The accounting cycle problem for this assignment is in an attached Word document . It will include:

1. Preparing a general journal of adjusting journal entries.

2. Preparing and completing a ten-column worksheet using Excel. ( Seee Appendix 3C for an example)

3. Based on worksheet calculations, preparing a multiple-step income statement, balance sheet, and statement of retained earnings in accordance with generally accepted accounting principles. Include headings, titles, dating, and formatting in good form.

4. Preparing the closing entries.

5. Bonus Points – Up to 6 bonus points can be earned on this assignment. Prepare the reversing journal entries at period end. Partial credit can be earned on this part of the assignment.

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              Credit

Cash                                                                                      $ 31,500

Accounts receivable 49,600

Allowance for doubtful accounts $     750

Supplies Inventory                                                                     1,960

Prepaid insurance                                                                    1,100

Furniture & Equipment                                                           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 9,750

Salaries and wages expense 28,500

Utilities expense                                                                         1,080

Office expense                                                                             720                                                                       

                                                                                                 $149,210     $149,210     

The following information is available as of December 31, 2016.

Fees were received in advance from clients and treated as revenue: $6,000

Services performed for clients that were not recorded by 12/31/16 or paid by clients: $4,900

Bad debt expense for the year: $1,430

Insurance premiums expired during the year: $480

Equipment is being depreciated at 10% per year.

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.

Rent on the building is $750 per month. The rent for all of 2016 and January, 2017 has been paid.

Office salaries and wages earned but unpaid as of 12/31/16: $2,510

Mr. Freely withdrew dividends of $17,000 during the year. The dividends were debited to retained earnings at the time the disbursements were made.

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.

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

Prepare the reversing entries.