Introductory Financial Accounting

Individual Assignment 1 (Deadline: 20 Oct 2023, Friday)

New Education Agency is a business which provides coaching and consulting service to students, parents and institutions. Some clients pay in advance with payments credited to Unearned agency fees; others are billed after services have been performed. An adjusted trial balance dated November 30, 2022 follows.

New Education Agency

Adjusted Trial Balance

30 November, 2022

Cash

14,845

Fees receivable

34,240

Prepaid rent

1,500

Unexpired insurance policies

720

Office supplies

640

Office equipment

21,000

Accumulated depreciation: office equipment

6,125

Accounts payable

2,385

Income taxes payable

3,350

Dividend payable

400

Unearned agency fees

7,700

Salaries payable

1,210

Share capital

40,000

Retained earnings

10,800

Dividends

400

Agency fees earned

35,940

Telephone expense

880

Office supply expense

1,080

Depreciation expense: office equipment

1,925

Rent expense

5,500

Insurance expense

1,980

Salaries expense

19,850

Income taxes expense

3,350

Totals

107,910

107,910

1

Below are the transactions of the company in December 2022:

Dec 1 Issued 1,000 shares of share capital in exchange for $10,000 cash

2 Borrowed $11,000 from bank by issuing 6-month notes payable. 3 Purchased office supplies that cost $500 with $230 cash and the

balance on account.

7 Paid the dividend of $400 declared in October 2022 which become

due on 7 December 2022 to shareholders.

10 Billed clients $3,560 for agency service performed, with $2,000

collected immediately by cash and the balance due in next month. 13 Received $2,000 from clients in advance for service to be conducted

over the next few months.

17 Collected fees receivable of $5,800 from a client.

21 Issued a check in full payment of the office supplies purchased on 3

December.

26 Declared a dividend of $400 to be paid on 24 February 2023. 30 Paid Decembers salary expense of $1,790 and settled all salary

payable outstanding.

Instructions

(a) Journalize the December transactions.

(b) Post the journal entries to the T-accounts.

(c) Prepare an unadjusted trial balance at 31 December 2022.

(d) Refer to the following information, journalize adjusting entries for the month of

December 2022.

1. Records show that $4,200 of cash receipts originally recorded as Unearned

agency fees had been earned as of 31 December.

2. Office Equipment have a useful life of 10 years, to be depreciated using

straight line method.

3. The company had paid $2,160 cash on 1 April for an annual insurance policy

effective April 1.

4. The company had paid $3,000 cash on 1 September for a 6-month rent

effective 1 September.

5. Accrued but unpaid employee salaries were $3,150.

6. A count shows $720 of supplies on hand at 31 December..

7. Agency services performed but unbilled and uncollected at 31 December

were $8,300.

8. A 6-month 6% note payable was issued on 2 December 2022, with all

interests and the balance to be settled on maturity.

9. The companys CPA estimates that income taxes expense for the year is

$4,200.

(e) Prepare an adjusted trial balance at 31 December 2022.