Question
Metlock, Inc has the following balances in selected accounts on December 31, 2019
Accounts Receivable $ -0-
Accumulated Depreciation—Equipment -0-
Equipment 7,000
Interest Payable -0-
Notes Payable 9,800
Prepaid Insurance 2,820
Salaries Payable -0-
Supplies 2,450
Unearned Consulting Revenue 36,000
All the accounts have normal balances.
The information below has been gathered at December 31, 2019.
1. Metlock, Inc. borrowed $9,800 by signing a 12%, one-year note on September 1, 2019.
2. A count of supplies on December 31, 2019, indicates that supplies of $860 are on hand.
3. Depreciation on the equipment for 2019 is $1,600.
4. Metlock, Inc. paid $2,820 for 12 months of insurance coverage on June 1, 2019.
5. On December 1, 2019, Metlock, Inc. collected $36,000 for consulting services to be performed from December 1, 2019, through March 31, 2020.
6. Metlock, Inc. performed consulting services for a client in December 2019. The client will be billed $4,300.
7. Metlock, Inc. pays its employees total salaries of $7,500 every Monday for the preceding 5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last 3 days of 2019
Answer:
1. Metlock Inc borrowed $9,800 by signing a 12%, one-year note on September 1, 2019
Dr Cash $9,800
Cr Notes Payable $9,800
2. A count of supplies on December 31, 2019, indicates that supplies of $860 are on hand.
Dr Supplies Expense $1,590
Cr Supplies $1,590
3. Depreciation on the equipment for 2019 is $1,600.
Dr Depreciation Expense--Equipment $1,600
Cr Accumulated Depreciation--Equipment $1,600
4. Metlock Inc paid $2,820 for 12 months of insurance coverage on June 1, 2019.
$2,820 x 7/12 = $1,645
Dr Insurance Expense $1,645
Cr Prepaid Insurance $1,645
5. On December 1, 2019, Metlock Inc collected $36,000 for consulting services to be performed from December 1, 2019, through March 31, 2020.
$36,000 / 4 months = $9,000 per month
Dr Unearned Consulting Revenue $9,000
Cr Consulting Fees $9,000
6. Metlock Inc performed consulting services for a client in December 2019. The client will be billed $4,300.
Dr Accounts Receivable $4,300
Cr Consulting Fees $4,300
7. Metlock, Inc. pays its employees total salaries of $7,500 every Monday for the preceding 5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last 3 days of 2019
$7,500 / 5 x 3 = $12,500
Dr Salaries Expense $12,500
Cr Salaries Payable $12,500
Explanation:
