Blackberry Mountain Inc began business on January 1, 2020. The following transactions occurred during the month of January.

Jan 1 Company issued common stock for $21,000. Jan 2a Supplies are purchased for $3,000.

Jan 2b Insurance is paid for 6 months beginning January 1: $5,400 (record as an asset)

Jan 2c Rent is paid for 3 months beginning in January: $4,500 (record as an asset)

Jan 3 Blackberry Mountain Inc borrows $45,000 from 1st State Bank (due in the year 2025) at 12% annual interest.

Jan 6 An equipment is purchased for $22,500 cash. It will be used for 3 years and will be depreciated monthly using straight-line depreciation with no salvage value. A full month of depreciation will be charged in January.

Jan 9 Services are performed for customers on account. Invoices totaling $9,800 are mailed.

Jan10 Services are performed for cash customers: $7,600.

Jan 15 Blackberry Mountain Inc borrows $16,000 from 2nd State Bank (due in the year 2030) at 9% annual interest.

Jan16 Wages for the first half of the month are paid on January 16: $4,200.

Jan 20 The company receives $3,000 from a customer for an advance order for services to be provided in January and February.

Jan 25 Collections from customers on account (see January 9 transaction): $4,500.

Jan 30 A $3,100 utility bill for January arrived. It is due on February 15.

Additional information for the adjusting entries at January 31:

a. The company completed 60% of the deliveries for the customer that paid in advance on January 20th.

b. Interest is accrued for the two bank loans (assume a full month for the 1st State Bank loan and ½ month for the 2nd State Bank loan).

c. The last 2 weeks wages earned by employees are $4,200 and will be paid on February 3rd.

d. Record January depreciation. e. Adjust the prepaid asset accounts as needed.

f. Supplies of $ 2500 were still available on January 31.

Instructions

1. Prepare journal entries for each event.

2. Prepare the t-accounts.

3. Prepare unadjusted Trial Balance (please follow the proper order in which accounts are presented in the trial balance).

4. Record Adjusting Entries.

5. Prepare Adjusting Trial Balance (please follow the proper order in which accounts are presented in the trial balance).

6. Prepare Income Statement, Balance sheet, and Statement of Retained Earnings.

7. Prepare closing Entries.

Answer rating: 100% (QA)

Transaction entries Date Account and explanations Jan Cash 1 ... View the full answer