Required information Skip to question [The following information applies to the questions displayed...
90.2K
Verified Solution
Link Copied!
Question
Accounting
Required information
Skip to question
[The following information applies to the questions displayed below.]
Fast Deliveries, Inc. (FDI), was organized in December last year and had limited activity last year. The resulting balance sheet at the beginning of the current year is provided below:
FAST DELIVERIES, INC.
Balance Sheet at January 1
Assets:
Liabilities:
Cash
$
10,900
Accounts Payable
$
500
Accounts Receivable
800
Stockholders Equity:
Supplies
400
Common Stock
11,000
Retained Earnings
600
Total Assets
$
12,100
Total Liabilities and Stockholders Equity
$
12,100
Two employees have been hired, at a monthly salary of $2,200 each. The following transactions occurred during January of the current year.
Ch.
January
2
1
$5,700 is paid for 12 months insurance starting January 1. (Record as an asset.)
2
2
$4,200 is paid for 12 months of rent beginning January 1. (Record as an asset.)
2
3
FDI borrows $30,000 cash from First State Bank at 6% annual interest; this note is payable in two years.
2
4
A delivery van is purchased using cash. Including tax, the total cost was $24,000.
2
5
Stockholders contribute $6,000 of additional cash to FDI for its common stock.
2
6
Additional supplies costing $1,000 are purchased on account and received.
2
7
$600 of accounts receivable arising from last years December sales are collected.
2
8
$400 of accounts payable from December of last year are paid.
3
9
Performed services for customers on account. Sent invoices totaling $10,400.
3
10
$7,600 of services are performed for customers who paid immediately in cash.
3
16
$2,200 of salaries are paid for the first half of the month.
3
20
FDI receives $3,500 cash from a customer for an advance order for services to be provided later in January and in February.
3
25
$4,500 is collected from customers on account (see January 9 transaction).
Ch.
January
Additional information for adjusting entries:
4
31a.
A $1,200 bill arrives for January utility services. Payment is due February 15.
4
31b.
Supplies on hand on January 31 are counted and determined to have cost $250.
4
31c.
As of January 31, FDI had completed 60% of the deliveries for the customer who paid in advance on January 20.
4
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 0.06).
For convenience, calculate January interest as one-twelfth of the annual interest.
4
31e.
Assume the van will be used for 4 years, after which it will have no value. Thus, each year, one-fourth of the vans benefits will be used up, which implies annual depreciation equal to one-fourth of the vans total cost. Record depreciation for the month of January, equal to one-twelfth of the annual depreciation expense.
4
31f.
Salaries earned by employees for the period from January 1631 are $1,100 per employee and will be paid on February 3.
4
31g.
Adjust the prepaid asset accounts (for rent and insurance) as needed.
4-a. Post the adjusting journal entries from part 3, set up T-accounts for the accounts on the trial balance.
4-b. Post the adjusting entries from part 3 and prepare an adjusted trial balance.
Prev
Question 4 linked to 5of5Total4 5 of 5
Visit question mapNext
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
