Question

Problem 1. The account balances from the September 30, 2020 unadjusted trial balance for Washington Enterprises Inc. are presented below: Debit Credit Contributed Capital.. $110,000 Office Furniture... 72,000 Accumulated Depreciation Furniture 6,000 Cash... $224,000 Rent Expense. 12,000 Retained Earnings.. 125,000 Accounts Receivable. 71,000 Accounts Payable.... 98,000 Office Supply Inventory.. 58,000 Note Payable (taken out on 9/1/20; 10% interest due annually) 30,000 Consulting Revenue... 110,000 Deferred Revenue.. 20,000 Salaries Expense. 40,000 Prepaid Insurance. 22,000 Additional information is as follows: a. The Prepaid Insurance represents the original premium of S24,000 paid on July 1, 2020 for a 2 year policy. b. The Office Furniture has an estimated five year life with no residual (salvage) value. c. You found a utility bill that had not been included in the accounts and had not been paid. The amount was $5,000. d. For deferred revenue, consultants charged 50 hours during September to these clients. No revenue has been recognized nor have any adjustments been made. The CEO estimated that it would take another 10 hours per month for the next 20 months to complete the work Movies Transa....doc Movies problem.doc Additional Pri...docx 25

Answer 1

1 Dr.($) Cr.($) WASHINGTON ENTERPRISES INC. Journal entry Date Particulars 2020 Sep-30 Prepaid Insurance A/c Dr. To Insurance A/C a 2,000 2,000 b 1,200 Sep-30 Depreciation-Furniture A/c Dr. To Accumulated Depreciation-Equipment A/c 1,200 с 5,000 Sep-30 Utilitites A/c Dr. To Utilities Payable A/C 5,000 d 4,000 Sep-30 Deferred revenue A/c Dr. To Consulting Revenue A/C 4,000 e 49,000 Sep-30 Office Supplies consumed A/C To Office Supplies A/C 49,000 f 5,000 Sep-30 Retained earnings A/c Dr. To Dividends Payable A/C 5,000 g 250 Sep-30 Interest A/c Dr. To Interest payable A/ 250 h 12,000 Sep-30 Salaries A/c Dr. To Salaries Payable A/C 12,000 Notes: 1 Prepaid insurance for 2 year = 24000 i.e., 2000 per month Insurance for september 2000 2 Depreciation = 72000/60 = 1200 per month 3 Deferred revenue recognition for september 2020 Total hours to be charged = 50+ (10*20) = 250 To be recognised = 20000*50/250 = 4000 4 Office Supplies A/C Amount Amount 4000 54000 Bal b/d Purchase Office Supplies consumed Bal c/d 49000 9000 58000 58000 5 Interest payable on notes = 30000*10%/12 = 250 per month 6 Salaries = 14000/7 = 2000 per day Salaries Payable = 2000*6 = 12000

2 WASHINGTON ENTERPRISES INC. Income Statement For September 30, 2020 Amount($) Amount($) Particulars Revenue: Consulting Revenue 114,000 Total revenue 114,000 Expenses: Salaries Insurance Rent Utilities Expenses Office Supplies consumed Interest Depreciation-Furniture Total Expenses 52,000 2,000 12,000 5,000 49,000 250 1,200 (121,450) Net Income/ (loss) (7,450) 3 WASHINGTON ENTERPRISES INC. Statement of Stockholder's Equity For September 30, 2020 Contibuted Capital Retained earnings Balance 110,000 125,000 Add: Income/ (loss) (7,450) 110,000 117,550 Less: Dividends (5,000) Balance September 30 110,000 112,550 Total Stockholder's Equity 222,550

WASHINGTON ENTERPRISES INC. Balance Sheet At September 30, 2020 Assets Amount($) Current Assets Accounts Receivable Cash Office Supplies Prepaid insurance Tuition fee receivable Total Current Assets 71,000 224,000 9,000 20,000 324,000 Non Current Assets Office furniture Accumulated depreciation Total Non Current Assets 72,000 (7,200) 64,800 64,800 Total assets 388,800 Amount($) Liabilities and owner's equity Current liabilities Accounts payable Salaries Payable Notes payable Interest payable Utilities payable Deferred revenue Dividend payable Total Current liabilities 98,000 12,000 30,000 250 5,000 16,000 5,000 166,250 Owner's Equity Contributed Capital Retained Earnings Total Owner's Equity 110,000 112,550 222,550 Total liabilities and owner's equity 388,800