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Financial Act Demonstration Problem #3

Financial Act Demonstration Problem #3 - Demonstration...

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Demonstration Problem #3 Cainas Company, CPAs February 20XX Jennifer Cainas, C.P.A. has prepared preliminary financial statements for the month of February. (See Demonstration Problem #2). Upon her review she realizes that there are some adjusting entries she needs to record in order to properly recognize revenues and record expenses. Before she begins, she prepared an Unadjusted Trial Balance based on the ending balances in each of the general ledger accounts. Cainas Company, CPAs Unadjusted Trial Balance February 28, 20XX Db. Cr. Cash 10,100 Prepaid Rent 800 Office Supplies 150 Office Equipment 1,500 Leasehold Improvements 3,000 Notes Payable 3,000 J. Cainas, Equity 9,500 Service Revenues 3,800 Wages Expense 750 16,300 16,300 The following information was also available at the end of February: A. Prepaid rent paid in January has expired. B. The ending balance of office supplies is $25. C. Cainas Company uses a straight line depreciation method. The estimated useful life of the office equipment is 2 years, and there is no estimated salvage value. Leasehold improvements are also estimated to have a useful life of 2 years, with no salvage value D. Interest on the note payable needed to be accrued for the first two months. (Assume simple interest). The first payment on the note (with interest) is due on 3/31.
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