Problem 3.3 Mechanical Engineers, Inc. is a newly formed corporation, with a December 31 fiscal year end, which Incorporated on January 1, 20X1 and uses the following Chart of Accounts: Chart of Accounts for Mechanical Engineers. In Cash Accounts receivable Prepaid insurance Prepaid rent Office supplies Equipment Accumulated depreciation equipment Land Accounts payable Dividends payable Interest payable Income tax payable Unearned client service revenue Notes payable Common stock Retained earnings Dividends Client service revenue Travel expense Office supplies expense Advertising experise Salary expense Utility expense Depreciation expenses equipment Interest expense Insurance expense Rent expense Income tax expense Income summary 84 Problem 3.3 (continued) The company makes adjusting entries monthly and had the following after closing trial balance as of December 31. 20X1 Mechanical Engineers, Inc. After Closing Trial Balance December 31, 20X1 Debit Cash 100,100 Accounts receivable 19,400 Prepaid insurance 2,400 Prepaid rent 25,000" Office supplies 4,000 Equipment 100,000 *** Accumulated depreciation equipment 1,000 Land 90,000 Accounts payable 1,500 Dividends payable 10,000 Interest payable 400 Income tax payable 16,000 Unearned client service revenue 18,000 Notes payable 80,000 Common stock 200,000 Retained earnings 14.000 Total 310.000 340.900 Prepard protestinal liability insurance was purchased for $9.200 on December 1, 2017 and provide insurance Coverage from December 2001, through March 31, 2012 "Prepaid rost was paid on December 1, 2o, in the amount of $20.000 or the month perodecember 1, 20x1, through May 31.2002 * Equipment was purchased on December 1, 2001 for $100,000 which is beiro depreciated monthly based on an estimated like of year. The estimated salvage value of the equipment is 54.000 and straight in sciation is used On December 1, 20x1.580.000 was borrowed and recorded as a long term cte payable at en el terest rate of ordres do every the mendis, beg ming February 20, 20X2 On December 1, 20X1. 20.000 shares of common stock were issued to perstar Problem 3.3 (continued) The following transactions occurred during January of 20x2 January 2 Shareholders bought 5,000 additional shares of Mechanical Engineers, Inc. common stock at $10 per share January 2: Purchased land for $30,000, paying $10,000 down and signing a 6% (annual rate) note payable for the balance. The principal will be paid on January 2, 20X4. Interest will be paid monthly on the first of each month beginning February 1, 20x2. January 5: Purchased office supplies on account for $10,000 January 6: Pald utility bill for $1,500 previously accrued in December 20X1 ss accounts payable January : Paid travel expense of $1,900 January 9. Collected $47,000 for professional services performed for clients during the first week of January that had not been previously billed or accrued. January 10: Pald advertising experses of $4,000. January 16: Pald semi-monthly salaries of $25,000 in cash. January 15: Paid dividends of $10,000 that had been declared on December 31, 20X1. January 16: Received payment in advance of $21,000 from clients for mechanical engineering services to be performed liter in the January or in early Pebruary 20x2. January 24: Bued clients $24,000 for services performed during January (collection expected in early February 20X2). Janury 26: Collected $28,000 on account from clients January 27 Collected 348,000 for professional services performed for clients during Jamury that had not been previously billed or accrued. January 28: Paid advertising expenses of 86,000 January 29: Paid travel expense of $2,600 January 31: Paid semi-monthly salaries of $28,000 in cash January 31: Received involce for gas and electric utility service during January for $1.000 (which was not paid until February 8, 20X2) January 31: Declared dividends of S.60 per share puvable to shareholders on February 15, 20x2. Note: As of January 31, 20X2, there were 25,000 shares of stock issued and outstanding (based on 20,000 shares innued in prior year plus 5,000 shares issued on January 2, 20X2) Problem 3.3 Mechanical Engineers, Inc. is a newly formed corporation, with a December 31 fiscal year end, which Incorporated on January 1, 20X1 and uses the following Chart of Accounts: Chart of Accounts for Mechanical Engineers. In Cash Accounts receivable Prepaid insurance Prepaid rent Office supplies Equipment Accumulated depreciation equipment Land Accounts payable Dividends payable Interest payable Income tax payable Unearned client service revenue Notes payable Common stock Retained earnings Dividends Client service revenue Travel expense Office supplies expense Advertising experise Salary expense Utility expense Depreciation expenses equipment Interest expense Insurance expense Rent expense Income tax expense Income summary 84 Problem 3.3 (continued) The company makes adjusting entries monthly and had the following after closing trial balance as of December 31. 20X1 Mechanical Engineers, Inc. After Closing Trial Balance December 31, 20X1 Debit Cash 100,100 Accounts receivable 19,400 Prepaid insurance 2,400 Prepaid rent 25,000" Office supplies 4,000 Equipment 100,000 *** Accumulated depreciation equipment 1,000 Land 90,000 Accounts payable 1,500 Dividends payable 10,000 Interest payable 400 Income tax payable 16,000 Unearned client service revenue 18,000 Notes payable 80,000 Common stock 200,000 Retained earnings 14.000 Total 310.000 340.900 Prepard protestinal liability insurance was purchased for $9.200 on December 1, 2017 and provide insurance Coverage from December 2001, through March 31, 2012 "Prepaid rost was paid on December 1, 2o, in the amount of $20.000 or the month perodecember 1, 20x1, through May 31.2002 * Equipment was purchased on December 1, 2001 for $100,000 which is beiro depreciated monthly based on an estimated like of year. The estimated salvage value of the equipment is 54.000 and straight in sciation is used On December 1, 20x1.580.000 was borrowed and recorded as a long term cte payable at en el terest rate of ordres do every the mendis, beg ming February 20, 20X2 On December 1, 20X1. 20.000 shares of common stock were issued to perstar Problem 3.3 (continued) The following transactions occurred during January of 20x2 January 2 Shareholders bought 5,000 additional shares of Mechanical Engineers, Inc. common stock at $10 per share January 2: Purchased land for $30,000, paying $10,000 down and signing a 6% (annual rate) note payable for the balance. The principal will be paid on January 2, 20X4. Interest will be paid monthly on the first of each month beginning February 1, 20x2. January 5: Purchased office supplies on account for $10,000 January 6: Pald utility bill for $1,500 previously accrued in December 20X1 ss accounts payable January : Paid travel expense of $1,900 January 9. Collected $47,000 for professional services performed for clients during the first week of January that had not been previously billed or accrued. January 10: Pald advertising experses of $4,000. January 16: Pald semi-monthly salaries of $25,000 in cash. January 15: Paid dividends of $10,000 that had been declared on December 31, 20X1. January 16: Received payment in advance of $21,000 from clients for mechanical engineering services to be performed liter in the January or in early Pebruary 20x2. January 24: Bued clients $24,000 for services performed during January (collection expected in early February 20X2). Janury 26: Collected $28,000 on account from clients January 27 Collected 348,000 for professional services performed for clients during Jamury that had not been previously billed or accrued. January 28: Paid advertising expenses of 86,000 January 29: Paid travel expense of $2,600 January 31: Paid semi-monthly salaries of $28,000 in cash January 31: Received involce for gas and electric utility service during January for $1.000 (which was not paid until February 8, 20X2) January 31: Declared dividends of S.60 per share puvable to shareholders on February 15, 20x2. Note: As of January 31, 20X2, there were 25,000 shares of stock issued and outstanding (based on 20,000 shares innued in prior year plus 5,000 shares issued on January 2, 20X2)