Question

P4-4B Allesnik Advertising Agency was founded in January 2017. Presented here are both the adjusted and unadjusted trial balances as of December 31, 2017.

ALLESNIK ADVERTISING AGENCY

Trial Balance

December 31, 2017

			Unadjusted											Adjusted
Cash			Dr.						Cr.					Dr.						Cr.
	$		11,000									$		11,000
Accounts Receivable			16,000											19,000
Supplies			9,400											7,000
Prepaid Insurance			3,350											1,790
Equipment			60,000											60,000
Accumulated Depreciation—
Equipment					$				25,000							$				30,000
Notes Payable									8,000											8,000
Accounts Payable									2,000											2,000
Interest Payable									0											560
Unearned Service Revenue									5,000											3,100
Salaries and Wages Payable									0											820
Common Stock									20,000											20,000
Retained Earnings									5,500											5,500
Dividends			10,000											10,000
Service Revenue									57,600											62,500
Salaries and Wages Expense			9,000											9,820
Insurance Expense														1,560
Interest Expense														560
Depreciation Expense														5,000
Supplies Expense														2,400
Rent Expense			4,350											4,350
		$	123,100		$				123,100				$	132,480		$				132,480

Instructions

(a)Journalize the annual adjusting entries that were made.

(b)   Prepare an income statement and a retained earnings statement for the year ended December 31, and a classified balance sheet at December 31.

Answer 1

a) Adjustment Journal Entries :

Date	Accounts Titles	Debit $	Credit $
Dec 31	AR	3000
	Sale Rev		3000
	Supplies exp	2400
	Supplies		2400
	Insurance exp.	1560
	prepaid Insurance		1560
	Depreciation	5000
	Acc Dep - Eq		5000
	Interest Exp	560
	Interest payable		560
	Unearned Service Revenue	1900
	Service Revenue		1900
	salary and wages exp	820
	Salary and wages payable		820

b) Income statement :

Service Revenue	$62500
Less: Expenses:
Salary and Wages	9820
Insurance	1560
Interest	560
Depreciation	5000
Supplies	2400
rent	4350
Total Expenses =	23690
Net Income	$38810

Balance Sheet as on Dec 31,

Assets	Amount $
CAsh	11000
AR	19000
Supplies	7000
Prepaid Insu.	1790
Current Assets =	38790
Equipment	60000
Acc Dep - Equipment	(30000)
Total Assets =	$68790
Liabilities and Shareholders equity:
NP	8000
AP	2000
Inter Payable	560
Sal & Wages payable	820
Current Liabilities	11380
Unearned Service Rev	3100
CS	20000
RE 5500
add: Net Income 38810
Less: Dividend ( 10000)	34310
Total Liabilities and Shareholders equity=	$68790