Required information Fast Deliveries, Inc. (FDI), was organized in December last year and had limited activity last year. The resulting balance sheet at the beginning of the current year is provided below: FAST DELIVERIES, INC. Balance sheet at January 1 Assets: Liabilities: Cash $10,600 Accounts Payable $ 600 Accounts Receivable 750 Stockholders' Equity! Supplies 440 Common Stock 11,090 Retained Earnings 100 Total Assets $11,790 Total Liabilities and Stockholders' Equity $11,790 Two employees have been hired at a monthly salary of $2.980 each. The following transactions occurred during January of the current year Ch. NNN January 1 $4,800 is paid for 12 months' insurance starting January 1. (Record as an asset.) 2 $3,600 is paid for 12 months of rent beginning January 1. (Record as an asset.) 3 FDI borrows $26,400 cash from First State Bank at 4% annual interest; this note is payable in two years. A delivery van is purchased using cash. Including tax, the total cost was $24,000. Stockholders contribute $6,000 of additional cash to FDI for its common stock. Additional supplies costing $800 are purchased on account and received. $800 of accounts receivable arising from last year's December sales are collected. 8 $600 of accounts payable from December of last year are paid. 9 Performed services for customers on account. Sent invoices totaling $11,500. 10 $7,600 of services are performed for customers who paid immediately in cash. 16 $2,980 of salaries are paid for the first half of the month. 20 FDI receives $3,800 cash from a customer for an advance order for services to be provided later in January and in February. 25 $3,200 is collected from customers on account (see January 9 transaction). 4567 www WNNNNN 3 3 ch. 4 4 4 4 January Additional information for adjusting entries: 31a. A $1,200 bill arrives for January utility services. Payment is due February 15. 31b. Supplies on hand on January 31 are counted and determined to have cost $300. 31c. As of January 31, FDI had completed 60% of the deliveries for the customer who paid in advance on January 20. 31d. Accrue one month of interest on the bank loan. Yearly interest is determined by multiplying the amount borrowed by the annual interest rate (expressed as 0.04). For convenience, calculate January interest as one-twelfth of the annual interest. 31e. Assume the van will be used for 4 years, after which it will have no value. Thus, each year, one-fourth of the van's benefits will be used up, which implies annual depreciation equal to one-fourth of the van's total cost. Record depreciation for the month of January, equal to one-twelfth of the annual depreciation expense. 31f. Salaries earned by employees for the period from January 16-31 are $1,490 per employee and will be paid on February 3. 31g. Adjust the prepaid asset accounts (for rent and insurance) as needed. 4 4 4 Journal entry worksheet Record $3,600 paid for 12 months of rent beginning January 1. Note: Enter debits before credits. Date General Journal Debit Credit Jan 02 Record entry Clear entry View general journal Journal entry worksheet 2. 3 4 5 6 7 8 13 > Record $26,400 cash borrowed by FDI from First State Bank at 4% annual interest; this note is payable in two years. Note: Enter debits before credits. Date Jan 03 General Journal Debit Credit Record entry Clear entry View general journal Journal entry worksheet ..... TYYTY Record stockholders' contributions of $6,000 of additional cash to FDI for its common stock. Note: Enter debits before credits. Date General Journal Debit Credit Jan 05 Record entry Clear entry View general journal Prey 7 8 So lott Journal entry worksheet Record additional supplies costing $800 that are purchased on account and received Note: Enter debits before credits. Date General Journal Debit Credit Jan 06 Record entry Clear entry View general journal Journal entry worksheet 1 2 3 4 5 6 8 ..... 13 Record $800 of accounts receivable arising from last year's December sales that are collected. Note: Enter debits before credits. Date General Journal Debit Credit Jan 07 Record entry Clear entry View general journal Journal entry worksheet Record $600 of accounts payable from December of last year that are paid. Note: Enter debits before credits Date General Journal Debit Credit Jan 08 Record entry Clear entry View general journal Journal entry worksheet Record $3,200 collected from customers on account (see January 9 transaction) Note: Enter debits before credits. General Journal Debit Credit Date Jan 25 Record entry Clear entry View general journal