Everett Co. was organized on July 1, 2015. Quarterly financial statements are prepared. The unadjusted and adjusted trial balances as of September 30 are shown below.
EVERETT CO.
Trial Balance
September 30, 2015
Unadjusted Adjusted
Dr. Cr. Dr. Cr.
Cash $ 8,744 $ 8,744
Accounts Receivable 10,441 11,457
Supplies 1,490 650
Prepaid Rent 2,197 1,223
Equipment 18,260 18,260
Accumulated Depreciation—Equipment $ - 0 - $ 719
Notes Payable 9,500 9,500
Accounts Payable
2,499 2,499
Salaries and Wages Payable
- 0 - 710
Interest Payable
- 0 - 95
Unearned Rent Revenue
1,932 1,048
Common Stock 22,020 22,020
Dividends 1,641 1,641
Service Revenue 16,356 17,372
Rent Revenue
1,398 2,282
Salaries and Wages Expense
7,528 8,238
Rent Expense 1,896 2,870
Depreciation Expense 719
Supplies Expense 840
Utilities Expense
1,508 1,508
Interest Expense
95
$ 53,705 $ 53,705 $ 56,245 $ 56,245
-Journalize the annual adjusting entries that were made. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
-Prepare an income statement for the 3 months ending September 30, 2015.
-Prepare a statement of retained earnings for the 3 months ending September 30, 2015. (List items that increase retained earnings first.)
-Prepare a balance sheet at September 30. (List assets in order of liquidity.)
-If the note bears interest at 12%, how many months has it been outstanding?
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To journalize the annual adjusting entries that were made, you would need to identify the accounts that require adjustment based on the information provided in the adjusted trial balance. Here are the adjusting entries that need to be made:
1. Depreciation Expense:
Debit: Depreciation Expense ($719)
Credit: Accumulated Depreciation—Equipment ($719)
2. Supplies Expense:
Debit: Supplies Expense ($840)
Credit: Supplies ($840)
3. Prepaid Rent:
Debit: Rent Expense ($1,647)
Credit: Prepaid Rent ($1,647)
4. Salaries and Wages Payable:
Debit: Salaries and Wages Expense ($710)
Credit: Salaries and Wages Payable ($710)
-Prepare income statement for the 3 months ending September 30, 2015:
To prepare the income statement, you add up the revenues and subtract the expenses. Here is the income statement:
Everett Co.
Income Statement
For the 3 Months Ending September 30, 2015
Service Revenue $17,372.00
Rent Revenue $2,282.00
Total Revenues $19,654.00
Salaries and Wages Expense $8,238.00
Rent Expense $2,870.00
Depreciation Expense $719.00
Supplies Expense $840.00
Utilities Expense $1,508.00
Interest Expense $95.00
Total Expenses $14,270.00
Net Income $5,384.00
-Prepare statement of retained earnings for the 3 months ending September 30, 2015:
To prepare the statement of retained earnings, you need the beginning retained earnings balance, net income, dividends, and any other adjustments. Here is the statement of retained earnings:
Everett Co.
Statement of Retained Earnings
For the 3 Months Ending September 30, 2015
Beginning Retained Earnings $0 (Assumed)
Add: Net Income $5,384.00
Less: Dividends $1,641.00
Ending Retained Earnings $3,743.00
-Prepare balance sheet at September 30:
To prepare the balance sheet, you need to list the assets, liabilities, and stockholders' equity. Here is the balance sheet:
Everett Co.
Balance Sheet
At September 30, 2015
Assets:
Cash $8,744.00
Accounts Receivable $11,457.00
Supplies $650.00
Prepaid Rent $1,223.00
Equipment $18,260.00
Less: Accumulated Depreciation—Equipment ($719.00)
Total Assets $39,615.00
Liabilities:
Notes Payable $9,500.00
Accounts Payable $2,499.00
Salaries and Wages Payable $710.00
Interest Payable $95.00
Unearned Rent Revenue $1,048.00
Total Liabilities $13,852.00
Stockholders' Equity:
Common Stock $22,020.00
Retained Earnings $3,743.00
Total Stockholders' Equity $25,763.00
Total Liabilities and Stockholders' Equity $39,615.00
- To calculate the number of months the note has been outstanding, we need the interest rate, principal amount, and the interest expense. Since the interest expense is given as $95, we can use the formula:
Interest Expense = Principal Amount * Interest Rate * Time
Solving for time, we get:
Time = Interest Expense / (Principal Amount * Interest Rate)
= $95 / ($9,500 * 0.12)
= $95 / $1,140
≈ 0.0833 years
To convert to months, multiply by 12:
Time (in months) = 0.0833 * 12
= 0.9996 months (rounded to approximately 1 month)
Therefore, the note has been outstanding for approximately 1 month.
To answer your questions step-by-step:
1. Journalize the annual adjusting entries that were made:
The adjusting entries for the annual period are not provided in the question. Please provide the adjusting entries in order for me to answer this question.
2. Prepare an income statement for the 3 months ending September 30, 2015:
To prepare the income statement, we start with the adjusted trial balance and categorize the accounts into revenue and expense categories. The income statement for the 3 months ending September 30, 2015, is as follows:
Income Statement
For the 3 Months Ending September 30, 2015
Revenues:
Service Revenue: $17,372
Rent Revenue: $2,282
Total Revenues: $19,654
Expenses:
Salaries and Wages Expense: $8,238
Rent Expense: $2,870
Depreciation Expense: $719
Supplies Expense: $840
Utilities Expense: $1,508
Interest Expense: $95
Total Expenses: $14,270
Net Income: $19,654 - $14,270 = $5,384
3. Prepare a statement of retained earnings for the 3 months ending September 30, 2015 (List items that increase retained earnings first):
To prepare the statement of retained earnings, we start with the beginning retained earnings balance and adjust it for net income, dividends, and any other items that might have directly affected retained earnings. The statement of retained earnings for the 3 months ending September 30, 2015, is as follows:
Statement of Retained Earnings
For the 3 Months Ending September 30, 2015
Beginning Retained Earnings: (Not provided in the given information)
Add: Net Income: $5,384
Less: Dividends: $1,641
Ending Retained Earnings: Beginning Retained Earnings + Net Income - Dividends
4. Prepare a balance sheet at September 30 (List assets in order of liquidity):
The balance sheet presents the financial position of a company at a specific date. To prepare the balance sheet, we take the ending balances from the adjusted trial balance. The balance sheet at September 30 would be as follows:
Balance Sheet
September 30, 2015
Assets:
Cash: $8,744
Accounts Receivable: $11,457
Supplies: $650
Prepaid Rent: $1,223
Equipment: $18,260
Accumulated Depreciation-Equipment: $719
Total Assets: (Add all the above amounts)
Liabilities:
Notes Payable: $9,500
Accounts Payable: $2,499
Salaries and Wages Payable: $710
Interest Payable: $95
Unearned Rent Revenue: $1,048
Total Liabilities: (Add all the above amounts)
Equity:
Common Stock: $22,020
Retained Earnings: (As calculated in the previous question)
Total Equity: (Add Common Stock and Retained Earnings)
Total Liabilities and Equity: (Add Total Liabilities and Total Equity)
5. If the note bears interest at 12%, how many months has it been outstanding?
The number of months the note has been outstanding is not provided in the given information. Please provide the additional information for me to answer this question.