Required: 3. Prepare an unadjusted trial balance at January 31.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required Information
[The following information applies to the questions displayed below.]
Fast Deliveries, Incorporated (FDI), was organized in December last year and had limited activity last year. The resulting
balance sheet at the beginning of the current year is provided below:
Assets:
Cash
Accounts Receivable
Supplies
Total Assets
January
1
2
3
4
5
6
Two employees have been hired, at a monthly salary of $2,900 each. The following transactions occurred during January
of the current year.
7
8
9
18
16
20
25
January
31a.
31b.
31c.
31d.
31e.
31f.
31g.
$3,600 is paid for 12 months' insurance starting January 1. (Record as an asset.)
$3,600 is paid for 12 months of rent beginning January 1. (Record as an asset.)
FDI borrows $33,600 cash from First State Bank at 6% annual interest; this note is payable in
two years.
A delivery van is purchased using cash. Including tax, the total cost was $24,000.
Stockholders contribute $8,000 of additional cash to FDI for its common stock.
Additional supplies costing $1,500 are purchased on account and received.
$899 of accounts receivable arising from last year's December sales are collected.
$300 of accounts payable from December of last year are paid.
Performed services for customers on account. Sent invoices totaling $11, 2800.
$7,100 of services are performed for customers who paid immediately in cash.
$2,900 of salaries are paid for the first half of the month.
FDI receives $3,600 cash from a customer for an advance order for services to be provided
later in January and in February.
$4,100 is collected from customers on account (see January 9 transaction).
Retained Earnings
Service Revenue
FAST DELIVERIES, INCORPORATED
Balance Sheet at January 1
Liabilities:
Accounts Payable
Stockholders' Equity:
Common Stock
Retained Earnings
$ 12,280 Total Liabilities and Stockholders' Equity
$ 11,000
820
468
Additional information for adjusting entries:
A $1,000 bill arrives for January utility services. Payment is due February 15.
Supplies on hand on January 31 are counted and determined to have cost $290.
As of January 31, FDI had completed 60% of the deliveries for the customer who paid in advance
on January 20.
Accrue one month of interest on the bank loan. Yearly interest is determined by multiplying the
amount borrowed by the annual interest rate (expressed as 0.06). For convenience, calculate
January interest as one-twelfth of the annual interest.
Assume the van will be used for 4 years, after which it will have no value. Thus, each year,
one-fourth of the van's benefits will be used up, which implies annual depreciation equal to
one-fourth of the van's total cost. Record depreciation for the month of January, equal to one-
twelfth of the annual depreciation expense.
Salaries earned by employees for the period from January 16 to 31 are $1,450 per employee and
will be paid on February 3.
Adjust the prepaid asset accounts (for rent and insurance) as needed.
Required:
3. Prepare an unadjusted trial balance at January 31.
Account Titles
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Prepaid Rent
Vehicles
FAST DELIVERIES, INCORPORATED
Unadjusted Trial Balance
At January 31
Accumulated Depreciation
Accounts Payable
Deferred Revenue
Notes Payable (long-term)
Salaries and Wages Payable
Interest Payable
Common Stock
Salaries and Wages Expense
Supplies Expenses
Depreciation Expense
Interest Expense
Totals
$
Debit
0 $
Credit
$400
11,150
730
$ 12,280
0
Transcribed Image Text:Required Information [The following information applies to the questions displayed below.] Fast Deliveries, Incorporated (FDI), was organized in December last year and had limited activity last year. The resulting balance sheet at the beginning of the current year is provided below: Assets: Cash Accounts Receivable Supplies Total Assets January 1 2 3 4 5 6 Two employees have been hired, at a monthly salary of $2,900 each. The following transactions occurred during January of the current year. 7 8 9 18 16 20 25 January 31a. 31b. 31c. 31d. 31e. 31f. 31g. $3,600 is paid for 12 months' insurance starting January 1. (Record as an asset.) $3,600 is paid for 12 months of rent beginning January 1. (Record as an asset.) FDI borrows $33,600 cash from First State Bank at 6% annual interest; this note is payable in two years. A delivery van is purchased using cash. Including tax, the total cost was $24,000. Stockholders contribute $8,000 of additional cash to FDI for its common stock. Additional supplies costing $1,500 are purchased on account and received. $899 of accounts receivable arising from last year's December sales are collected. $300 of accounts payable from December of last year are paid. Performed services for customers on account. Sent invoices totaling $11, 2800. $7,100 of services are performed for customers who paid immediately in cash. $2,900 of salaries are paid for the first half of the month. FDI receives $3,600 cash from a customer for an advance order for services to be provided later in January and in February. $4,100 is collected from customers on account (see January 9 transaction). Retained Earnings Service Revenue FAST DELIVERIES, INCORPORATED Balance Sheet at January 1 Liabilities: Accounts Payable Stockholders' Equity: Common Stock Retained Earnings $ 12,280 Total Liabilities and Stockholders' Equity $ 11,000 820 468 Additional information for adjusting entries: A $1,000 bill arrives for January utility services. Payment is due February 15. Supplies on hand on January 31 are counted and determined to have cost $290. As of January 31, FDI had completed 60% of the deliveries for the customer who paid in advance on January 20. Accrue one month of interest on the bank loan. Yearly interest is determined by multiplying the amount borrowed by the annual interest rate (expressed as 0.06). For convenience, calculate January interest as one-twelfth of the annual interest. Assume the van will be used for 4 years, after which it will have no value. Thus, each year, one-fourth of the van's benefits will be used up, which implies annual depreciation equal to one-fourth of the van's total cost. Record depreciation for the month of January, equal to one- twelfth of the annual depreciation expense. Salaries earned by employees for the period from January 16 to 31 are $1,450 per employee and will be paid on February 3. Adjust the prepaid asset accounts (for rent and insurance) as needed. Required: 3. Prepare an unadjusted trial balance at January 31. Account Titles Cash Accounts Receivable Supplies Prepaid Insurance Prepaid Rent Vehicles FAST DELIVERIES, INCORPORATED Unadjusted Trial Balance At January 31 Accumulated Depreciation Accounts Payable Deferred Revenue Notes Payable (long-term) Salaries and Wages Payable Interest Payable Common Stock Salaries and Wages Expense Supplies Expenses Depreciation Expense Interest Expense Totals $ Debit 0 $ Credit $400 11,150 730 $ 12,280 0
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