Problem

Belanger & Associates, PC, is an engineering firm with offices in several cities in the Carolinas. Belangers fiscal year-end is December 31, and it prepares financial statements just once a year, at year-end. For bookkeeping purposes, the company has adopted a policy to record payments and collections in advance into asset and liability accounts, respectively. Belangers unadjustedtrial balance at December 31, 2018 is shown below. All accounts have normal-side balances.

Accounts Payable $ 602,715

Accounts Receivable 923,610

Accumulated Depreciation Buildings 332,105

Accumulated Depreciation Equipment 269,597

Allowance for Doubtful Accounts 11,832

Advertising Expense 46,739

Buildings 1,382,015

Cash 582,287

Common Stock ($1 par) 196,750

Dividends 152,500

Equipment 793,926

Insurance Expense 77,205

Interest Expense 16,931

Land 253,760

Notes Payable 821,000

Prepaid Insurance 385,104

Property Tax Expense 41,490

Retained Earnings 1,037,500

Salaries and Wages Expense 3,938,920

Service Revenue 5,612,810

Unearned Rent Revenue 17,388

Utilities Expense 307,210

Additional information available at year-end is as follows:

Belanger sometimes leases unused space in its buildings to other businesses. On September 1, 2018, a new tenant signed a 3-year lease and paid the first 9 months rent of $17,388 in advance. The lease began on that date and runs through August 31, 2021.

The Notes Payable balance relates to a bank loan obtained in 2017 that is payable in full on March 31, 2023. The loan agreement specifies that Belanger pay interest annually on March 31 at the rate of 6.40%. Belangers bookkeeper made the proper entry for the first interest payment, on March 31, 2018. (Hint Think about the entry Belanger made on the first interest payment date.)

On November 20, 2018, Belanger paid $31,640 for internet ads to run evenly over an 8-month period, starting December 1, 2018. Note Contrary to the companys normal practice, Belangers bookkeeper recorded the prepayment into the Advertising Expense account. Give the adjusting entry needed when a company uses the expense approach to record a payment in advance.

Belanger performed $182,976 of engineering services for several clients in December 2018 that it has not yet billed, recorded or collected.

In the first week of January 2019, Belanger received bills for December 2018 utilities totaling $22,651. The company paid all of these bills in late January 2019.

Belanger estimates that 8.19% of the 2018 year-end accounts receivable balance will notbe collected.

Belanger purchased its buildings in 2007 and its equipment in 2014. Belanger depreciates its fixed assets according to the straight-line method. For the buildings, it uses estimates of 35 years for the useful life and $275,000 for the salvage value. For the equipment, it uses estimates of 9 years for the useful life and $47,349 for the salvage value.

On June 1, 2018, Belanger purchased a 2-year insurance policy for $385,104 and paid the full cost of the policy in advance. The policy provides coverage through May 31, 2020.

Belanger operates 5 days a week, Mondays through Fridays. Employees are paid each Friday, for hours worked through the previous Friday. On Friday, December 28, 2018, the last pay day in 2018, Belanger paid its employees for hours worked during the week of December 17-21. The employees then worked their regular schedule through the end of the year. Note that Tuesday, December 25 was a paid holiday for all employees. Belangers payroll averages $15,720 per day.

The companys income tax rate for the year is 30%. (Hint The income tax rate is applied to the companys income after all revenues and expenses have been considered except for the income tax charge.)

Instructions

Complete the following four tasks relating to Belanger & Associates, PCs accounting process at year-end 2018:

(a) Prepare the adjusting journal entries needed at December 31, 2018.

(b) Prepare an adjustedtrial balance as of December 31, 2018. List the accounts in an appropriate trial balance order.

(c) Prepare the closing journal entries needed at December 31, 2018. Belanger uses an Income Summary account.

(d) Prepare a post-closingtrial balance as of December 31, 2018. List the accounts in an appropriate trial balance order.