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 Liabilities: Assets: Cash $ 12,600 Accounts Receivable Supplies 600 720 Accounts Payable Stockholders' Equity: Common Stock Retained Earnings $ 700 11,900 1,320 Total Assets $ 13,920 Total Liabilities and Stockholders' Equity $ 13,920 Two employees have been hired, at a monthly salary of $2,960 each. The following transactions occurred during January of the current year. January 123 2 7 456982222 $6,000 is paid for 12 months' insurance starting January 1. (Record as an asset.) $4,800 is paid for 12 months of rent beginning January 1. (Record as an asset.) FDI borrows $30,000 cash from First State Bank at 5% annual interest; this note is payable in two years. A delivery van is purchased using cash. Including tax, the total cost was $28,800. Stockholders contribute $4,000 of additional cash to FDI for its common stock. Additional supplies costing $1,400 are purchased on account and received. $700 of accounts receivable arising from last year's December sales are collected. $600 of accounts payable from December of last year are paid. Performed services for customers on account. Sent invoices totaling $10,600. 10 $7,400 of services are performed for customers who paid immediately in cash. $2,960 of salaries are paid for the first half of the month. 16 20 25 January 31a. 31b. 31c. 31d. 31e. 31f. 31g. FDI receives $3,700 cash from a customer for an advance order for services to be provided later in January and in February. $3,500 is collected from customers on account (see January 9 transaction). Additional information for adjusting entries: A $1,100 bill arrives for January utility services. Payment is due February 15. Supplies on hand on January 31 are counted and determined to have cost $280. As of January 31, FDI had completed 60% of the deliveries for the customer who paid in advance on January 20. 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. 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 to 31 are $1,480 per employee and will be paid on February 3. Adjust the prepaid asset accounts (for rent and insurance) as needed. T accounts. Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions from January 1-25. Then post the adjusting journal entries from January 31. (Do not round intermediate calculations.) Cash Debit Credit Beginning Balance Ending Balance Accounts Receivable Debit Credit Beginning Balance Ending Balance Supplies Prepaid Insurance Debit Credit Debit Credit Beginning Balance Beginning Balance Ending Balance Debit Beginning Balance Ending Balance Prepaid Rent Ending Balance Vehicles Credit Debit Credit Beginning Balance Ending Balance Debit Beginning Balance Ending Balance Accumulated Depreciation Accounts Payable Credit Debit Beginning Balance Credit Ending Balance Deferred Revenue Notes Payable (long-term) Debit Credit Debit Credit Beginning Balance Beginning Balance Ending Balance Ending Balance 0 Interest Payable Salaries and Wages Payable Debit Credit Debit Credit Beginning Balance Beginning Balance Ending Balance Debit Beginning Balance Ending Balance Common Stock Ending Balance Retained Earnings Credit Debit Credit Beginning Balance Ending Balance Service Revenue Debit Credit Debit Beginning Balance Beginning Balance Ending Balance Ending Balance Salaries and Wages Expense Credit Utilities Expense Supplies Expenses Debit Credit Debit Credit Beginning Balance Beginning Balance Ending Balance Ending Balance Interest Expense Insurance Expenses Debit Credit Debit Credit Beginning Balance Beginning Balance Ending Balance Debit Beginning Balance Ending Balance Rent Expense Ending Balance Depreciation Expense Credit Debit Credit Beginning Balance Ending Balance