Required information

Skip to question

$[$The following information applies to the questions displayed below.$]$

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 $ $10,900$ Accounts Payable $ $500$

Accounts Receivable $800$ Stockholders$$ Equity:

Supplies $400$ Common Stock $11,000$

Retained Earnings $600$

Total Assets $ $12,100$ Total Liabilities and Stockholders$$ Equity $ $12,100$

Two employees have been hired, at a monthly salary of $$2,200$ each. The following transactions occurred during January of the current year.

Ch$.$ January

$21$ $$5,700$ is paid for $12$ months$$ insurance starting January $1.($Record as an asset.$)$

$22$ $$4,200$ is paid for $12$ months of rent beginning January $1.($Record as an asset.$)$

$23$ FDI borrows $$30,000$ cash from First State Bank at $6\%$ annual interest; this note is payable in two years.

$24$ A delivery van is purchased using cash. Including tax, the total cost was $$24,000.$

$25$ Stockholders contribute $$6,000$ of additional cash to FDI for its common stock.

$26$ Additional supplies costing $$1,000$ are purchased on account and received.

$27$ $$600$ of accounts receivable arising from last year$$s December sales are collected.

$28$ $$400$ of accounts payable from December of last year are paid.

$39$ Performed services for customers on account. Sent invoices totaling $$10,400.$

$310$ $$7,600$ of services are performed for customers who paid immediately in cash.

$316$ $$2,200$ of salaries are paid for the first half of the month.

$320$ FDI receives $$3,500$ cash from a customer for an advance order for services to be provided later in January and in February.

$325$ $$4,500$ is collected from customers on account $($see January $9$ transaction$).$

Ch$.$ January Additional information for adjusting entries:

$431$a$.$ A $$1,200$ bill arrives for January utility services. Payment is due February $15.$

$431$b$.$ Supplies on hand on January $31$ are counted and determined to have cost $$250.$

$431$c$.$ As of January $31,$ FDI had completed $60\%$ of the deliveries for the customer who paid in advance on January $20.$

$431$d$.$ 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 $0\mathrm{.}06).$

For convenience, calculate January interest as one$-$twelfth of the annual interest.

$431$e$.$ 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.

$431$f$.$ Salaries earned by employees for the period from January $1631$ are $$1,100$ per employee and will be paid on February $3.$

$431$g$.$ Adjust the prepaid asset accounts $($for rent and insurance$)$ as needed.