Question
Bill's Boards (BB) is an outdoor advertising company founded by William Longfall. William knows very little accounting so he hired a friend to keep
Bill's Boards (BB) is an outdoor advertising company founded by William Longfall. William knows very little accounting so he hired a friend to "keep the books." Unfortunately. William did not review his friend's work and now it seems his friend has made a mess of the accounting records. William has provided you the following list of unadjusted account balances at BB September 30 fiscal year-end. You have reviewed the balances with William and made notes shown in the right column. BILL'S BOARDS Unadjusted Trial Balance Account Name: Cash Debits $ 12,300 Accounts Receivable 920 Prepaid Rent 1,040 Supplies At September 30 Credits 1,810 Equipment 5,200 Accumulated Depreciation $ 0 Accounts Payable Deferred Revenue 1,440 Salaries and Wages Payable Income Tax Payable 320 Common Stock Retained Earnings 1,420 5,310 Service Revenue Salaries and Wages Expense 46,300 Depreciation Expense Rent Expense 8 520 Supplies Expense 2,618 58,590 Income Tax Expense Totals $ 68,890 $ 68,890 Notes This balance equals the balance reported by the bank. A customer ordered $920 of advertising services to be provided in October. The accountant recorded this service by debiting Accounts Receivable and crediting Service Revenue. Starting January 1, B8 agreed to pay $1,568 cash to rent the land on which its billboards are located, for the January-December period. The accountant adjusted this account on April 30 but has not adjusted it since. BB still has supplies costing $310 on hand on September 30. BB bought scaffolding and billboards in October last year. Because the equipment was bought at the beginning of the fiscal year, no depreciation is carried forward from prior years. BB purchased and received $1,810 of supplies used for creating advertising displays. The supplier is to be paid in October. This balance relates to $1,440 cash paid by a customer in August for advertising from September 1-November 30. BB employees are still waiting to be paid for the last half of September. BB hasn't paid the $328 tax owed from the last fiscal year. BB has issued 2,820 shares for $1,420 cash. BB started business a few years ago, so this is the total accumulated earnings up to October 1 of last year. BB has provided $2,820 of services for which it hasn't yet billed customers or recorded in its accounting records. BB employees earn $4,300 per month. The employees were paid in full on August 31, and were paid again on September 15. About $1,300 of the usefulness of the equipment's $5,200 cost has been used up during the current fiscal year. BB incurs a small cost to rent the land on which its billboards are located. Rent for the current year has been paid in full. BB accountant expensed $2,610 of supplies purchased during the year because he assumed the supplies would be completely used by year-end. As noted above, he was wrong. BB tax rate is 20% of income before tax.
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