Question

P3-45: Assessing Financial Statement Effects of Transactions and Adjustments.

The following information related to December 31 accounting adjustment for fulton fast print company. The firm’s fiscal year ends on December 31.

1. Weekly salaries for a five-day week total 3,600 payable on Fridays. December 31 of the current year is a Tuesday.

2. Fulton Fast Print has 20,000 of notes payable outstanding at December 31. Interest of $200 has accrued on these notes by December 31 but will not be paid until the notes mature next year.

3. During December, Fulton Fast Print provided $900 of printing services to clients who will be billed on January 2. The firm uses the fees receivable account to reflect amounts earned but not yet billed.

4. Starting December 1, all maintenance work on Fulton Fast Print’s equipment is handled by Richardson Repair Company under an agreement whereby Fulton Fast Print pays a fixed monthly charge of $400. Fulton Fast Print paid six months’ service charge of 2,400 cash in advance on December 1 and increased its Prepaid maintenance amount by 2,400.

5. The firm paid $900 cash on December 15 for a series of radio commercials to run during December and January. One-third of the commercials aired by December 31. The $900 payment was in its prepaid advertising account.

6. Starting December 16, Fulton Fast Print rented 800 square feet of storage space from a neighboring business. The monthly rent of $0.80 per square foot is due in advance on the first of each month. Nothing was paid in December to the January 1 payment.

7. Fulton Fast Print invested 5,000 cash in securities on December 1 and earned interest of $38 on these securities by December 31. No interest will be received until January.

8. Annual depreciation on the firm’s equipment is 2,175. No depreciation has been recorded during the year.

Required

Prepare Fulton Fast Print Company’s accounting adjustments required at December 31 using the financial statement effects template.

P3-46: Preparing Accounting Adjustments Refer to the information in P3-45. Prepare accounting adjustments required at December 31 using journal entries.

NOTE: Only P3-46 IS REQUIRED, but you needed the information from P3-45 to complete this problem

Answer 1