Question

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		$ 8,729				$ 8,729
Accounts Receivable		10,445				11,537
Supplies		1,501				607
Prepaid Rent		2,207				1,204
Equipment		18,400				18,400
Accumulated Depreciation—Equipment				$    - 0 -				$     682
Notes Payable				9,300				9,300
Accounts Payable				2,494				2,494
Salaries and Wages Payable				- 0 -				724
Interest Payable				- 0 -				93
Unearned Rent Revenue				1,915				1,061
Common Stock				22,470				22,470
Dividends		1,644				1,644
Service Revenue				16,822				17,914
Rent Revenue				1,400				2,254
Salaries and Wages Expense		8,039				8,763
Rent Expense		1,883				2,886
Depreciation Expense						682
Supplies Expense						894
Utilities Expense		1,553				1,553
Interest Expense						93
		$ 54,401		$ 54,401		$ 56,992		$ 56,992

Journalize the annual adjusting entries that were made. Then, prepare an income statement of retained earnings for the 3 months ending sept. 30, 2015. Prepare a balance sheet at Sept 30. If the note bears interest at 12% how many months has it veen outstanding?

Answer 1

Everett Co.
					Amount in $
	Date	General Jounral			Debit	Credit
		Cash			0
	September 30, 2015	Depreciation expense			682
			Accumulated Depreciation			682
		To record the depreciation expense
	September 30, 2015	Supplies expense			894
			Supplies			894
		To record the supplies expense
	September 30, 2015	Rent expense			1003
			Prepaid rent			1003
		To record the rent expense
	September 30, 2015	Accounts Receivable			1092
			Service Revenue			1092
		To record the service revenue
	September 30, 2015	Unearned Rent revenue			854
			Rent Revenue			854
		To record the rent revenue
	September 30, 2015	Salary and wages expense			724
			Salary and wages Payable			724
		To record the salary and wages expense
	September 30, 2015	Interest expense			93
			Interest Payable			93
		To record the interest expense
Income statement for 3 months ending September 30, 2015
Revenue from services		17914
Rent Revenue		2254
Total Revenue			20168
Less
Expenses
Salary and wages expense		8763
Rent expense		2886
Supplies expense		894
Depreciation expense		682
Utilities expense		1553
Interest expense		93
Total expenses			14871
Net Income			5297
Statement of retained earnings
Retained earnings Beginning balance		0
Add ; net Income for the period		5297
Less : Dividends		1644
Retained earnings Ending balance			3653
Balance sheet as on September 30, 2015
Asset
Current asset
Cash	8729
Accounts receivable	11537
Prepaid rent	1204
Supplies	607
Total of current asset		22077
Non-current asset
Equipment	18400
Accumulated depreciation on equipment	682	17718
Total asset		39795
Liabilities and stockholder's equity
Liabilities
Current Liabilities
Accounts payable	2494
Salary and wages payable	724
Interest payable	93
Unearned rent revenue	1061
Non-current liabilities		4372
Notes Payable	9300
Total current liabilites		9300
Total liabilities		13672
Stockholder's equity
Common stock	22470
Retained earnings	3653
Total stockholder's equity		26123
Total Liabilities and stockholder's equity		39795
Notes Payable bears 12% interest , the notes has been outstanding for one month.
=93/9300%	1	%
Notes bears 12% interest for 12 months so for 1% its one month
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