80.2K

Verified Solution

Link Copied!

The following are the balances in the accounts for Joan Miller Advertising Agency as of January 31, 2001:

Debit Credit

Cash $ 1,720

Accounts Receivable 2,800

Fees Receivable 200

Art Supplies 1,300

Office Supplies 600

Prepaid Rent 400

Prepaid Insurance 440

Art Equipment 4,200

Accumulated Depreciation, Art eq.$ 70

Office Equipment 3,000

Accumulated Depreciation Office Eq. 50

Accounts Payable 3,170

Unearned Art Fees 600

Wages Payable 180

Joan Miller, Capital 10,590

____________

Totals $14,66014,660

During the month of February, the agency engaged in the following transactions:

Feb. 1 Received an additional investment of cash from Joan Miller, $6,000

Feb. 2 Purchased additional office equipment with cash, $800.

Feb. 5 Received art equipment transferred to the business from Joan Miller, $1,400.

Feb. 6 Purchased additional office supplies with cash, $80

Feb. 7 Purchased additional art supplies on credit from Taylor Supply Company, $500.

Feb. 8 Completed the series of advertisements for Marsh Tire Company that began on January 31, and billed Marsh Tire Company for the total services performed, including the accrued revenues that had been recognized in January of $200 (see fees receivable). The total bill is $800.

Feb. 9 Paid the secretary for two weeks wages, $600, $180 of which had been accrued in January.

Feb. 12 Paid the amount due to Morgan Equipment for the office equipment purchased last month $1,500

Feb. 13 Accepted an advance fee in cash for artwork to be done for another agency, $1,800.

Feb. 14 Purchased a copier from Morgan Equipment for $2,100 paying $250 in cash and agreeing to pay he rest in equal payments over the next five months.

Feb. 15 Performed advertising services and accepted a cash fee, $1,050.

Feb. 16 Received payment on account from Ward Department Stores for services performed last month, $2,800

Feb. 19 Paid amount due for the telephone bill that was received and recorded at the end of January , $70.

Feb. 20 Performed advertising services for Ward Department Stores and agreed to accept payment next month $3,200.

Feb. 21 Performed art services for a cash fee, $580

Feb. 22 Received and paid the utility bill for February, $110. Paid the secretary for two weeks wages. $600.

Feb. 26 Paid the rent for March in advance, $400.

Feb. 27 Received the telephone bill for February, which is to be paid next month, $80.

Feb. 28 Paid out cash to Joan Miller as a withdrawal for personal living expenses, $1,400.

At the end of February, adjustments are made for the following:

a. One months prepaid rent has expired.

b. One months prepaid insurance has expired, $40.

c. An inventory of art supplies reveals $720 of supplies are still on hand on February 28th.

d. An inventory of office supplies reveals $300 in office supplies have been used in February.

e. Depreciation on the Art equipment for February is calculated to be $90.

f. Depreciation on the Office equipment for February is calculated to be $100.

g. Art services performed for which payment has been received in advance total, $1,400

h. Fees for advertising services performed will not be billed until March total $340.

i. Three days worth of secretarial wages had accrued by the end of February totaling $180.

Required:

1. Prepare the general journal entries or enter into a worksheet the transactions completed in February, 2001

2. Prepare the general journal entries or enter into a worksheet the adjustments necessary at the end of February.

3. Prepare the closing entries for the general journal or close the revenue and expense columns.

4. Prepare in good form an income statement for the month of February 2001

5. Prepare in good form a balance sheet as of February 28, 2001.

Answer & Explanation Solved by verified expert

See Answer