Question

Paula Judge owns Judge Creative Designs. The trial balance of the firm for January 31, 2019, the first month of operations, is shown below.

End-of-the-month adjustments must account for the following items:

1. Supplies were purchased on January 1, 2019; inventory of supplies on January 31, 2019, is $1,250.
2. The prepaid advertising contract was signed on January 1, 2019, and covers a four-month period.
3. Rent of $1,750 expired during the month.
4. Depreciation is computed using the straight-line method. The equipment has an estimated useful life of 10 years with no salvage value.

Required:

1. Complete the worksheet for the month.
2. Prepare an income statement, statement of owner’s equity, and balance sheet. No additional investments were made by the owner during the month.
3. Journalize and post the adjusting entries.

Analyze
If the adjusting entries had not been made for the month, would net income be overstated or understated?

Complete this question by entering your answers in the tabs below.

• Req 1
• Req 2 Inc Stmt
• Req 2 Stmt of OE
• Req 2 Bal Sheet
• Req 3 Gen Journal
• Req 3 Ledgers
• Analyze

Complete the worksheet for the month.

JUDGE CREATIVE DESIGNS Worksheet Month Ended January 31, 2019 Account Name Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Cash $35,800 Accounts Receivable 12,900 Supplies 8,350 Prepaid Advertising 9,600 Prepaid Rent 21,000 Equipment 25,200 Accumulated Depreciation—Equipment Accounts Payable 15,850 Paula Judge, Capital 60,300 Paula Judge, Drawing 7,300 Fees Income 55,550 Advertising Expense Depreciation Expense—Equipment Rent Expense Salaries Expense 10,000 Supplies Expense Utilities Expense 1,550 Sub—Totals $131,700 $131,700 Totals

Answer 1

JUDGE CREATIVE DESIGNS
Worksheet
Month Ended January 31, 2019
Account Name	Trial Balance		Adjustments		Adjusted Trial Balance		Income Statement		Balance Sheet
	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$ 35,800				$ 35,800				$ 35,800
Accounts Receivable	$ 12,900				$ 12,900				$ 12,900
Supplies	$ 8,350			$ 7,100	$ 1,250				$ 1,250
Prepaid Advertising	$ 9,600			$ 2,400	$ 7,200				$ 7,200
Prepaid Rent	$ 21,000			$ 1,750	$ 19,250				$ 19,250
Equipment	$ 25,200				$ 25,200				$ 25,200
Accumulated Depreciation—Equipment				$ 210		$ 210				$ 210
Accounts Payable		$ 15,850				$ 15,850				$ 15,850
Paula Judge, Capital		$ 60,300				$ 60,300				$ 60,300
Paula Judge, Drawing	$ 7,300				$ 7,300				$ 7,300
Fees Income		$ 55,550				$ 55,550		$ 55,550
Advertising Expense [(9600 ÷ 4 )]			$ 2,400		$ 2,400		$ 2,400
Depreciation Expense—Equipment [(25,200 ÷ 10) x 1/12]			$ 210		$ 210		$ 210
Rent Expense			$ 1,750		$ 1,750		$ 1,750
Salaries Expense	$ 10,000				$ 10,000		$ 10,000
Supplies Expense			$ 7,100		$ 7,100		$ 7,100
Utilities Expense	$ 1,550				$ 1,550		$ 1,550
Sub—Totals	$ 131,700	$ 131,700	$ 11,460	$ 11,460	$ 131,910	$ 131,910	$ 23,010	$ 55,550	$ 108,900	$ 76,360
Net Income							$ 32,540			$ 32,540
Totals	$ 131,700	$ 131,700	$ 11,460	$ 11,460	$ 131,910	$ 131,910	$ 55,550	$ 55,550	$ 108,900	$ 108,900