Question $60$ marks

Snow Services Corporation performs snow removal services and sells advertising space on

its vehicle. The company started operations on January $1,2019,$ with $$30,000$ cash and

$$30,000$ of share capital. It sublets some empty office space.

Part A

The following transactions occurred during January $2019$:

a$.$ Purchased a truck for $$15,000$ cash on January $1.$

b$.$ Collected snow removal revenue for January, February, and March amounting to

$$4,000$ per month, $$12,000$ in total $($recorded as Service Revenue$).$

c$.$ Paid $$600$ for a one$$year insurance policy, effective January $1.$

d$.$ Invested $$5,000$ of temporarily idle cash in a term deposit $($recorded as Short$$term

Investments$)$

e$.$ Purchased $$500$ of supplies on credit $($recorded as Supplies Expense$)$

f$.$ Received three months of advertising revenue amounting to $$900($recorded as

Other Revenue$).$

g$.$ Received two months of interest amounting to $$150($recorded as Interest Earned$).$

h$.$ Paid $$5,000$ cash for equipment.

i$.$ Received $$1,200$ cash for January, February, and March rent of unused office space

$($recorded as Rent Earned$)$

j$.$ Paid $$3,000$ of wages during the month.

Required:

$1.$ Prepare journal entries to record the January transactions. Descriptions are not

needed.

$2.$ Open general ledger T$$accounts for the following: Cash, Short$$term Investments,

Prepaid Insurance, Equipment, Truck, Accounts Payable, Share Capital, Other

Revenue, Interest Earned, Rent Earned, Service Revenue, Supplies Expense, and

Wages Expense.

Part B

At the end January, the following adjusting entries are needed:

k$.$ The truck purchased in transaction a has a useful life of five years.

l$.$ One$$third of the snow removal revenue from transaction b has been earned.

m$.$ The January portion of the insurance policy has expired.

n$.$ Half of the interest revenue still has not been earned.

o$.$ A physical count indicates $$200$ of supplies is still on hand.

p$.$ The January component of the advertising revenue has been earned.

q$.$ $$50$ interest for January is accrued on the term deposit; this amount will be included

with the interest payment to be received at the end of February.

r$.$ The equipment purchased in transaction h on January $1$ is expected to have a useful

life of four years.

s$.$ January rent revenue has been earned.

t$.$ Three days of wages amounting to $$150$ remain unpaid; the amount will be paid in

February.

Required:

$3.$ Raise additional journals entries to capture the adjusted entries.

$4.$ Open additional general ledger T$$accounts for the following: Interest Receivable,

Unused Supplies, Accumulated Depreciation$$Equipment$,$ Accumulated

Depreciation$$Truck$,$ Wages Payable, Unearned Advertising Revenue, Unearned

Fees Revenue, Unearned Interest Revenue, Unearned Rent Revenue, Insurance

Expense, Depreciation Expense$$Equipment$,$ and Depreciation Expense$$ Truck.

General ledger account numbers are not necessary.

$5.$ Prepare adjusted trial balance for period ended at January $31.$