The unadjusted trial balance for Security First as December 31 is provided on the trial balance tab. Information for adjustments is as follows: As of December 31, employees had earned $1,900 of unpaid and unrecorded salaries. The next payday is January 4, at which time $2,375 of salaries will be paid.
The cost of supplies still available at December 31 is $1,500.
The notes payable requires an interest payment to be made every three months. The amount of unrecorded accrued interest at December 31 is $1,125. The next interest payment, at an amount of $1,350, is due on January 15.
Analysis of the unearned member fees account shows $2,000 remaining unearned at December 31.
In addition to the member fees included in the revenue account balance, the company has earned another $9,800 in unrecorded fees that will be collected on January 31. The company is also expected to collect $10,000 on that same day for new fees earned in January.
Depreciation expense for the year is $20,000.
Unadjusted
People First
Trial Balance
December 31, 2017
Account Title Debit Credit
Cash 129,880
Supplies 10,000
Equipment 106,000
Accumulated depreciation - Equipment 42,400
Unearned member fees 18,000
Long-term notes payable 92,000
P. Clark, Capital 90,000
P. Clark, Withdrawals 27,000
Member fees earned 52,000
Salaries expense 16,000
Interest expense 5,520
Total 294,400 294,400

Security First

a) Adjusted Trial Balance at December 31:

Cash                                        $129,880

Accounts Receivable -Fees         9,800

Supplies                                        1,500

Equipment                               106,000

Accumulated depreciation - Equipment      $62,400

Unearned member fees                                   2,000

Long-term notes payable                               92,000

P. Clark, Capital                                               90,000

P. Clark, Withdrawals              27,000

Member fees earned                                     77,800

Supplies Expense                     8,500

Salaries expense                     17,900

Salaries Payable                                                1,900

Interest expense                      6,645

interest Payable                                                 1,125

Depreciation Expense          20,000

Total                                  $327,225        $327,225

b) Income Statement for the year ended December 31:

Member Fee Earned                     $77,800

Expenses:

Supplies Expense            8,500

Salaries expense            17,900

Interest expense             6,645

Depreciation                 20,000   ($53,045)

Net Income                                  $24,755

b) Balance Sheet as at December 31:

Assets:

Cash                                        $129,880

Accounts Receivable -Fees         9,800

Supplies                                        1,500         141,180

Noncurrent Assets:

Equipment                               106,000

Accumulated depreciation   ($62,400 )        43,600

Total Assets                                               $184,780

Liabilities + Equity:

Current Liabilities:

Unearned Member Fee           2,000

Salaries Payable                        1,900

Interest Payable                         1,125

Total Current Liabilities           5,025

Noncurrent Liabilities:

Long-term Notes Payable    92,000         $97,025

Capital                                   90,000

Drawings                              (27,000)

Net Income                           24,755          $87,755

Total Liabilities + Equity                            $184,780

Explanation:

1. Unadjusted Security First Trial Balance at December 31:

Account Title                               Debit           Credit

Cash                                        $129,880

Supplies                                      10,000

Equipment                               106,000

Accumulated depreciation - Equipment      $42,400

Unearned member fees                                  18,000

Long-term notes payable                               92,000

P. Clark, Capital                                               90,000

P. Clark, Withdrawals              27,000

Member fees earned                                     52,000

Salaries expense                     16,000

Interest expense                      5,520

Total                                   $294,400        $294,400

2. Salaries Expense

as per Trial balance       $16,000

Salaries Payable                 1,900

Total Salaries Expense  $17,900

3. Supplies Expense

Supplies  = $10,000

Ending Supplies $1,500

Supplies Expense = $8,500

4. Interest Expense

As per trial balance = $5,520

Interest Payable           $1,125

Interest Expense     = $6,645

5. Unearned Fees

As per trial balance = $18,000

Earned fees                  16,000

Balance                        $2,000

6. Member Fees earned

As per trial balance = $52,000

Earned                           16,000

Accounts Receivable     9,800

Total                           $77,800

7. Accumulated Depreciation:

As per trial balance $42,400

Depreciation charge 20,000

Balance                   $62,400

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