PROBLEM:
Skinny Enterprise has operated a business for the past twoyears from his home. In January 2020, she decided to move to alease office space. Skinny registered the business as a corporationaccording to Delaware laws in January 2020. Skinny EnterpriseCorporation received authorization to issue 1,500,000 common shareswith $1.4 par value. During January 2020, the business entered thefollowing transactions:
2 The following assets received from Skinny Enterprise inexchange for 175,000 common shares: Cash, $156,000; AccountsReceivable, $75,000; Office Supplies, $8,280; Prepaid Insurance$36,000 (for 24 month) and Building, $208,000. There were noliabilities assumed.
2 Borrowed $125,000 from Banco Popular with 8% ofinterest.
3 Paid THREE year of rent on a lease rental contract, $36,000(recorded as Prepaid)
3 Purchased office equipment on account for $28,000.
4 Purchase a Building with a market value of $160,000 inexchange of 47,890 company shares.
4 Paid the premiums on property and casualty insurancepolicies, $9,000 for 18 MONTHS (recorded as
Prepaid)
5 Received cash from clients as an advance payment forservices to provided and recorded it as
unearned fees, $34,000.
6 Invests cash not needed for operations in trading shares at5%, $180,000.
7 Received cash from clients on account, $43,000.
10 Paid cash for a newspaper advertisement for TWO years,$2,400 (recorded as Prepaid)
11 Paid part of debt incurred on January 3, $7,000.
12 Recorded services provided on account for the periodJanuary 1-15, $48,000.
13 Recorded cash from cash clients for fees earned duringJanuary 1-15, $55,000.
15 Skinny declared cash dividends of $.30 for outstandingshares to be paid on January 31. 17 Paid telephone, cable, andinternet bills for January, $1,825.
18 Issue 18,000 new shares for a market value of $2.00.
19 Paid cash for supplies, $5,700.
21 Received cash from clients on account, $38,000. 22 Received$1,575 from a leased space.
25 Paid electricity bill for January, $1,340.
26 Obtain the investor list for dividend payment on January31
27 Paid part of debt incurred on January 3, $7,000.
30 Paid monthly office salary, $16,000; sales salaries for$24,000; and $8,000 to Skinny as General Manager of SkinnyEnterprise Corporation. Deductions for FICA 6.2% and Medicare Tax1.45%, federal income tax withheld 20%. Voluntary deductions are:United Funds $200 and Red Cross $500.
30 Recorded employer payroll taxes expense for FICA 6.2% andMedicare Tax 1.45%, 5.4% for state unemployment (SUTA tax) and .8%for federal unemployment (FUTA tax).
29 Recorded cash from cash clients for fees earned duringJanuary 16-30, $54,880
30 Recorded services provided on account for the remainder ofJanuary 16-30, $46,000.
31 Skinny paid cash dividends declared on January 15.
3. Post the journal entries to a ledger accounts, you may usefour column formats for each one of the ledger accounts.
4. Prepare an unadjusted trial balance on January 31,2020.
At the end of January, the following adjustments data wereobtained. Analyze and use these data to complete #5 y #6instructions. HAND OUT YOUR CALCULATIONS.
a. Insurance expired during January for each policy.
b. Supplies on hand on January 31 are $4,375.
c. Depreciation of office equipment for January 31, use thestraight-line method (Residual
value $5,000, and useful life 60 months)
d. Depreciation of building for January 31, use thestraight-line method (Residual value
$18,000, and useful life 120 months)
e. Rent expired during January.
f. Unearned fees earned during January 31 are $15,000.
g. Market value in Investment in trading securities increaseto $189,500.
h. Advertising expired during January.
i. Record one month of interest accrued on note payable.
j. Record one month of interest accrued on tradingsecurities.
5. Prepare adjusting entries.
6. Journalize and post adjusting entries to the ledgeraccounts.
7. Prepare an adjusted trial balance.
8. Prepare on January 31, 2020 a Multiple Step IncomeStatement, a Retained Earnings Statement,
Statement of Shareholder’s, and a Statement of FinancialPosition (Balance Sheet).
9. Journalize and post to the ledger accounts the closingentries.
10. Prepare a Post-Closing Trial Balance on January 31,2020.
