ACCT 300-ACCOUNTING CYCLE PROBLEM

ACCOUNTING CYCLE PROBLEM The following is a trial balance and certain other information relating to Mr. I. Spend Freely, a financial consultant operating as a corporation. I. SPEND FREELY, FINANCIAL CONSULTANT TRIAL BALANCE DECEMBER 31, 2016 Debit Cash Accounts receivable Credit $ 31,500 49,600 Allowance for doubtful accounts $ Supplies Inventory 1,960 Prepaid insurance 1,100 Furniture & Equipment 750 25,000 Accumulated depreciation – equipment 6,250 Notes payable 7,200 Common stock 20,000 Retained earnings 15,010 Service revenue 100,000 Rent expense Salaries and wages expense 9,750 28,500 Utilities expense 1,080 Office expense 720 $149,210 $149,210 The following information is available as of December 31, 2016. 1. Fees were received in advance from clients and treated as revenue: $6,000 2. Services performed for clients that were not recorded by 12/31/16 or paid by clients: $4,900 3. Bad debt expense for the year: $1,430 4. Insurance premiums expired during the year: $480 5. Equipment is being depreciated at 10% per year. 6. Mr. Freely gave the bank a 90-day note on December 1, 2016 for $7,200. The note has an interest rate of 10% annually. 7. Rent on the building is $750 per month. The rent for all of 2016 and January, 2017 has been paid. 8. Office salaries and wages earned but unpaid as of 12/31/16: $2,510 9. Mr. Freely withdrew dividends of $17,000 during the year. The dividends were debited to retained earnings at the time the disbursements were made. 10. Assume the corporation has no income tax liability. Required: From the trial balance and other information given, please prepare the following as of December 31, 2016. 1. 2. 3. 4. 5. 6. Adjusting entry general journal 10-column worksheet (use of MSExcel required on this part of the problem) Income statement Statement of retained earnings Balance sheet Closing entry general journal Extra Credit – Worth 6 additional points 1. Prepare the reversing entries. Please note: City University of Seattle uses software which tests for originality of work. Plagiarized work will result in a “0” grade for the assignment.

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