The following are the trial balance and the other information related to Yorkis Perez, a consulting engineer.

YORKIS PEREZ, CONSULTING ENGINEER . TRIAL BALANCE DECEMBER 31, 2017

	Debit	Credit
Cash	\( 29,500
Accounts Receivable	49,600
Allowance for Doubtful Accounts		\) 750
Supplies	1,960
Prepaid Insurance	1,100
Equipment	25,000
Accumulated Depreciation—Equipment		6,250
Notes Payable		7,200
Owner’s Capital		35,010
Service Revenue		100,000
Rent Expense	9,750
Salaries and Wages Expense	30,500
Utilities Expenses	1,080
Office Expense	720
	\(149,210	\)149,210

1. Fees received in advance from clients \(6,000, which were recorded as revenue.
2. Services performed for clients that were not recorded by December 31, \)4,900.
3. Bad debt expense for the year is \(1,430.
4. Insurance expired during the year \)480.
5. Equipment is being depreciated at 10% per year.
6. Yorkis Perez gave the bank a 90-day, 10% note for \(7,200 on December 1, 2017.
7. Rent of the building is \)750 per month. The rent for 2017 has been paid, as has that for January 2018, and recorded as Rent Expense.
8. Office salaries and wages earned but unpaid December 31, 2017, \(2,510.

Instructions

1. From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2017. (Omit explanations.)
2. Prepare an income statement for 2017, a statement of owner’s equity, and a classified balance sheet. Yorkis Perez withdrew \)17,000 cash for personal use during the year.

Date

Particulars

Debit ($)

Credit ($)

Dec. 31

Service Revenue

6,000

Unearned Service Revenue

6,000

31

Accounts Receivables

4,900

Service revenue

4,900

31

Bad Debt expense

1,430

Allowance for doubtful accounts

1,430

31

Insurance expense

480

Prepaid Insurance

480

31

Depreciation expense

2,500

Accumulated depreciation-

Equipment $\left(\$25,000\times 10\%\right)$

2,500

31

Prepaid Rent

750

Rent expense

750

31

Salaries and Wages expense

2,510

Salaries and Wages Payable

2,510

$18,570

$18,570

PEREZ CONSULTING ENGINEERS

Service revenue $\left(\$100,000-\$6,000+\$4,900\right)$

$98,900

Expenses

Salaries and wages expense $\left(\$30,500+\$2,510\right)$

$33,010

Rent expense $\left(\$9,750-\$750\right)$

9,000

Depreciation expense

2,500

Bad debt expense

1,430

Utilities expense

1,080

Office expense

720

Insurance expense

480

Interest expense

60

Total expenses

48,280

Net Income

$50,620

Owner’s capital, January 1, 2017

$52,010

Add: Net income .

50,620

Less: withdrawals

(17,000)

Owner’s capital, December 31, 2017

$85,630

Owners’ capital trial balance

$35,010

Withdrawals during year

17,000

Owner’s capital as of January 1, 2017

$52,010

PEREZ CONSULTING ENGINEERS .

Assets .

Current assets

Cash $29,500

Accounts receivable$\left(\$49,600+\$4,900\right)$$54,500

Less: Allowance for doubtful accounts 2,180 52,320

$\left(\$750+\$1,430\right)$

Supplies 1,960

Prepaid Insurance $\left(\$1,100-\$480\right)$ 620

Prepaid rent 750

Total current assets

$85,150

Equipment 25,000

Less: Accumulated depreciation 8,750

$\left(\$6,250+\$2,500\right)$

16,250

Total assets

$101,400

Liabilities and Owner’s equity .

Current liabilities

Notes payable $7,200

Unearned service revenue 6,000

Salaries and wages payable 2,510

Interest payable 60

$15,770

Common stock $88,630

$85,630

Total liabilities and owners’ equity

$101,400