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: Accounts Payable Stockholders' Equity: Assets: Cash $ 11,400 Accounts Receivable Supplies 900 350 Total Assets $ 12,650 Total Liabilities and Stockholders' Equity Common Stock Retained Earnings $300 11,240 1,110 $ 12,650 Two employees have been hired, at a monthly salary of $2,040 each. The following transactions occurred during January of the current year. January 1 2 3. 4 5 6 . 9 10 16 20 25 $5,700 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 $27,600 cash from First State Bank at 4% 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 $5,000 of additional cash to FDI for its common stock. Additional supplies costing $900 are purchased on account and received. $800 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 $10,100. $8,000 of services are performed for customers who paid immediately in cash. $2,040 of salaries are paid for the first half of the month. I FDI receives $4,000 cash from a customer for an advance order for services to be provided later in January and in February. $4,100 is collected from customers on account (see January 9 transaction). January 31a. 31b. 31c. 31d. 31e. 31f. 31g. Additional information for adjusting entries: A $800 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 0.04). 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 $1,020 per employee and will be paid on February 3, Adjust the prepaid asset accounts (for rent and insurance) as needed. 3. Prepare an unadjusted trial balance at January 31. FAST DELIVERIES, INCORPORATED Unadjusted Trial Balance Account Titles Cash Accounts Receivable Supplies Prepaid Insurance Prepaid Rent Vehicles Accumulated Depreciation Accounts Payable Deferred Revenue Notes Payable (long-term) Salaries and Wages Payable Interest Payable Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Debit Credit Supplies Prepaid Insurance Prepaid Rent Vehicles Accumulated Depreciation Accounts Payable Deferred Revenue Notes Payable (long-term) Salaries and Wages Payable Interest Payable Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Supplies Expenses Depreciation Expense Interest Expense Totals $ 0 0 No Date General Journal Debit Credit 1 January 01 Prepaid Insurance 5,700 Cash 2 January 02 Prepaid Rent Cash 5,700 4,800 4,800 3 January 03 Cash 27,600 Notes Payable (long-term) 27,600 4 January 04 Accounts Payable Cash 24,000 24,000 Common Stock 5,000 6 January 06 Supplies 900 Accounts Payable 900 7 January 07 Cash 800 Accounts Receivable 800 8 January 08 hoes Accounts Payable Cash 600 600 7 9 January 09 Accounts Receivable 10,100 Service Revenue 10,100 7 10 January 10 Cash 8,000 Service Revenue 8,000 11 January 16 Salaries and Wages Expense 2,040 Cash 2,040 8 January 08 Accounts Payable Cash 600 600 9 January 09 Accounts Receivable 10,100 Service Revenue 10,100 10 January 10 Cash 8,000 Service Revenue 8,000 11 January 16 Salaries and Wages Expense 2,040 Cash 2,040 12 January 20 Cash Deferred Revenue 4,000 4,000 13 January 25 Cash 4,100 Accounts Receivable 4,100