The following are the trial balance and the other information related to Perez Consulting Engineers. Perez Consulting EngineersTrial BalanceDecember 31, 2020 Debit Credit Cash $ 29,500 Accounts Receivable 49,600 Allowance for Doubtful Accounts $ 750 Supplies 1,960 Prepaid Insurance 1,100 Equipment 25,000 Accumulated Depreciation—Equipment 6,250 Notes Payable 7,200 Common Stock 10,000 Retained Earnings 25,010 Service Revenue 100,000 Rent Expense 9,750 Salaries and Wages Expense 30,500 Utilities Expenses 1,080 Office Expense 720 000,000 $149,210 $149,210 1. Fees received in advance from clients $6,000, which were recorded as revenue. 2. Services performed for clients that were not recorded by December 31, $4,900. 3. Bad debt expense for the year is $1,430. 4. Insurance expired during the year $480. 5. Equipment is being depreciated at 10% per year. 6. Perez gave the bank a 90-day, 10% note for $7,200 on December 1, 2020. 7. Rent of the building is $750 per month. The rent for 2020 has been paid, as has that for January 2021, and recorded as Rent Expense. 8. Office salaries and wages earned but unpaid December 31, 2020, $2,510. Instructions a. From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2020. (Omit explanations.) b. Prepare an income statement for 2020, a retained earnings statement, and a classified balance sheet. Perez paid a $17,000 cash dividend during the year (recorded in Retained Earnings).
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
The following are the
| Perez Consulting Engineers Trial Balance December 31, 2020 |
||||
| Debit | Credit | |||
| Cash | $ 29,500 | |||
| 49,600 | ||||
| Allowance for Doubtful Accounts | $ 750 | |||
| Supplies | 1,960 | |||
| Prepaid Insurance | 1,100 | |||
| Equipment | 25,000 | |||
| 6,250 | ||||
| Notes Payable | 7,200 | |||
| Common Stock | 10,000 | |||
| 25,010 | ||||
| Service Revenue | 100,000 | |||
| Rent Expense | 9,750 | |||
| Salaries and Wages Expense | 30,500 | |||
| Utilities Expenses | 1,080 | |||
| Office Expense | 720 | 000,000 | ||
| $149,210 | $149,210 |
1. Fees received in advance from clients $6,000, which were recorded as revenue.
2. Services performed for clients that were not recorded by December 31, $4,900.
3.
4. Insurance expired during the year $480.
5. Equipment is being depreciated at 10% per year.
6. Perez gave the bank a 90-day, 10% note for $7,200 on December 1, 2020.
7. Rent of the building is $750 per month. The rent for 2020 has been paid, as has that for January 2021, and recorded as Rent Expense.
8. Office salaries and wages earned but unpaid December 31, 2020, $2,510.
Instructions
a. From the trial balance and other information given, prepare annual
b. Prepare an income statement for 2020, a retained earnings statement, and a classified
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