Question
Case 1: The following information relates to Chaters Advertising Services for the accounting period ending December 31, 2018. The company is a leader within your
Case 1:
The following information relates to Chaters Advertising Services for the accounting period ending December 31, 2018. The company is a leader within your local advertising industry but their accountant resigned just days before the final year end and only the information now presented was made available. The owners have decided to test your groups knowledge in accounting having been made aware that you are currently pursuing a course in accounting at the university level. In this regard your group has been approached to use the information presented alongside your knowledge to advise and present the company financial statements for the period.
Charters Advertising Service
Trial Balance
December 18, 2018
Account Name | DR | CR | |
| 25,500 |
| |
Cash | 3,100 |
| |
Accounts Receivable | 2,300 |
| |
Supplies | 2,600 |
| |
Equipment |
|
| |
Accumulated Depreciation - Equipment |
|
| |
Furniture | 6,000 |
| |
Accumulated Depreciation - Furniture |
|
| |
Accounts Payable |
| 4,000 | |
Salary Payable |
|
| |
Unearned Service Revenue |
|
| |
Charters Capital |
| 40,000 | |
Charters Withdrawal |
|
| |
Service Revenue |
| 4,200 | |
Rent Expense | 3,600 |
| |
Utilities Expense4 | 1,700 |
| |
Salaries Expense | 3,400 |
| |
Depreciation Expense - Equipment |
|
| |
Depreciation Expense - Furniture |
|
| |
Supplies Expense |
|
| |
Total | 48,200 | 48,200 | |
|
|
Later in December, the business completed these transactions, as follows:
Dec. 21 Received $2,500 in advance for advertising service expected to be performed in January 2019.
Dec 21 Paid secretary $500 for the week December 17 to 21.
Dec. 26 Paid $1,000 on account.
Dec 28 Collected $1,200 on account.
Dec 30 Charter withdrew cash of $2,000 for personal use.
Requirements
- Journalize the transactions of December 21 30 and post to the respective T-accounts and key all items by date. Write a brief narration for each journal entry.
- At December 31, the business gathers the following information for the adjusting journal entries:
- Accrued service revenue, $600
- Earned $700 of the service revenue collected in advance on December 21 because of a change in the agreement between client and the company to split the advertising campaign to December 2018 and the remaining balance of $1,800 for January 2019.
- Supplies on hand, $1,300.
- Depreciation expense equipment $260: furniture $600.
- Accrued $500 expense for secretarys salary December 24 to 28.
- After journalizing the transactions in requirement 2, post them to their respective T-accounts. Write a brief narration for each journal entry.
- Prepare the income statement and the statement of owners equity of Charter Advertising Services for the month ended December 31, 2018 and prepare the balance sheet at that date.
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