C4-6 (Algo) Recording/Posting Transactions and Adjustments, and Preparing Trial Balances and Financial Statements-Requires Calculating Depreciation and Interest (Chapters 2, 3, and 4) (LO 2-3, LO 3-3, LO 4- 2, LO 4-4) (The following information applies to the questions displayed below.) Fast Deliveries, Incorporated (FDI), was organized in December last year and had limited activity last year. The resulting balance sheet at the beginning of the current year is provided below: FAST DELIVERIES, INCORPORATED Balance Sheet at January 1 Assets: Liabilities: Cash $ 12,300 Accounts Payable $ 300 Accounts Receivable 810 Stockholders' Equity! Supplies 260 Common Stock 11,160 Retained Earnings 1.910 Total Assets $ 13,370 Total Liabilities and Stockholders' Equity $ 13,370 Two employees have been hired, at a monthly salary of $2,740 each. The following transactions occurred during January of the current year. January 1 $4,200 15 paid for 12 months' insurance starting January 1. (Record as an asset.) 2 $3,600 is paid for 12 months of rent beginning January 1. (Record as an asset.) 3 FDI borrows $25,200 cash from First State Bank at 54 annual interest; this note is payable in two years. A delivery van is purchased using cash. Including tax, the total cost was $24,000. Stockholders contribute $4,000 of additional cash to FDI for its common stock. 6 Additional supplies costing $1,100 are purchased on account and received. $600 of accounts receivable arising from last year's December sales are collected. $200 of accounts payable from December of last year are paid. Performed services for customers on account. Sent invoices totaling $10,600. $7,100 of services are performed for customers who paid immediately in cash. 16 $2.740 of salaries are paid for the first half of the month. FDI receives $3,600 cash from a customer for an advance order for services to be provided later in January and in February. 25 $3,100 is collected from customers on account (see January 9 transaction). 4 5 7 8 9 10 20 January Additional information for adjusting entries: 31a. A $1,000 bill arrives for January utility services. Payment is due February 15. 31b. Supplies on hand on January 31 are counted and determined to have cost $250. 31c. As of January 31, FDI had completed 60% of the deliveries for the customer who paid in advance on January 20. 31d. Accrue one month of interest on the bank loan. Yearly interest is determined by multiplying the amount borrowed by the annual interest rate (expressed as 0.05). For convenience, calculate January interest as one-twelfth of the annual interest. 31e. Assume the van will be used for 4 years, after which it will have no value. Thus, each year, one-fourth of the van's benefits will be used up, which implies annual depreciation equal to one-fourth of the van's total cost. Record depreciation for the month of January, equal to one-twelfth of the annual depreciation expense. 31f. Salaries earned by employees for the period from January 16 to 31 are $1,370 per employee and will be paid on February 3. 31g. Adjust the prepaid asset accounts for rent and insurance) as needed. Required: 6-a. Prepare an income statement. 6-b. Prepare the statement of retained earnings. 6-c. Prepare the balance sheet. Req 6A Req 6B Req 6C Prepare an income statement. FAST DELIVERIES, INCORPORATED Income Statement 0 Req 6A Reg 6B Req 6C Prepare the statement of retained earnings. FAST DELIVERIES, INCORPORATED Statement of Retained Earnings Retained earnings, beginning of period Retained earnings, end of period $ 0 Req 6A Req 6B Reg 60 Prepare the balance sheet. (Amounts to be deducted should be indicated by a minus sign.) FAST DELIVERIES, INCORPORATED Balance Sheet 0 0 0 0 $ 0 $ 0