ACCOUNTING CYCLE PROBLEM

The following is a trial balance and certain other information relating to Mr. I. Spend Freely, a financial consultant operating as a corporation.

I. SPEND FREELY, FINANCIAL CONSULTANT

TRIAL BALANCE

DECEMBER 31, 2016

Debit Credit

Cash $ 31,500

Accounts receivable 49,600

Allowance for doubtful accounts $ 750

Supplies Inventory 1,960

Prepaid insurance 1,100

Furniture & Equipment 25,000

Accumulated depreciation equipment 6,250

Notes payable 7,200

Common stock 20,000

Retained earnings 15,010

Service revenue 100,000

Rent expense 9,750

Salaries and wages expense 28,500

Utilities expense 1,080

Office expense 720

$149,210 $149,210

The following information is available as of December 31, 2016.

Fees were received in advance from clients and treated as revenue: $6,000

Services performed for clients that were not recorded by 12/31/16 or paid by clients: $4,900

Bad debt expense for the year: $1,430

Insurance premiums expired during the year: $480

Equipment is being depreciated at 10% per year.

Mr. Freely gave the bank a 90-day note on December 1, 2016 for $7,200. The note has an interest rate of 10% annually.

Rent on the building is $750 per month. The rent for all of 2016 and January, 2017 has been paid.

Office salaries and wages earned but unpaid as of 12/31/16: $2,510

Mr. Freely withdrew dividends of $17,000 during the year. The dividends were debited to retained earnings at the time the disbursements were made.

Assume the corporation has no income tax liability.

Required:

From the trial balance and other information given, please prepare the following as of December 31, 2016.

Adjusting entry general journal

10-column worksheet (use of MSExcel required on this part of the problem)

Income statement

Statement of retained earnings

Balance sheet

Closing entry general journal