Question

Murphy Delivery services completed the following transactions during December 2018      

 Dec1 Murphy delivery services began operations by receiving $13000 cash and a truck with a fair value of $9000 from Russ Murphy. The business issued Murphy Shares of common stock in exchange for this contribution.

Dec 1 Paid $600 cash for six month insurance policy. The policy begins December 1

Dec 4 Paid $750 cash for office supplies.

Dec 12 Performed delivery services for a customer and received $2200 cash.

Dec 15 Completed a large delivery job, billed the customer, $3300, and received a promise to collect the $3300 within one week.

Dec 18 Paid employee salary, $800.

Dec 20 Received $7000 cash for performing delivery services.

Dec 22 Collected $2200 in advance for delivery service to be performed later.

Dec 25 Collected $3300 cash from customer on account.

Dec 27 Purchased fuel for the truck, paying $150 on account. ( credit Accounts payable)

Dec 28 Performed delivery services on account, $1400

Dec 29 Paid office rent, $1400 for the month of December

Dec 30 paid $150 on account

Dec 31 Cash Dividends of $2500 were paid to stockholders.

ADJUSTMENT DATA :

1. Accured Salaries Expense $1800

2. Depreciation was recorded on the truck using the straight line method. Assume a useful life of five years and a salvage value of $3000.

3. Prepaid Insurance for the month has expired.

4. Office Supplies on hand $450

5. Unearned Revenue earned during the month $1700

6. Accured service revenue $450.

Requirements:

Adjusted trial balance

Income statement

retained earning

Balance sheet

Answer 1

in order to prepare the adjusted trail balance, first we have to post the journal entries and arrive ledger balances and then we have to prepare the adjusted trial balance as given below.

Adjusted Trial Balance of Murphy delivery services
Account Name	Debit Balance	Credit Balance
Cash Account	21,500
Capital Account		22,000
Asset Account (Truck)	8,900
Pre Paid Insurance Account	500
Office Inventory Account	450
Sales Account		16,050
Account Receivables	3,100
Salary Expenses	2,600
Advance received from Customer		2,200
Fuel Expenses Account	150
Office Rent Expenses	1,400
Dividend	2,500
Accrued Expenses		1,800
Depreciation expenses	100
Insurance Expenses	100
Office Expenses	300
Accrued Revenue	450	-
Total	42,050	42,050

Now Based on these ledger balances we will Prepare adjusted Trial Balance as Prepared below.

Based on the above Adjusted trail balance now we will prepare the Income statement as below

Income Statement of Murphy delivery services
Particulars	Amount
Revenue
Revenue from Sales	16050
Total Revenue	16050
Expenses
Salary Expenses	2600
Fuel Expenses Account	150
Office Rent Expenses	1400
Depreciation expenses	100
Insurance Expenses	100
Office Expenses	300
Total Expenses	4650
Net Profit	11400

Now we have arrive the Net profit and will prepare the retained earning statement as below for distribution of dividend and transfer the balance profit the Balance sheet

Retained Earning Statement of Murphy delivery services
Net Profit for the period	11,400
Less Dividend Distributed	2,500
Balance Profit Transferred to Retained Earnings Account	8,900

And now we will prepare the Balance Sheet.

Balance Sheet of Murphy delivery services
Assets	Amount	Liabilities	Amount
Cash Account	21,500	Capital Account	22,000
Asset Account (Truck)	8,900	Retained Earnings	8,900
Pre Paid Insurance Account	500	Advance received from Customer	2,200
Office Inventory Account	450	Accrued Expenses	1,800
Account Receivables	3,100
Accrued Revenue	450
Total	34,900	Total	34,900

Notes for Calculation of Depreciation.

	Amount
Purchase Value of Truck	9,000
Less Solvage Value	3,000
Net Value of the Asset	6,000
Useful Life ( Years)	5
Depreciation Per Year	1,200
Depreciation Per Month	100