Question

Two employees have been hired, at a monthly salary of $2,960 each. The following transactions occurred during Janu of the current year. ch. 2 2 2 January 1 2 3 4 5 6 7 نم نم لم له له لما فما فما لما $6,000 is paid for 12 months' insurance starting January 1. (Record as an asset.) $4,800 is paid for 12 months of rent beginning January 1. (Record as an asset.) FDI borrows $30,000 cash from First State Bank at 58 annual interest; this note is payable in two years. A delivery van is purchased using cash. Including tax, the total cost was $28,800. Stockholders contribute $4,000 of additional cash to FDI for its common stock. Additional supplies costing $1,400 are purchased on account and received. $700 of accounts receivable arising from last year's December sales are collected. $300 of accounts payable from December of last year are paid. Performed services for customers on account. Sent invoices totaling $10,600. $7,400 of services are performed for customers who paid immediately in cash. $2,960 of salaries are paid for the first half of the month. FDI receives $3,700 cash from a customer for an advance order for services to be provided later in January and in February. $3,500 is collected from customers on account (see January 9 transaction). 9 10 16 20 3 25 ch. 4 4 4 4 January Additional information for adjusting entries 31a. A $1,100 bill arrives for January utility services. Payment is due February 15. 31b. Supplies on hand on January 31 are counted and determined to have cost $280. 310. As of January 31, FdI had completed 608 of the deliveries for the castomer who paid in advance on January 20. 31d. Accrue one month of interest on the bank loan. Yearly interest is determined by multiplying the amount borrowed by the annual interest rate (expressed as 0.05). For convenience, calculate January interest as one-twelfth of the annual interest. 3le. Assume the van will be used for 4 years, after which it will have no value. Thus, each year, one-fourth of the van's benefits will be used up, which implies annual depreciation equal to one-fourth of the van's total cost. Record depreciation for the month of January, equal to one-twelfth of the annual depreciation expense. 311. Salaries earned by employees for the period from January 16-31 are $1,480 per employee and will be paid on February 3. 31g. Adjust the prepaid asset accounts (for rent and insurance) as needed. 4 4 4

Answer 1

Date	Account Titles	Debit	Credit
1-Jan	Prepaid Insurance	$          6,000
	Cash		$          6,000
2	Prepaid Rent	$          4,800
	Cash		$          4,800
3	Cash	$        30,000
	Notes Payable		$        30,000
4	Delivery Van	$        28,800
	Cash		$        28,800
5	Cash	$          4,000
	Common Stock		$          4,000
6	Supplies	$          1,400
	Accounts Payable		$          1,400
7	Cash	$             700
	Accounts Receivable		$             700
8	Accounts Payable	$             300
	Cash		$             300
9	Accounts Receivable	$        10,600
	Service Revenue		$        10,600
10	Cash	$          7,400
	Service Revenue		$          7,400
16	Salaries Expense	$          2,960
	Cash		$          2,960
20	Cash	$          3,700
	Unearned Service Revenue		$          3,700
25	Cash	$          3,500
	Accounts Receivable		$          3,500
31a.	Utilities Expense	$          1,100
	Accounts Payable		$          1,100
31b.	Supplies Expense	$          1,120
	Supplies		$          1,120
31c.	Unearned Service Revenue	$          2,220
	Service Revenue		$          2,220
31d.	Interest Expense	$             125
	Interest Payable		$             125
31e.	Depreciation Expense	$             600
	Accumulated Depreciation		$             600
31f.	Salaries Expense	$          2,960
	Salaries Payable		$          2,960
31g.	Insurance Expense	$             500
	Prepaid Insurance		$             500
	Rent Expense	$             400
	Prepaid Rent		$             400

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