P3-3A Alena Co. was organized on July 1, 2017. Quarterly financial statements ar

Question

P3-3A Alena Co. was organized on July 1, 2017. Quarterly financial statements are pre- pared. The unadjusted and adjusted trial balances as of September 30 are shown below. ALENA Co. Trial Balance September 30, 2017 Unadjusted Adjusted Cr. Cr. Cash Accounts Receivable Dr $ 8,700 10,400 $ 8,700 11,500 650 500 18,000 Ll Prepaid Rent Equipment Accumulated Depreciation-Equipment Notes Payable Accounts Payable Salaries and Wages Payable Interest Payable Unearned Rent Revenue Owner's Capital Owner's Drawings Service Revenue Rent Revenue Salaries and Wages Expense Rent Expense Depreciation Expense Supplies Expense Utilities Expense Interest Expense 18,000 $ 700 10,000 2,500 725 10,000 2,500 1,900 22,000 450 22,000 i,600 1,600 16,000 1,410 2,860 8,000 1,900 8,725 3,600 700 850 1,510 100 1,510 $53,810 $53,810 $56,435 $56,435 Instructions (a) Journalize the adjusting entries that were made. (b) Prepare an income statement and an owner's equity statement for the 3 months ending September 30 and a balance sheet at September 30. (c) If the note bears interest at 12%, how many months has it been outstanding?

Explanation / Answer

Adjusting entries: 1. Accounts receivable Dr. 1100          Service revenue 1100 2. Supplies expense Dr. 850           Supplies 850 3. Rent expense Account Dr. 1700             Prepaid rent Account 1700 4. Depreciation expense Dr. 700          Accumulated Depreciation 700 5. salaries And Wages expense Dr. 725           Salaries and wages payable 725 6. Interest expense Dr. 100           Interest payable 100 7. Unearned rent revenue Dr. 1450            Rent revenue 1450 STATEMENT OF INCOME Amount $ Service revenue 17100 Rent revenue 2860 Total revenue 19,960 Less: Operating expense Salaries and wages expense 8725 Rent expense 3600 Depreciation expense 700    Supplies expense 850 Utilities expense 1,510 Interest expense 100 15485 Net Income Earned 4475 STATEMENT OF OWNER'S EQUITY Amount $ Beginning Capital 22,000 Less: Drawings -1,600 Add: Net income earned 4,475 Ending Capital 24,875 BALANCE SHEET Amount $ ASSETS: Current Assets: Cash 8,700 Accounts Receivable 11500 Supplies 650 prepaid rent 500 21,350 Fixed Assets: Equipment 18,000 Less: Accumulated Dep -700 17,300 TOTAL ASSETS 38,650 LIABILITIES: Current Liabilities: Accounst Payable 2,500 Interest payable 100 Unearned revenue 450 Salaries payable 725 3,775 Long term notes payable 10,000 Owner's equity 24,875 TOTAL LIABILITIES 38,650 Req : Interest payable: $ 100 Notes payable: $ 10,000 Rate paid : 1% Annual rate: 12% Months for which notes is outstanding: 1 months

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