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Problem $5\mathrm{.}7$A $($Static$)$ Short Comprehensive Problem Including Adjusting Entries, Closing Entries, and Worksheet Preparation $($LO$5-8)$

Internet Consulting Service, Incorporated, adjusts its accounts every month. The company$$s year$-$end unadjusted trial balance dated December $31,$ current year follows. $($Bear in mind that adjusting entries already have been made for the first $11$ months of current year, but have not been made for December.$)$

INTERNET CONSULTING SERVICE, INCORPORATED

Unadjusted Trial Balance

December $31,$ Current Year

Debits Credits

Cash $ $49,100$

Consulting fees receivable $23,400$

Prepaid office rent $6,300$

Prepaid dues and subscriptions $300$

Supplies $600$

Equipment $36,000$

Accumulated depreciation: equipment $ $10,200$

Notes payable $5,000$

Income taxes payable $12,000$

Unearned consulting fees $5,950$

Capital stock $30,000$

Retained earnings $32,700$

Dividends $60,000$

Consulting fees earned $257,180$

Salaries expense $88,820$

Telephone expense $2,550$

Rent expense $22,000$

Income taxes expense $51,000$

Dues and subscriptions expense $560$

Supplies expense $1,600$

Depreciation expense: equipment $6,600$

Miscellaneous expenses $4,200$

$ $353,030$ $ $353,030$

Other Data

On December $1,$ the company signed a new rental agreement and paid three months' rent in advance at a rate of $$2,100$ per month. This advance payment was debited to the Prepaid Office Rent account.

Dues and subscriptions expiring during December amounted to $$50.$

An estimate of supplies on hand was made at December $31$; the estimated cost of the unused supplies was $$450.$

The useful life of the equipment has been estimated at five years $(60$ months$)$ from date of acquisition.

Accrued interest on notes payable amounted to $$100$ at year$-$end. $($Set up accounts for Interest Expense and for Interest Payable.$)$

Consulting services valued at $$2,850$ were rendered during December to clients who had made payment in advance.

It is the custom of the firm to bill clients only when consulting work is completed or$,$ in the case of prolonged engagements, at monthly intervals. At December $31,$ consulting services valued at $$11,000$ had been rendered to clients but not yet billed. No advance payments had been received from these clients.

Salaries earned by employees but not paid as of December $31$ amount to $$1,700.$

Income taxes expense for the year is estimated at $$56,000.$ Of this amount, $$51,000$ has been recognized as expense in prior months, and $$39,000$ has been paid to tax authorities. The company plans to pay the $$17,000$ remainder of its income tax liability on January $15.$

Prepare a worksheet for Internet Consulting Service, Incorporated, dated December $31,$ current year.

Note: Adjustments are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.

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