Karla Tanner opened a web consulting business called Linkworksand recorded the following transactions in its first month ofoperations.
| Apr. | | 1 | | Tanner invests $80,000 cash along with office equipment valuedat $26,000 in the company in exchange for common stock. |
| Apr. | | 2 | | The company prepaid $9,000 cash for twelve months’ rent foroffice space. The company's policy is record prepaid expenses inbalance sheet accounts. |
| Apr. | | 3 | | The company made credit purchases for $8,000 in officeequipment and $3,600 in office supplies. Payment is due within 10days. |
| Apr. | | 6 | | The company completed services for a client and immediatelyreceived $4,000 cash. |
| Apr. | | 9 | | The company completed a $6,000 project for a client, who mustpay within 30 days. |
| Apr. | | 13 | | The company paid $11,600 cash to settle the account payablecreated on April 3. |
| Apr. | | 19 | | The company paid $2,400 cash for the premium on a 12-monthinsurance policy. The company's policy is record prepaid expensesin balance sheet accounts. |
| Apr. | | 22 | | The company received $4,400 cash as partial payment for thework completed on April 9. |
| Apr. | | 25 | | The company completed work for another client for $2,890 oncredit. |
| Apr. | | 28 | | The company paid $5,500 cash in dividends. |
| Apr. | | 29 | | The company purchased $600 of additional office supplies oncredit. |
| Apr. | | 30 | | The company paid $435 cash for this month’s utility bill. |
Descriptions of items that require adjusting entries onApril 30, follow.
a) On April 2, the company prepaid $9,000 cash for twelvemonths' rent for office space.
b) The balance in Prepaid insurance represents the premium paidfor a 12-month insurance policy the policy's coverage began onApril 1.
c) Office supplies on hand as of April 30 total $1,200.
d) Straight-line depreciation of office equipment, based on a5-year life and a $4,000 salvage value, is $500 per month.
e) The company has completed work for a client, but has not yetbilled the $1,800 fee.
f) Wages due to employees, but not yet paid, as of April 30total $2,600.
This question requires:
General Journal tab-For each transaction, review theunadjusted balance and prepare the adjusting entry necessary tocorrectly report the revenue earned or the expense incurred. Afteradjusting the accounts, review the general ledger and trial balancefor accuracy.
General Ledger tab - Each journalentry is posted automatically to the general ledger. Use thedrop-down button to view the unadjusted or adjusted balances.
Trial Balance tab - You may vieweither the unadjusted or adjusted trial balance by choosing fromthe dropdown box below. Your choice will determine the reportedvalues on the financial statement tabs.
Income Statement tab- Use the drop-downs to select theaccounts properly included on the income statement. The unadjustedor adjusted balances will appear for each account, based on yourselection.
Statement of Retained earnings tab- The unadjusted or adjusted balanceswill appear for each account, based on your selection.
Balance Sheet tab- Use the drop-downs to select theaccounts properly included on the balance sheet. The unadjusted oradjusted balances will appear for each account, based on yourselection.
Impact on Income tab-For each adjustment, indicate the incomestatement and balance sheet account affected, and the impact on netincome. If an adjustment caused net income to decrease, enter theamount as a negative value. Net income before adjustments can befound on the income statement tab. (Hint: Select unadjusted on thedropdown.)
