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 |
31500 |
|
| Accounts receivable |
49600 |
|
| Allowance for doubtful accounts |
|
750 |
| Supplies Inventory |
|
|
| Prepaid insurance |
1100 |
|
| Furniture & Equipment |
25000 |
|
| Accumulated depreciation - equipment |
|
6250 |
| Notes payable |
|
7200 |
| Common stock |
|
20000 |
| Retained earnings |
|
15010 |
| Service revenue |
|
100000 |
| Rent expense |
9750 |
|
| Salaries and wages expense |
28500 |
|
| Utilities expense |
1080 |
|
| Office expense |
720 |
|
| |
149210 |
149210 |
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. Adjusting entry general journal
2. 10-column worksheet (use of MSExcel required on this part of the problem)
3. Income statement
4. Statement of retained earnings
5. Balance sheet
6. 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.