Transactions to be recorded:

1

Cash Dividends of $1,000 were declared and paid on October 31st.

2

There were 800 shares of stock issued and recorded on November 1, 2016.

Marx Consulting issued another 400 shares of stock with a par value of $0.25 at fiscal year end that needs recording. They received $800 in cash for the stock.

Adjusting Entries to be recorded:

3

A count of Office supplies reveals $500 was on hand on October 31.

4

The $2,400 one-year insurance policy was purchased on August 1, 2017.

5

Equipment was purchased on November 1, 2016 for $25,000. The equipment has a useful life of 5 years with no residual value.

The company uses straight-line depreciation.

6

The $3,000 Note payable was issued on July 1, 2017 and accrues interest at a 4% annual rate. Simple interest method.

The note plus interest is expected to be repaid in January of 2018.

7

On October 1, 2017, the company entered into a 4-month contract to provide consulting services for a local business.

The business paid $800 in advance for the service. One month of services has now been provided.

8

The company had an employee who had earned, unrecorded unpaid wages of $200 on October 31.

9

As of October 31, the company had completed, but not yet billed $550 worth of work.

Required:

1

Post the adjusting journal entries required to the Adjustments column. Reference your entries. The Adjusted TB column will calculate for you.

2

Record the adjusting entries on the GJ below. Explain each transaction. Make sure you Debits equal your Credits.

Link all account values and account titles from the TB.

3

Based on the adjusted trial balance column, prepare an Income Statement, Statement of Equity, and a Balance Sheet.

Additional Information

Marx Consulting is in its first year of operations began on November 1, 2016 and has a fiscal year end of October 31.

	Marx Consulting Services
	Trial Balance
	October 31, 2017
		Unadjusted TB			Adjustments				Adjusted TB
		DR	CR		DR	CR			DR	CR
	Cash	$3,100			$800	$1,000			$2,900
	Accounts receivable, net	3,000			550				3,550
	Office supplies	1,500				1,000			500
	Prepaid insurance	2,400				300			2,100
	Prepaid rent	6,000							6,000
	Equipment	25,000							25,000
	Accumulated depreciation equipment					5,000				$5,000
	Accounts payable		$800							800
	Wages payable		900			200				1,100
	Interest payable					40				40
	Unearned consulting revenue		800		200					600
	Note payable		3,000							3,000
	Common shares		200			100				300
	Additional paid-in capital		1,200			700				1,900
	Retained earnings		-							-
	Dividends	-			1,000				1,000
	Consulting revenue, net		70,000			750				70,750
	Cost of services sold	4,100							4,100
	Wages expense	11,000			200				11,200
	Depreciation expense	-			5,000				5,000
	Office supplies expense	500			1,000				1,500
	Maintenance expense	300							300
	Insurance expense	-			300				300
	Rent expense	15,000							15,000
	Interest expense	-			40				40
	Income tax expense	5,000							5,000
	Totals	$76,900	$76,900		$9,090	$9,090			$83,490	$83,490
					Your Debits should equal				Your Debits should equal
					your Credits at $9,390				your Credits at $83,490
	General Journal
REF		DR	CR
1
2
3
4
5
6
7
8
9
		Your Debits should equal
		your Credits at $9,390

Total

Common

Additional

Retained

Stockholders'

Stock

Paid-In

Earnings

Equity

Beginning balance October 31, 2016

$-

$-

$-

$-

Additional stock issuance

Net income

(Dividends)

Ending balance October 31, 2017

Assets
Current assets:
Total current assets
Property, plant and equipment
Property, plant, and equipment, net
Total assets
Liabilities and Stockholders' Equity
Current liabilities:
Total current liabilities
Total liabilities
Equity:
Total stockholders' equity
Total liabilities and stockholders' equity

Revenues
Gross profit
Operating expenses:
Total operating expenses
Total income from operations
Other expense:
Pretax income
Net income
Earnings per share (EPS)