Question

1. Computers R US took out a 9 month, 4.25, $17,000 note on August 1, 2019 with interest and principal to be paid on maturity.

2. On October 1, 2019, Computers R US rented some storage space at a rate of $450 per month. On that date, Computers R US recorded Rent Expense for six months rent paid in advance.

3. Computers R US purchased $4,780 of office supplies during the year and the asset office supplies account was increased A count of the supplies on hand Dec 31, 2019, indicates a balance of $485.

4. $16,500 of store supplies were purchased during the year and were immediately expensed. A count of the store supplies on hand December 31, 2019, indicates a balance of $1.275.

5. On June 1, 2019 an 18-month insurance policy was purchased for $9,000.

6. On Dec 1, 2019, Computers R US collected $32,000 for consulting services to be performed from Dec. 1, 2019 to Feb. 28, 2020. The company credited the revenue account when paid.

7. On October 1, 2019, Computers R Us issued a 5-month note receivable to Morerams Inc. at an annual interest rate of 5%. Principle and interest will be paid at the end of the 5-months. The note was recorded in Notes Receivable and is the only note outstanding.

8. The company rented idle office space to Bytes and Bits on June 1, 2019, at a rate of $1500 per month. On this date Computers R Us credited Unearned Rent Revenue for one year of rent received in advance.

9. Computers R Us is open seven days a week and has a daily payroll of $5,430. Employees are paid every Friday, December 31 is a Monday. 40% of the payroll is for office employees, 60% of payroll is for sales employees.

10.  Depreciation for store equipment is based on the following: • Straight Line Depreciation • Store equipment – Assets were held for the entire year; Residual Value = $8,200; Service life is estimated to be 6 years.

11. Depreciation for office equipment is based on the following: • Double-Declining Method • Office equipment – Assets were purchased July 1; Residual Value = $4,000; Service life is estimated to be 4 years.

12. At 12/31/2019, based on the aging method, Computers R US determines that uncollectible accounts are $13,850.

13. Utilities expense of $3,700 remained unpaid. 40% of the utilities expense is for office and 60% of utilities expense is for the store.

Based on the following information,

a. Prepare a worksheet (Show formulas and use an "IF" statement)

b. Prepare the adjusting journal entries

c. Prepare a multiple step income statement

d. Prepare a statement of retained earnings

e. Prepare a balance sheet

f. Prepare the closing entries

Answer 1

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Event	ACCOUNT	Debit	Credit
a	Interest Expense	$       301
	Interest Payable		$       301
	(To record interest expense) $17,000*4.25%*5/12
b	Prepaid Rent	$    1,350
	Rent Expense		$    1,350
	(To record rent paid in advance) $450*3 Months
c	Office Supplies Expense	$    4,295
	Office Supplies		$    4,295
	(To record office supplies expense) $4,780-$485
d	Store Supplies	$    1,275
	Store Supplies Expense		$    1,275
	(To record reversal of store supplies expense)
e	Insurance Expense	$    3,500
	Prepaid Insurance		$    3,500
	(To record insurance expense) $9,000/18 m*7 m
f	Consulting Revenue	$ 32,000
	Unearned Consulting Revenue		$ 32,000
	(To record unearned revenue)
g	Interest Receivable	Note amount not given
	Interest Revenue		Note amount not given
	(To record interest revenue ) Note*5%*3/12
h	Unearned Rent Revenue	$ 10,500
	Rent Revenue		$ 10,500
	(To record rent earned) $1,500*7 Months
i	Salaries Expense-Office $16,290*40%	$    6,516
	Salaries Expense-Sales $16,290*60%	$    9,774
	Salaries Payable		$ 16,290
	(To record salaries expense) $5,430*3 Days)
j	Depreciation Expense-Store Equipment	Equipment cost not given
	Accumulated Depreciation-Store Equipment		Equipment cost not given
	(To record depreciatione expense)
	(Cost-$8,200)/6 Years
k	Depreciation Expense-Office Equipment	Equipment cost not given
	Accumulated Depreciation-Office Equipment		Equipment cost not given
	(To record depreciatione expense)
	(Cost*50%)*6/12
l	Bad Debt Expense	$ 13,850
	Allowance for Uncollectible Accounts		$ 13,850
	(To record bad debt expense) assumint no beginning balance
m	Utilities Expense-Office ($3,700*40%)	$    1,480
	Utilities Expense-Store ($3,700*60%)	$    2,220
	Utilities Payable		$    3,700
	(To record utilities expense)