Problem 3-6 The following are the trial balance and the other information relate
ID: 2609491 • Letter: P
Question
Problem 3-6 The following are the trial balance and the other information related to Novak Perez, a consulting engineer. NOVAK PEREZ, CONSULTING ENGINEER TRIAL BALANCE DECEMBER 31, 2017 Debit Credit Cash Accounts Receivable Allowance for Doubtful Accounts Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Notes Payable Owner's Capital Service Revenue Rent Expense (13 months of rent) Salaries and Wages Expense Utilities Expenses Office Expense Totals $29,500 55,900 $806 2,490 1,390 28,900 7,225 7,200 35,166 111,411 10,478 30,710 1,670 770 $161,808 $161,808 1. Fees received in advance from clients $6,510, which were recorded as revenue. 2. Services performed for clients that were not recorded by December 31, $4,525 3. Bad debt expense for the year is $1,419. 4. Insurance expired during the year $499. 5. Equipment is being depreciated at 10% per year. 6, Novak Perez gave the bank a 90-day, 10% note for $7,200 on December 1, 2017. 7. Rent of the building is $806 per month. The rent for 2017 has been paid, as has that for January 2018, and recorded as Rent Expense 8. Office salaries and wages earned but unpaid December 31, 2017, $2,658Explanation / Answer
NOVAL PEREZ CONSULTING ENGINEER
Adjustment Entries
1.
Service Revenue A/c Dr. 6510
To Service Revenue Advance A/c Cr. 6510
2.
A/c Receivable Dr. 4525
To Service Revenue A/c 4525
3.
Bad Debts A/c Dr 1419
To A/c Receibavles A/c 1419
4.
Insurance Expences A/c Dr 499
To Prepaid Insurance A/c Cr 499
5.
Depreciation A/c Dr. 2890
To Accumulated Depreciation A/c 2890
6.
Prepaid Rent A/c Dr. 806
To Rent A/c 806
7.
Salary & Wages A/c Dr. 2658
To Salary & Wages Payable A/c Cr. 2658
So above are the adjustment entries required for completing the effect of ramaining transactions.
Income statment
Novak Perez Cunsulting Engineer
31-12-2017
Sevice Revenue as per trial Balance 111411
Less: Advance Service Revenue -6510
Add: Service revenue ommited to be recorded +4525
Total Revenue 109426
Expences
Supplies 2490
Insurance for the period 499
Depreciation on Equipments 2890
Rent for the year 9672
Salary & Wages 33368
Utility Exps. 1670
Office Exps. 770
Bad Debts 1419
Total Expences 52778
Income for the year ended on 31-12-2017 $56648
Owner Capital A/c
Novak Perez Cunsulting Engineer
31-12-2017
Opening Balance of capital Account $35166
Add: Income from Operation for the period $56648
Less: Cash Withdrawal for the Period as Drawings $16930
Closing Balance of Owner Capital Account $74884
BALANCE SHEET
Novak Perez Cunsulting Engineer
31-12-2017
ASSETS
Cash 12570
Account Receivables 59006
Prapaid Insurance 891
Equipments 28900
Prapaid (Advance) Rent 806
Total Assets 102173
Liabilities
Allowance for doubtful accounts 806
Accumuated Depreciation 10115
Note Payable 7200
Owner's capital 74884
Salary & Wages Payable 2658
Advance Service Revenue 6510
Total Liabilities 102173
All figures stated above are in USD ($)
So, this is the solution to the problem.
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