This comprehensive problem is a continuation of Comprehensive Problem 1. Magness Delivery Service has completed closing entries and the accounting cycle for 2016. The business is now ready to record January 2017 transactions.
Jan. 3 Collected $1,000 cash from customer on account.
5 Purchased office supplies on account, 4600.
12 Performed delivery services for a customer and received 42,000 cash.
15 Paid employee salary including the amount owed on December 31, $2,500.
18 Performed delivery services on account, 4950.
20 Paid $200 on account.
24 Purchased fuel for the truck, paying 4250 cash.
27 Completed the remaining work due for Unearned Revenue.
28 Paid office rent, $1,600, for the month of January.
30 Collected 43,200 in advance for delivery service to be performed later.
31 Magness withdrew cash of $2,000.
1. Record each January transaction in the journal. Explanations are not required.
2. Post the transactions in the T-accounts. Don’t forget to use the December 31, 2016, ending balances as appropriate.
3. Prepare an unadjusted trial balance as of January 31, 2017.
4. Prepare a worksheet as of January 31, 2017. (optional)
5. Journalize the adjusting entries using the following adjustment data and also by reviewing the journal entries prepared in Requirement 1. Post adjusting entries to the T-accounts.
a. Office Supplies on hand, $120.
b. Accrued Service Revenue, $1,200.
c. Accrued Salaries Expense, $1,000.
d. Prepaid Insurance for the month has expired.
e. Depreciation was recorded on the truck for the month.
6. Prepare an adjusted trial balance as of January 31, 2017.
7. Prepare Magness Delivery Service’s income statement and statement of owner’s equity for the month ended January 31, 2017, and the classified balance sheet on that date. On the income statement, list expenses in decreasing order by amount- that is, the largest expense first, the smallest expense last.
8. Calculate the following ratios as of January 31, 2017, for Magness Delivery Service: return on assets, debt ratio, and current ratio.