Muse Daycare Centre (MDC) has been providing daycare services to its local com-munity for several years. MDC’s year-end is on December 31. The unadjusted trial balance on December 31, 2013 was as follows:
Additional information about several transactions that occurred during the year:
a. Several parents did not pay the fee for the last week of daycare. These parents would pay $1,400 (which included $700 owed in December) in the first week of January.
b. A physical count of art supplies showed that there was $1,500 of art supplies on hand on December 31. The balance of Art Supplies Expense, $4,800 on December 31, represents art supplies purchased during the year.
c. The balance of Prepaid Rent represents the 4 months of rent paid on November 1.
d. Playground Equipment was estimated to last for 10 years, with a salvage value of $4,000 at the end of 10th year. No adjustment was made in 2013.
e. Three daycare workers each earned $80/day. Seven days of wages were earned by employees, but not paid on December 31.
f. Half of the unearned revenue was earned in December.
g. The utilities expense for December was estimated at $480. The utility bill usually arrived during the first week of the following month.
h. MDC’s income tax rate was 30%.
1. Indicate the type of adjustments for each transaction.
2. Prepare the adjusting entry and enter the amount for each transaction in the worksheet.
3. Prepared the adjusted trial balance in the worksheet.
4. What is the age of the playground equipment?
5. Prepare the income statement, statement of retained earnings, and classified statement of financial position.
6. Record the adjusting entry for the income tax.

  • CreatedJuly 08, 2015
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