Fast Deliveries, Inc. (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, INC. Balance Sheet at January 1 Assets: Liabilities: Cash $10,900 Accounts Payable $ 500 Accounts Receivable 800 Stockholders' Equity: Supplies 400 Common Stock 11,000 Retained Earnings 600 Total Assets $12.100 $12,100 Total Liabilities and Stockholders' Equity Two employees have been hired, at a monthly salary of $2,200 each. The following transactions occurred during January of the current year. For your reference, the chapter to which each event relates is indicated in the first column. January 2 Ch. January Additional information for adjusting entries: 4. 31a. A $1,200 bill arrives for January utility services. Paymer is due February 15. 4 31b. Supplies on hand on January 31 are counted and determined to have cost $250. 4 31c. As of January 31, FDI had completed 60% of the deliveries for the customer who paid in advance on January 20. 4 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 0.06). 4 $5,700 is paid for 12 months' insurance starting January 1. (Record as an asset.) $4,200 is paid for 12 months of rent beginning January 1. (Record as an asset.) FDI borrows $30,000 cash from First State Bank at 6% 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 $6,000 of additional cash to FDI for its common stock. Additional supplies costing $1,000 are purchased on account and received. $600 of accounts receivable arising from last year's December sales are collected. $400 of accounts payable from December of last year are paid. Performed services for customers on account. Sent invoices totaling $10,400. 5 6 7 4 31e. For convenience, calculate January interest as one-twelft of the annual interest. 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. 8 9 16 20 4 31g. February 3. Adjust the prepaid asset accounts (for rent and insurance as needed. $2,200 of salaries are paid for the first half of the month. FDI receives $3,500 cash from a customer for an advance order for services to be provided later in January and in February $4.500 is collected from customers on account (see January 9 transaction). 25 Post each of the adjusting entries to the correct T-accounts on the enclosed T-account form. Total each T-account and record the ending balance on the correct side of the T-account. Prepare the 3 Financial statements in good form using the final ending balances as of January 31, current year
