Question

Problem 3-02 Tamarisk Advertising was founded in January 2013. Presented below are adjusted and unadjusted trial balances as of December 31, 2020. TAMARISK ADVERTISING TRIAL BALANCE DECEMBER 31, 2020 Unadjusted Cr. Adjusted Cr. Dr. Dr. Cash $17,960 $17,960 33,784 Accounts Receivable 30,200 Supplies 8,640 3,366 3,436 65,890 Prepaid Insurance 4,300 65,890 Equipment Accumulated Depreciation-Equipment $27,250 34,524 $32,390 Accounts Payable 34,524 Interest Payable -0- 141 Notes Payable 4,700 4,700 Unearned Service Revenue 6,550 5,151 Salaries and Wages Payable -0- 1,197 Common Stock 10,670 10,670 Retained Earnings 3,770 3,770 Service Revenue 55,976 60,959 Salaries and Wages Expense 11,600 12,797 Insurance Expense 864 Interest Expense 490 631 Depreciation Expense 5,140 Supplies Expense 5,274 Rent Expense 4,360 4,360 $143,440 $143,440 $153,502 $153,502

Answer 1

Adjusting Entries: No. Debit $3,584 Credit [$33,784 - $30,200] $3,584 2. $1,399 [$6,550 - $5,151] $1,399 3. $5,274 [$8,640 - $3,366] $5,274 4. $5,140 ($32,390 - $27,250] Date Account Titles and Explanation Dec. 31 Accounts Receivable Service Revenue (To record accrued service revenue) Dec. 31 Unearned Service Revenue Service Revenue (To record earned service revenue) Dec. 31 Supplies Expense Supplies (To record supplies used) Dec. 31 Depreciation Expense Accumulated Dep. - Equip. (To record depreciation on equipment) Dec. 31 Interest Expense Interest Payable (To record interest accrued on the note) Dec. 31 Insurance Expense Prepaid Insurance (To record expired insurance) Dec. 31 Salaries & Wages Expense Salaries & Wages Payable (To record expired insurance) $5,140 5. $141 ($141 - $0] $141 $864 [$4,300 - $3,436] $864 $1,197 [$1,197 - $0] $1,197

TAMARISK ADVERTISING Statement of Retained Earnings For the Year Ended Dec. 31, 2020 Retained Earnings - Jan. 1, 2020 Add: Net Income / (Loss) Retained Earnings - Dec. 31, 2020 $3,770 $31,893 [Ref: Workings] $35,663 $60,959 Workings: TAMARISK ADVERTISING Income Statement For the Year Ended Dec. 31, 2020 Revenues: Service Revenue Expenses: Salaries & Wages expense $12,797 Insurance expense $864 Interest expense $631 Depreciation expense $5,140 Supplies expense $5,274 Rent expense $4,360 Total Expenses Net Income $29,066 $31,893 [$60959 - $29066]

TAMARISK ADVERTISING Balance Sheet Dec 31, 2020 Assets Liabilities & Stockholders' Equity Cash $17,960 Accounts Payable $34,524 Accounts Recievable $33,784 Interest Payable $141 Supplies $3,366 Notes Payable $4,700 Prepaid Insurance $3,436 Unearned Service Revenue $5,151 Equipment $65,890 Salaries and Wages Payable $1,197 Less: Accumulated Depreciation -$32,390 $33,500 Common Stock $10,670 Retained Earnings $35,663 [Ref: Statement of Retained Earnings] Total Assets $92,046 Liabilities & Stockholders' Equity $92,046 1) $141 Interest payable outstanding Number of months for which interest is outstanding Number of months in a year Annual interest expense Note payable outstanding Annual interest rate on note 12 $564 [($141/3) x 12] $4,700 12% [$564 / $4700] x 100 2) Unadjusted Salaries and Wages Expense for 2020 Salaries and Wages Expense paid in 2020 Balance in Salaries and Wages Payable on Dec. 31, 2019 $11,600 $12,280 $680 ($12280 - $11600)