Question

Problem 3 8B Communications provides telecommunications consulting Service The business had the following account balances mmunications consulting services. The business ad Prepare adjusting entries an ad usted trial balance and financial statements $ 19,000 17.100 13,000 3,900 54,000 PARIS COMMUNICATIONS Unadjusted Trial Balance December 1, 2017 Cash Accounts receivable Prepaid advertising Supplies Computer equipment Accumulated amortization computer equipment Furniture Accumulated amortization furniture Accounts payable R. Paris, capital R. Paris, withdrawals Consulting revenue Salaries expense Supplies expense Travel expense 120,000 28.000 99.000 45,000 260,600 82,500 32,100 Total S76,600 9786,600 The following transactions occurred during December a. On December 1, paid cash for an Internet advertising consultant for four months of work in advance. The contract was for $3.200 per month. Work will begin on January 1, 2018 b. On December 10, supplies in the amount of 52,975 were purchased on account. c. On December 18, the company received a cash advance of $4,000 for work to be per- formed starting January 1. d. On December 30, the company provided consulting services to a customer for $12,500; payment will be received in 30 days. The following adjustments information was available on December 31, 2017: e. A physical count shows $5,100 of supplies remaining on hand on December 31. f. The computer equipment has an expected useful life of four years with no residual value after four years. The computers were purchased on January 2, and the straight- line method of amortization is used. g. The furniture, purchased on January 2, is expected to be used for eight years with no expected value after eight years. The straight-line method of amortization is used. h. On October 1, Paris hired an advertising firm to prepare a marketing plan and agreed to pay the firm $2,200 per month, Paris paid for five months' work in advance and has made no adjusting entries for this during 2017. Record the portion of the prepayment that has been used to date. 1. The company's office manager, who earns $400 per day, worked the last five days of the year and will be paid on January 5, 2018

Answer 1

Paris Communications Journal Enteries Trans. Particulars a. Prepaid Advertisement a/c Dr. To Cash (Four months advertisement paid) Debit in $ Credit in $ 12800 12800 b. 2975 Supplies a/c Dr. To Accounts Payable (Supplies purchased on account) 2975 Dr. 4000 Cash a/c To Unearned Revenue (Advance from client) 4000 d. Dr. 12500 Accounts Receivable a/c To Consulting Revenue (Revenue on account) 12500 Adjusting Enteries Trans. Particulars Debit in $ Credit in $ Supplies Expense a/c Dr. 1075 To Supplies (Supplies expensed) 3900 + 2975 - 5100 1075 f. Amortization Expense a/c Dr. 13500 To Accum. Amort. - Comp.Equip (To record depreciation) 54000 / 4 = 13500 13500 g. Amortization Expense a/c Dr. 15000 To Accum. Amort. - Furniture (To record depreciation) 120000 / 8 = 15000 15000 h. Advertising Expense a/c Dr. 6600 To Prepaid Advetising (Advertising expense recogniized) 2200 x 3 6600 Dr. 2000 Salaries expense a/c To Salary Payable (Salary accrued) 400 x 5 2000

Worksheet For the period ending 31.12.2017 54000 Particulars Cash Accounts Receivable Prepaid Advertisement Supplies Computer Equipment Accum. Amort. - Comp.Equip Furniture Accum. Amort. - Furniture Accounts Payable Salary Payable Unearned Revenue R.Paris, Capital R.Paris, Withdrawals Consulting Revenue Salaries expense Supplies Expense Travel Expense Advertising Expense Amortization Expense Totals Unadjusted Adjustments Adjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 10200 10200 29600 29600 25800 6600 19200 6875 1075 5800 54000 13500 13500 120000 120000 15000 15000 30975 30975 2000 2000 4000 4000 98000 98000 45000 45000 273100 273100 82500 2000 84500 1075 1075 32100 32100 6600 6600 28500 28500 406075 406075 38175 38175436575 436575 273100 Statement of Income For the period ending 31.12.2017 Consulting Revenue Less: Salaries expense Supplies Expense Travel Expense Advertising Expense Amortization Expense Net Income 84500 1075 32100 6600 28500 152775 120325 Statement of Owner's Equity For the period ending 31.12.2017 R.Paris, Capital Net Income 98000 120325 218325 -45000 173325 R.Paris, Withdrawals

Amounts in $ Amounts in $ Balance sheet As at 31.12.2017 Assets Current Assets Cash Accounts Receivable Prepaid Advertisement Supplies Amounts in $ Amounts in $ Liabilities Current Liabilities 10200 Accounts Payable 29600 Salary Payable 19200 Unearned Revenue 5800 64800 30975 2000 4000 36975 Non Current Assets Computer Equipment Accum. Amort. - Comp.Equip Furniture Accum. Amort. - Furniture Total Assets 54000 -13500 120000 - 15000 40500 Owner's Equity 105000 R.Paris, Capital 210300 Total Liabilities & Equity 173325 210300