Question

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 $36,500 $36,500 $36,500 Accounts Receivable 13,600 13,600 13,600 Supplies 9,750 8,150 1,600 1,600 Prepaid Advertising 12,400 3,100 9,300 9,300 Prepaid Rent 25,200 2,100 23,100 23,100 Equipment 33,600 33,600 33,600 Accumulated Depreciation—Equipment 3,360 3,360 3,360 Accounts Payable 16,550 16,550 16,550 Paula Judge, Capital 61,000 61,000 61,000 Paula Judge, Drawing 8,000 8,000 8,000 Fees Income 74,100 74,100 74,100 Advertising Expense 3,100 3,100 3,100 Depreciation Expense—Equipment 3,360 3,360 3,360 Rent Expense 2,100 2,100 2,100 Salaries Expense 10,700 10,700 10,700 10,700 Supplies Expense 8,150 8,150 8,150 Utilities Expense 1,900 1,900 1,900 1,900 Sub—Totals $151,650 $151,650 $16,710 $29,310 $155,010 $155,010 $29,310 $74,100 $125,700 $80,910 Totals $29,310 $74,100 $125,700 $80,910

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:

Supplies were purchased on January 1, 2019; inventory of supplies on January 31, 2019, is $1,600.

The prepaid advertising contract was signed on January 1, 2019, and covers a four-month period.

Rent of $2,100 expired during the month.

Depreciation is computed using the straight-line method. The equipment has an estimated useful life of 10 years with no salvage value.

Required:

Complete the worksheet for the month.

Prepare an income statement, statement of owner’s equity, and balance sheet. No additional investments were made by the owner during the month.

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?

Prepare an income statement.

JUDGE CREATIVE DESIGNS Income Statement Month Ended January 31, 2019 Revenue Expenses Total expenses 0 $0 Prepare a statement of owner’s equity. JUDGE CREATIVE DESIGNS Statement of Owner's Equity Month Ended January 31, 2019 0 $0 Prepare a balance sheet. JUDGE CREATIVE DESIGNS Balance Sheet January 31, 2019 Assets 0 Total assets $0 Liabilities and owner's equity Liabilities Owner's Equity Total Liabilities and Owner's Equity $0

Answer 1

Answer 1.
JUDGE CREATIVE DESIGNS
Work Sheet
Month Ended Jan 31, 2019
	Trial Balance		Adjustments		Adjusted Trial Balance		Income Summary		Balance Sheet
	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Balance Sheet Accounts:
Cash	36,500.00				36,500.00				36,500.00
Accounts Receivable	13,600.00				13,600.00				13,600.00
Supplies	9,750.00			8,150.00	1,600.00				1,600.00
Prepaid Advertising	12,400.00			3,100.00	9,300.00				9,300.00
Prepaid Rent	25,200.00			2,100.00	23,100.00				23,100.00
Equipment	33,600.00				33,600.00				33,600.00
Accumulated Dep. - Equipment		-		280.00		280.00				280.00
Accounts Payable		16,550.00				16,550.00				16,550.00
Paula Judge, Capital		61,000.00				61,000.00				61,000.00
Paula Judge, Drawings	8,000.00				8,000.00				8,000.00
Fees Income		74,100.00				74,100.00		74,100.00
Advertising Expense	-		3,100.00		3,100.00		3,100.00
Depreciation Expense - Equipment	-		280.00		280.00		280.00
Rent Expense	-		2,100.00		2,100.00		2,100.00
Salaries Expense	10,700.00				10,700.00		10,700.00
Supplies Expense	-		8,150.00		8,150.00		8,150.00
Utilities Expense	1,900.00				1,900.00		1,900.00
Total	151,650.00	151,650.00	13,630.00	13,630.00	151,930.00	151,930.00	26,230.00	74,100.00	125,700.00	77,830.00
Net Income							47,870.00	-	-	47,870.00
Totals							74,100.00	74,100.00	125,700.00	125,700.00

Answer 2.
JUDGE CREATIVE DESIGNS
Income Statement
For the Month Ended Jan 31, 2019
Revenues
Fees Income		74,100.00
Expenses:
Advertising Expense	3,100.00
Depreciation Expense - Equipment	280.00
Rent Expense	2,100.00
Salaries Expense	10,700.00
Supplies Expense	8,150.00
Utilities Expense	1,900.00	26,230.00
Net Income		47,870.00
JUDGE CREATIVE DESIGNS
Statement of Owner Equity
For the Month Ended Jan 31, 2019
Net Income	47,870.00
Paula Judge, Drawings	(8,000.00)
Net Increase in Owner's Equity		39,870.00
Beginning Balance		61,000.00
Ending Balance, Dec 31, 2018		100,870.00
JUDGE CREATIVE DESIGNS
Balance Sheet
Jan 31, 2019
Assets
Current Assets
Cash	36,500.00
Accounts Receivable	13,600.00
Supplies	1,600.00
Prepaid Advertising	9,300.00
Prepaid Rent	23,100.00	84,100.00
Property, Plant & Equipment
Equipment	33,600.00
Accumulated Dep. - Equipment	(280.00)	33,320.00
Total Assets		117,420.00
Liabilities & Owners' Equity
Current Liabilities
Accounts Payable		16,550.00
Other Liabilities		-
Total Liabilities		16,550.00
Owner's Equity		100,870.00
Total Liabilities & Owners' Equity		117,420.00