(See attached file for full problem description)
Alpha Beta Internet Connections
Trial balance October 31, 20x2
Accounts receivable 7000
Prepaid rent 4000
Accumulated depreciation 3000
Accounts payable 8800
Common stock 15000
Retained earnings 21000
Advertising revenue 14400
Salary expense 4400
Utilities expense 300
Total 62200 62000
a. Accrued advertising revenue at October 31, 2900
b. Prepaid rent expired during the month. The unadjusted prepaid balance of 4000 relates to the period October 20x2 through January 20x3.
c. Supplies used during October, 200
d. Depreciation on furniture for the month. The furniture's expected useful life is 5 years.
e. Accrued salary expense at October 31 or Tuesday through Friday; the 5-day weekly payroll is 2000
1. Prepare the adjusted trial balance of Alpha Beta at October 31, 20x2. Key each adjusting entries by letter.
2. Prepare the income statement, the statement of retained earnings, and the classified balance sheet. Draw arrows linking the three financial statements.
3. A. compares the business net income for October to the amount of dividends paid to the owners. Suppose this trend continues into 20x3. What will be the effect on the business financial position, as shown by its accounting equation?
b. Will the trend make it easier or more difficult for Alpha Beta to borrow money if the business gets in a bind and need cash? Why?
c. Does either the current ratio or the cash position suggest the need for immediate borrowing? Explain?
The solution explains the adjustment entries and the preparation of financial statements for Alpha Beta Internet Connections