Problem
The following unadjusted and adjusted trial balances are available for Interior Designs, Inc., as of and for the fiscal year ended December 31, 20X7.
| |
Unadjusted Trial Balance
|
Adjusted Trial Balance |
|
|
Debit
|
Credit
|
Debit
|
Credit
|
|
Cash ........................................................... $20,000
|
|
$20,000
|
|
|
Accounts receivable ............................
|
11,000
|
|
19,500
|
|
|
Prepaid insurance....................................
|
4,400
|
|
4,000
|
|
|
Office supplies ..............................
|
7,000
|
|
6,000
|
|
|
Prepaid rent ..............................................
|
6,000
|
|
5,500
|
|
|
Equipment................................................ 120,000
|
|
120,000
|
|
|
Accumulated depreciation ..................
|
|
$22,000
|
|
$23,000
|
|
Interest payable........................................
|
|
500
|
|
600
|
|
Accounts payable ...................................
|
|
13,500
|
|
13,500
|
|
Income tax payable .....................
|
|
2,000
|
|
3,000
|
|
Salaries payable........................................
|
|
0
|
|
3,000
|
|
Unearned professional fees revenue .
|
|
15,000
|
|
14,000
|
|
Notes payable (due 20X9) ..........
|
|
20,000
|
|
20,000
|
|
Common stock ........................................
|
|
40,000
|
|
40,000
|
|
Retained earnings....................................
|
|
50,200
|
|
50,200
|
|
Dividends ...................................................
|
9,000
|
|
9,000
|
|
|
Professional fees revenue......................
|
|
86,000
|
|
95,500
|
|
Interest expense ...........................
|
1,100
|
|
1,200
|
|
|
Salaries expense .........................
|
25,000
|
|
28,000
|
|
|
Insurance expense ........................
|
4,400
|
|
4,800
|
|
|
Rent expense...........................................
|
11,000
|
|
11,500
|
|
|
Depreciation expense ................
|
11,000
|
|
12,000
|
|
|
Income tax expense.................................
|
5,600
|
|
6,600
|
|
|
Supplies expense ..........................
|
6,000
|
|
7,000
|
|
|
Utilities expense ......................
|
7.700
|
|
7.700
|
|
|
Totals ...................................................... $249 200
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$249 200
|
$282.821
|
$2.62 800
|
a) Prepare the adjusting entries that must have been made.
b) Prepare the income statement and the statement of retained earnings for the fiscal year ended December 31, 20X7, as well as a statement of financial position as of December 31, 20X7.
c) Prepare closing entries.
d) Prepare a retained earnings general ledger '1" account showing the January 1, 20X7, balance, the effect of the closing entries, and the December 31, 20X7, balance.