utilities expense 4,
- Interest expense 3,
- Income taxes expense 50,
- Totals $905,800 $905,
- For the Year Ended December 31, Income Statement
- Office supplies
- Prepaid rent 2,
- Unexpired insurance 1,
- Office equipment $72,
- Less: Accumulated Depreciation: office equipment 25,000 47,
- TOTAL ASSETS $442,
- Accounts payable $4,
- Note payable (Due 3/1/10) 60,
- Income taxes payable
- Income taxes payable 14,
- Dividends payable 3,
- Salaries payable 12,
- Unearned consulting fees 7,
- TOTAL LIABILITIES $100,
- Share capital $200, Shareholders' Equity
- Retained earnings 141,
- TOTAL SHAREHOLDERS' EQUITY $341,
- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $442, - December 31, General Journal
- Dec. 31 Consulting Services Revenue 540, (1) - Income Summary 540, - 31 Income Summary 435, (2) - Rent expense 15,
Interest payable 800 Income taxes payable 14, Dividends payable 3, Salaries payable 12, Unearned consulting fees 7, Share capital 200, Retained earnings 141, Totals $467,450 $467,
Working:
Insurance expense incurred in 2009 $2, Less: Total insurance expense for December. 250 Total expense incurred in Jan. through Nov. $2, ÷ 11 months Monthly insurance expense Jan. and Nov. $200 monthly
Monthly increase starting in Dec. ($250 - $200) $50 monthly
Rent expense incurred in 2009 $15,
Less: Total rent expense June through December 8,400 (at $1,200/
mo.)
Total rent expense incurred in Jan. through May $7,
÷ 5 months
Monthly rent expense in January through May $1,500 monthly
Monthly decrease starting in June ($1,500 - $1,200) $300 monthly
Accumulated depreciation: office equip. (12/31/09) $25,
Divided by monthly depreciation expense 1,000 monthly
Total months company has been in operation 25 months
Interest expense incurred in 2009 $3,
Less: Total interest expense in Sept. through Dec. 800
Total interest on prior note in Jan. through Mar. $2,
÷ 3 months
Monthly interest expense in January through March $800 monthly
