Problem 36 The following are the trial balance and the other

Problem 3-6 The following are the trial balance and the other information related to Novak Perez, a consulting engineer. NOVAK PEREZ, CONSULTING ENGINEER TRIAL BALANCE DECEMBER 31, 2017 Debit Credit Cash Accounts Receivable Allowance for Doubtful Accounts Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Notes Payable Owner\'s Capital Service Revenue Rent Expense (13 months of rent) Salaries and Wages Expense Utilities Expenses Office Expense Totals $29,500 55,900 $806 2,490 1,390 28,900 7,225 7,200 35,166 111,411 10,478 30,710 1,670 770 $161,808 $161,808 1. Fees received in advance from clients $6,510, which were recorded as revenue. 2. Services performed for clients that were not recorded by December 31, $4,525 3. Bad debt expense for the year is $1,419. 4. Insurance expired during the year $499. 5. Equipment is being depreciated at 10% per year. 6, Novak Perez gave the bank a 90-day, 10% note for $7,200 on December 1, 2017. 7. Rent of the building is $806 per month. The rent for 2017 has been paid, as has that for January 2018, and recorded as Rent Expense 8. Office salaries and wages earned but unpaid December 31, 2017, $2,658

Solution

NOVAL PEREZ CONSULTING ENGINEER

Adjustment Entries

1.

Service Revenue A/c Dr. 6510

To Service Revenue Advance A/c Cr. 6510

2.

A/c Receivable Dr. 4525

To Service Revenue A/c 4525

3.

Bad Debts A/c Dr 1419

To A/c Receibavles A/c 1419

4.

Insurance Expences A/c Dr 499

To Prepaid Insurance A/c Cr 499

5.

Depreciation A/c Dr. 2890

To Accumulated Depreciation A/c 2890

6.

Prepaid Rent A/c Dr. 806

To Rent A/c 806

7.

Salary & Wages A/c Dr. 2658

To Salary & Wages Payable A/c Cr. 2658

So above are the adjustment entries required for completing the effect of ramaining transactions.

Income statment

Novak Perez Cunsulting Engineer

31-12-2017

Sevice Revenue as per trial Balance 111411

Less: Advance Service Revenue -6510

Add: Service revenue ommited to be recorded +4525

Total Revenue 109426

Expences

Supplies 2490

Insurance for the period 499

Depreciation on Equipments 2890

Rent for the year 9672

Salary & Wages 33368

Utility Exps. 1670

Office Exps. 770

Bad Debts 1419

Total Expences 52778

Income for the year ended on 31-12-2017 $56648

Owner Capital A/c

Novak Perez Cunsulting Engineer

31-12-2017

Opening Balance of capital Account $35166

Add: Income from Operation for the period $56648

Less: Cash Withdrawal for the Period as Drawings $16930

Closing Balance of Owner Capital Account $74884

BALANCE SHEET

Novak Perez Cunsulting Engineer

31-12-2017

ASSETS

Cash 12570

Account Receivables 59006

Prapaid Insurance 891

Equipments 28900

Prapaid (Advance) Rent 806

Total Assets 102173

Liabilities

Allowance for doubtful accounts 806

Accumuated Depreciation 10115

Note Payable 7200

Owner\'s capital 74884

Salary & Wages Payable 2658

Advance Service Revenue 6510

Total Liabilities 102173

All figures stated above are in USD ($)

So, this is the solution to the problem.