Question

In: Accounting

The unadjusted trial balance at November 30 is below: No. Account Name Debit Credit 101 Cash...

The unadjusted trial balance at November 30 is below:

No.	Account Name	Debit	Credit
101	Cash	$ 99,876
106	Accounts receivable	5,300
125	Supplies - inventory	10,000
128	Prepaid insurance	6,400
131	Prepaid rent	35,000
151	Office equipment	20,000
152	Accumulated depreciation - office equipment		$ 0
155	Computer equipment	15,000
156	Accumulated depreciation - computer equipment		0
201	Accounts payable		0
205	Wages payable		0
221	Unearned revenue		1,500
301	Common stock		150,000
315	Retained earnings		0
401	Service revenue		65,325
501	Depreciation expense - office equipment	0
503	Depreciation expense - computer equipment	0
515	Wages expense	22,000
517	Insurance expense	0
519	Rent expense	0
521	Supplies expense	0
523	Advertising expense	1,940
525	Mileage expense	704
595	Miscellaneous expense	605
	TOTALS	$ 216,825	$ 216,825

Clown Around had the following transactions and events in December 2019:

Dec.	2	Paid $1,050 for July 2019 through December 2019 print advertisements in a local magazine.
	3	Purchased $750 of additional supplies on credit. The terms of the account require payment in 30 days.
	5	Received $3,000 cash from receivables for bills sent out in November.
	10	Paid wages to part time clowns for six days of work at $200 per day.
	11	Notified by Hyatt Hotels that Clown Around's offer to provide entertainment at a gala in January for $9,500 was accepted. Hyatt sent an advance payment of $3,500.
	12	Interviewed and hired three new clowns to start work in January 2020 at $10 per hour.
	20	Performed at a company holiday party and received $5,500 cash.
	21	Performed at another company holiday party and sent a bill for services in the amount of $6,500.
22-26		Took the week off for the holidays
	27	Reimbursed business mileage expense (350 miles at $0.50 per mile).
	28	Paid wages of $2,700 for the first 3 weeks of December.

The following additional items were disclosed for use in making adjusting entries before preparing financial statements. No adjustments have been made during 2019.

a. The December 31 inventory count of supplies shows that only $2,500 remains unused.

b. The insurance premium of $6,400 was paid on April 1 and covers a term of two (2) years.

c. The prepaid rent account was created on January 1 when five (5) years rent was paid in advance.

d. As of December 31, the clowns had not been paid for one week of work in the amount of $750.

e. The office equipment was put into use on January 1, and has a useful life of ten (10) years with no salvage value. Clown Around, Inc. uses straight-line depreciation on all property, plant and equipment.

f. The computer equipment was also put into use on January 1, and is estimated to have a useful life of five (5) years with no salvage value.

g. The beginning balance in unearned revenue was earned when the clowns performed at a birthday party on December 7.

Required:

1. Enter the beginning balances.

2. Prepare journal entries to record each of the December transactions and events for Clown Around, Inc.

3. Prepare an unadjusted trial balance as of December 31, 2019.

4. Prepare adjusting entries to reflect a. through f.

5. Prepare an adjusted trial balance as of December 31, 2019.

6. Prepare an income statement and statement of retained earnings for the year ended December 31, 2019. Prepare a balance sheet as of December 31, 2019.

7. Prepare closing entries.

8. Prepare a post-closing trial balance

Expert Solution

ekkarill92 answered 1 year ago

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