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Fast Deliveries, Incorporated ( FDI ) , was organized in December last year and had limited activity last year. The resulting balance sheet at the
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
Assets: Liabilities:
Cash $ Accounts Payable $
Accounts Receivable Stockholders Equity:
Supplies Common Stock
Retained Earnings
Total Assets $ Total Liabilities and Stockholders Equity $
Two employees have been hired, at a monthly salary of $ each. The following transactions occurred during January of the current year.
January
$ is paid for months insurance starting January Record as an asset.
$ is paid for months of rent beginning January Record as an asset.
FDI borrows $ cash from First State Bank at annual interest; this note is payable in two years.
A delivery van is purchased using cash. Including tax, the total cost was $
Stockholders contribute $ of additional cash to FDI for its common stock.
Additional supplies costing $ are purchased on account and received.
$ of accounts receivable arising from last years December sales are collected.
$ of accounts payable from December of last year are paid.
Performed services for customers on account. Sent invoices totaling $
$ of services are performed for customers who paid immediately in cash.
$ of salaries are paid for the first half of the month.
FDI receives $ cash from a customer for an advance order for services to be provided later in January and in February.
$ is collected from customers on account see January transaction
January Additional information for adjusting entries:
a A $ bill arrives for January utility services. Payment is due February
b Supplies on hand on January are counted and determined to have cost $
c As of January FDI had completed of the deliveries for the customer who paid in advance on January
d 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 For convenience, calculate January interest as onetwelfth of the annual interest.
e Assume the van will be used for years, after which it will have no value. Thus, each year, onefourth of the vans benefits will be used up which implies annual depreciation equal to onefourth of the vans total cost. Record depreciation for the month of January, equal to onetwelfth of the annual depreciation expense.
f Salaries earned by employees for the period from January to are $ per employee and will be paid on February
g Adjust the prepaid asset accounts for rent and insurance as needed.
Required:
a Prepare an income statement.
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