ACCT 1310 Handwritten Homework #2 Chapter 3 Name Part 1 Prepare the adjusting journal entry (AJE) in good form required on December 31, 2020. The company has a calendar yearend and closes its books annually. 1. The company purchased $2,400 in supplies. Opening balance in the account on January 1, 2020, was $3,700 and the ending balance on December 31, 2020, for supplies on hand totaled $1,500 2. The company obtained a short-term note payable on April 1, 2020, for $10,000 at 7% interest. Principle and interest are due March 31, 2021. 3. During the year the company took in $8,000 of uncarned revenue for work to be performed at a later date. The opening balance on January 1, 2020, was $2,000 and the ending balance on December 31, 2020, was $4,500. 4. The company pays employees on a 2-week basis. The last 4 days of the year will fall into the January 10, 2021, pay period. Employees earned $7,650 at yearend for the last 4 days. 5. The company purchased a 36-month insurance policy for $12,000 on July 1, 2020. The opening balance in the account was $3,000 on January 1, 2020 and reflects coverage through June 30, 2020 3. 6. A company paid $80,000 cash. The equipment has a useful life of 8 years and was placed in service on October 1, 2020, 7. Service revenue not billed at yearend totaled $17,000. Part II To follow is the opening balance sheet for Ridgeway Consulting as of January 1, 2020. Ridgeway Consulting January 1, 2020 Cash $12.000 Accounts Payable $19,000 Accounts Receivable 16,000 Interest Payable 3,000 Prepaid Rent --0-- Notes Payable 30,000 Supplies 3,425 Unearned Revenue 2,000 Land 20,000 Total Liabilities $54,000 Equipment 46,000 Owner's Capital Accumulated Depreciation $34.800 (8,625) Total Assets 588,800 Total Liabilities and OE $88,800 Part A: Prepare the journal entry for each of the following transactions and then post your answer to the T-accounts on page 4. plus calculate ending balances. When completed, go to page 7 and enter the ending balances in the trial balance worksheet under the "unadjusted" column. 1. The $3,000 interest payable resulted from the accrual of interest on the $30,000 note payable. It is a 4-year note that bears 10% interest. The loan originated on January 1, 2018. Interest payments are due on January 1 each year. 2. Ridgeway purchased $4,000 of supplies on account. 3. Services performed during the year totaled $40,000 which was all on account. 4. Ridgeway collected $50,000 on its accounts receivable. 5. On July 1 of this year the firm rented a warehouse to store office furniture until the remodeling is completed. As a means of getting a discount, Ridgeway paid $18,000 on July 1 to cover rent for the next year and a half (18-months). 6. Workers were paid at yearend for services rendered totaling $24,000. 7. Ridgeway received $28,000 in unearned revenue from a customer who put a deposit down for work to be performed early in 2021. 8. Owner withdrew $10,000 cash for personal use. 9. Ridgeway paid $8,000 on its accounts payable. Supplies 3,425 Cash 12,000 AVR 16.000 Land Prepaid Rent Equipment 20,000 0 46,000 Accum. Deprec. Accounts Payable Interest Payable 8,625 19,000 3,000 Notes Payable Unearned Revenue OE Capital 30,000 2,000 34,800 Revenue Expenses Withdrawal Part B: Additional information The company accrues interest on the note every December 31. A physical count of supplies on December 31 revealed $2,225 on hand. On December 31 one job got completed for $9,000 but the company has yet to bill out for it. The equipment has an 8-year life and the company uses straight line depreciation to expense its fixed assets. Prepare all necessary adjusting journal entries (AJES) at December 31--there should be 5. 1. 2. 3. 4. 5. After making the adjusting journal entries, post your answers in the trial balance under the heading "adjustments". Lastly, calculate the true ending balances by extending the numbers to the far right incorporating your AJEs in the column under "adjusted". Part C Prepare an Income Statement and ending Balance Sheet for Ridgeway Consulting in the space provided below. Income Statement for the period ending December 31, 2020 Balance Sheet at December 31, 2020 the under Trial Balance Worksheet Unadjusted Adjustments Adjusted DR CR DR CR DR CR Account Cash AR Prepaid Rent Supplies Land Equipment Accum. Deprec A/P Interest Payable Notes Payable Unearned Revenue OE - Capital Withdrawal Revenue Rent expense Wage expense Interest expense Supplies expense Depreciation exp. Totals