At the end of its first month of operations,Watson Answering Service Inc. has the following unadjusted trial balance
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WATSON ANSWERING SERVICE INC. August 31, 2011 Trial Balance |
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Cash |
Debit |
Credit |
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Accounts Receivable |
$ 5,400 |
|
|
Supplies |
2,800 |
|
|
Prepaid Insurance |
1,300 |
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|
Equipment |
2,400 |
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Notes Payable |
$40,000 |
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Accounts Payable |
2,400 |
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Common Stock |
30,000 |
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Dividends |
1,000 |
|
|
Service Revenue |
4,900 |
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Salaries Expense |
3,200 |
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Utilities Expense |
800 |
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Advertising Expense |
400 |
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$77,300 |
$77,300 |
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Other data:
1. Insurance expires at the rate of $200 per month.
2. $1,000 of supplies are on hand at August 31.
3. Monthly depreciation on the equipment is $900.
4. Interest of $500 on the notes payable has accrued during August.
Instructions
(a) Prepare a worksheet.
(b) Prepare a classified balance sheet assuming $35,000 of the notes payable are long term.
(c) Journalize the closing entries.