You are just starting an internship at a small public accounting firm. You receive a memo from the intern supervisor that outlines the assignment.
- Include one excel folder with different tabs for the adjusted trial balance, the income statement, and the balance sheet. A multi-step income statement and a classified balance sheet.
- Write a memo.
- You will need to add appropriate accounts in order to make the adjusting entries. Some adjustments will require you to add two accounts, others only one.
To: New intern Date: January 5, 2015
From: S. Stern, Intern Supervisor Subject: Summertime Co.
Prepare adjusting entries, an adjusted trial balance and financial statements for Summertime for 2014. Please start by putting the accounts in chart-of-accounts order and splitting the amounts between debits and credits. You will need the following information to make the adjusting entries.
- Bad debt expense is expected to be 1% of sales for the year
- Depreciation expense for the year is $5,000
- Summertime issued the 6% note payable on July 1, 2014, and interest is payable each June 30th thereafter.
- Summertime issued the 9% note receivable on March 1, 2014 and expects to receive payment of both the interest and principle on March 1, 2015.
- Employees have earned $6,200 in salaries that will be paid in January.
- Two-thirds of the unearned rent revenue was earned in 2014.
- The income tax rate is 30% and will be paid in January.
Unadjusted trial balance, 12/31/14
Accounts payable 32,000
Accounts receivable 43,700
Accumulated depreciation - equipment 20,000
Allowance for uncollectible accounts 3,500
Common stock 46,000
Cost of goods sold 116,000
Note payable (due 7/1/2018) 50,000
Note receivable (due 3/1/2015) 30,000
Prepaid rent 1,200
Rent expense 21,800
Retained earnings 20,000
Salaries expense 51,200
Sales revenue 244,000
Unearned rent revenue 6,000
This solution provides assistance with the finance questions.