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In: Accounting

Create a trial balance with the following information: DR. a. Mr. Reed opened a print service...

Create a trial balance with the following information:

DR. a. Mr. Reed opened a print service company, Print It, on Jan 1 and gave the company $15000 in cash and a piece of land valued at $65000 in exchange for common stock. b. On Jan 1 Print It paid $7500 for the first 6 months of rent. c. Print It paid cash for $1000 of office supplies on Jan 15 d. Print It signed a 10,000 notes payable on Feb 1 to purchase the printing equipment necessary for operation. The equipment is expected to last for 10 years and have a salvage value of $1000. e. Feb 5 Print It completed a $700 print service and billed the customer for the job. f. Feb 15 Print it purchased another $120 of office supplies on account. g. Feb 25 Print it received $1500 from a customer for 3 months’ worth of printing services to begin on Mar 1. h. On March 5 Print It paid its only employee $2500 for work completed in February. i. On March 31 Print It adjusted for completing one month of services from the customer transaction that took place on Feb 25. j. On March 31 Print It did a count of office supplies and found that there were $475 worth of supplies still available. k. March 31, Print It adjusted for the first quarter’s rent. l. Mar 31, Print It adjusted for the first quarter of depreciation on equipment m. As of March 31, Print It owed its employee $2500 in wages, but the wages won’t be paid out until April 5. n. No dividends were paid out for the quarter.

Solutions

Expert Solution

Trial Balance of Print It for the quarter ended March 31, XXXX
Particulars Debit Credit Transaction Reference or Working Note Reference
Cash $          5,500 WN 1
Land $        65,000 a. Jan 1: Invested by Mr.Reed
Common stock $        80,000 a. Jan 1: Invested by Mr.Reed Cash $15,000 and Land $65,000 in exchange of common stock
Rent expense $          3,750 b. Jan 1: Rent paid for 6 months $7,500;
k. March 31, Print It adjusted for the first quarter’s rent.
Out of which 3 months rent is expensed off and balance to be treated as prepayment; (ie.) $3,750 is expense and $3,750 is prepayment
Prepaid rent $          3,750
Purchase of Office supplies $ 645 WN 2
Notes Payable $        10,000 d. Signed a 10,000 notes payable on Feb 1 to purchase the printing equipment
Printing equipment $        10,000 d. Signed a 10,000 notes payable on Feb 1 to purchase the printing equipment
Depreciation expense $ 225 The equipment is expected to last for 10 years and have a salvage value of $1000
l. Mar 31, Print It adjusted for the first quarter of depreciation on equipment - WN 3
Accumulated depreciation $ 225 WN 3
Sale of service $          1,200 WN 4
Accrued Revenue $          1,000 g. Feb 25 received $1500 from a customer for 3 months’ worth of printing services to begin on Mar 1 and
i. On March 31 Print It adjusted for completing one month of services from the customer transaction that took place on Feb 25.
(ie) 1500*2 months/3 months
Inventory of office supplies $ 475 j. did a count of office supplies and found that there were $475 worth of supplies still available - Inventory
Salaries $          5,000 WN7
Salary Payable $          2,500 m. As of March 31, Print It owed its employee $2500 in wages, but the wages won’t be paid out until April 5
Accounts Receivable $ 700 WN 5
Accounts payable $ 120 WN 6
Total $        95,045 $        95,045
WN1: Cash
Jan 1 Invested by Mr. Reed $        15,000
Jan 1 Rent paid for 6 months $        (7,500)
Jan 1 Purchase of office supplies $        (1,000)
g. Feb 25 received $1500 from a customer for 3 months’ worth of printing services to begin on Mar 1 $          1,500
h. On March 5 Print It paid its only employee $2500 for work completed in February. $        (2,500)
TOTAL $          5,500
WN 2: Purchase of Office supplies
c. Jan 1 Purchase of office supplies $          1,000
f. Feb 15 Purchase of office supplies on account $ 120
$          1,120
Less:
j. did a count of office supplies and found that there were $475 worth of supplies still available - Inventory $           (475)
TOTAL $ 645
WN3: Depreciation
Cost $        10,000
Less: Salvage value $          1,000
$          9,000
Life 10 years
Depreciation p.a. (9000/10) $ 900
Depreciation per quarter (900/4) $ 225
WN4: Sales
e. Feb5 Printit completed a service and billed the customer $ 700
g. Feb 25 received $1500 from a customer for 3 months’ worth of printing services to begin on Mar 1 and
i. On March 31 Print It adjusted for completing one month of services from the customer transaction that took place on Feb 25.
(ie) 1500*1 month/3 months
$ 500
TOTAL $          1,200
WN5: Accounts Receivable
e. Feb5 Printit completed a service and billed the customer $ 700
WN6: Accounts payable
f. Feb 15 Purchase of office supplies on account $ 120
WN7: Salaries
h. On March 5 Print It paid its only employee $2500 for work completed in February. $          2,500
m. As of March 31, Print It owed its employee $2500 in wages, but the wages won’t be paid out until April 5 $          2,500
TOTAL $          5,000
n. No dividends were paid out for the quarter. - No entries required

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