Acc205 Principles of Accounting: P3-49 Draper Consulting Continuing Problem

Acc205 Principles of Accounting

P3-49 Preparing adjusting entries; preparing an adjusted trial balance; and preparing financial statements from an adjusted trial balance
Trial Balance
December 18, 2012
Account Title Debit Credit
Cash 16,500
Accounts receivable 1,500
Supplies 900
Equipment 1,800
Accumulated depreciation—equipment
Furniture 4,200
Accumulated depreciation—furniture
Accounts payable 5,100
Salary payable
Unearned service revenue
Draper, capital 18,000
Draper, drawing
Service revenue 2,600
Rent expense 550
Utilities expense 250
Salary expense
Depreciation expense—equipment
Depreciation expense—furniture
Supplies expense
Total $25,700 $25,700
Later in December, the business completed these transactions, as follows:
Dec 21 Received $1,400 in advance for client service to be performed evenly over the next 30 days
21 Hired a secretary to be paid $2,055 on the 20th day of each month. The secretary begins work immediately.
26 Paid $450 on account.
28 Collected $300 on account.
30 Draper withdrew cash of $1,400.
1. Open these additional T-accounts: Accumulated depreciation—equipment; Accumulated depreciation—furniture; Salary payable; Unearned service revenue; Salary expense; Depreciation expense—equipment; Depreciation expense—furniture; Supplies expense.
2. Journalize the transactions of December 21–30.
3. Post to the T-accounts, keying all items by date.
4. Prepare a trial balance at December 31. Also set up columns for the adjustments and for the adjusted trial balance, as illustrated in Exhibit 3-8.
5. At December 31, the business gathers the following information for the adjusting entries:
a. Accrued service revenue, $550.
b. Earned $700 of the service revenue collected in advance on December 21.
c. Supplies on hand, $200.
d. Depreciation expense—equipment, $30; furniture, $70.
e. Accrued $685 expense for secretary’s salary.
On your worksheet, make these adjustments directly in the adjustments columns, and complete the adjusted trial balance at December 31. Throughout the book, to avoid rounding errors, we base adjusting entries on 30-day months and 360-day years.
6. Journalize and post the adjusting entries. In the T-accounts, denote each adjusting amount as Adj and an account balance as Bal.
7. Prepare the income statement and the statement of owner's equity of Draper Consulting for the month ended December 31, 2012, and prepare the balance sheet at that date.
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