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 11,000 600 Total Assets $12.100 Retained Earnings Total Liabilities and Stockholders' Equity $12.100 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. Ch. January 2 2 2 3 2 4 27 $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. $7.600 of services are performed for customers who paid immediately in cash. $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). 39 3 10 3 25 31b. Ch. January Additional information for adjusting entries: 31a A $1,200 bill arrives for January utility services. Payment is due February 15. 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 31e. For convenience, calculate January interest as one-twelfth 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. Salaries earned by employees for the period from January 16-31 are $1,100 per employee and will be paid on February 3. Adjust the prepaid asset accounts for rent and insurance) as needed. 4 31f. 4 31g. Required: 1. Record journal entries for the transactions that occurred from January 1-25. 2. If you are completing this problem manually, set up T-accounts using the beginning balances shown in the January 1 balance sheet, post the transactions from requirement 1, and prepare an unadjusted trial balance at January 31. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you. 3. Using the given information, record all adjusting journal entries needed at January 31. 4. If you are completing this problem manually, post the adjusting journal entries from requirement 3 into T-accounts and prepare an adjusted trial balance. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you. 5. Prepare an income statement and statement of retained earnings for the month ended January 31, and prepare a classified balance sheet at January 31