Please Help Answer No. 1-6 on Instructions in Page 1

Accounting 1Accounting Cycle ExerciseMcFudge & AssociatesInstructions Overview The Accounting Cycle Exercise is a role—play exercise. You are playing the role of accountantfor a small business, McFudgc & Associates, started by an entrepreneur, Waldo FrancisMcFudge, in December 2016. Instructions: (follows a typical accounting cycle) 1. Record the December transactions in the journal (page 2 in work sheet ?le), post them tothe ledger (pages 5-7) and calculate the account balances. Finally, prepare a trial balanceas ofDecetnber 31" on the Work Sheet (page 8). For instructions on using a proper formof ledger, read "The Proper Ledger", which is in the Accounting Cycle Exercise folder. 2. Complete the Work Sheet:a. Record the adjusting entries.b. Prepare an adjusted trial balance. 3. Prepare ?nancial statements in the following order: (pages 9-11) at. Income Statementb. Owner's Equity Statementc. Balance Sheet 4. Record the adjusting entries in the journal (page 3) and post same to the ledger. Updatethe account balances. 5. Record the closing entries in the journal (page 4) and post same to the ledger. Update theaccount balances. 6. Prepare a post-closing trial balance (page 12). Please note the following: 1. All of the work sheets you need to complete this assignment are in an Excel ?le called"McFudge, Working Papers." The mine work sheets are designed to ?t the requiredwork, no more or less. If you ?nd yourself adding lines, you are probably doingsomething wrong, unnecessary, or you are misusing the forms. 2. Joumalize and post each of the December entries simultaneously. After you post, makesure you update the balances in the affected accounts. You will reduce the chance oferrors if you do it this way. 3. When you joumalize, skip a line between each entry. Do not write an explanation aftereach transaction. 4. Use the Chart of Accounts (page 1) to make sure you identify the right accounts in which to record the entries. McFudge & AssociatesOn December 1st, 2016, Waldo Francis McFudge started an accounting services company calledMcFudge & Associates. Waldo adopted the calendar year for financial reporting purposes andexpects to prepare the company's first set of financial statements as of December 31st, 2016 andfor the one month ended thereon.During December McFudge had the following transactions:DateTransaction12/1Waldo Francis McFudge invested $75,000 in his new company.12/1Waldo found an office and paid three months rent in advance, giving the landlord acheck for $4,200.12/2Waldo bought a computer for $2,100. He financed the purchase by paying $500 cashand signing a $1,600 three-year promissory note.12/5Waldo paid $350 cash to purchase office supplies.12/10Waldo provided six hours of accounting services to Fanny Fruitcake and collected$1,200 cash.12/11Waldo provided eight hours of accounting services to Danny Doughnut on account.He gave Danny a $1,600 bill, payable by Danny in 30 days.12/17Emma Eclair paid Waldo $1,700 in advance to represent her in a tax dispute with theIRS.12/29Happy with his first month in business, Waldo withdrew $650 from the business.After preparing the trial balance as of December 31st and confirming the ledger was in balance,McFudge's accountant gathered the following information prior to recording period-endadjusting entries:(a)Waldo agreed to hire his wife Molly as his assistant at the beginning of the month.She reminded him that he owed her $900 for the month of December.(b)Waldo remembered the rent he paid in advance on December 1st was for threemonths.(c)When he bought the computer, Waldo assumed it had a useful life of three years anda salvage value of $300. Therefore, annual depreciation would be $600 and monthlydepreciation would be $50.(d)The note Waldo signed when he bought the computer bears interest at 6% per yearand interest is payable quarterly, i.e. every three months. The first interest payment isdue on February 28th, 2017. Annual interest on the note would be $96 and monthlyinterest would be $8.(eWaldo audited the supplies and determined there were supplies on hand with a cost of$244 as of December 31 st.(f)Based on a meeting he had with the IRS in late December, Waldo determined that heearned $1,000 of the advance payment he received from Emma Eclair.