Blue & Gold (B&G) Advertising Agency, Inc., a sports marketing firm specializing in design and web applications, began business on January 2, 202X. B&G’s management asks for your firm’s assistance in accounting and preparing financial statements for the month of January. B&G had the following transactions and activities during the month:

1. B&G incorporated on January 2, 202X by issuing 7,500 shares of common stock for $50,000 cash.
2. On January 2 B&G purchased office equipment for $75,000 by signing a five-month, $75,000 note payable with a 4% annual interest rate. Both interest and principal are due June 1, 202X. The equipment has a five-year useful life, an estimated $5,000 residual value, and will be depreciated using the straight-line method.
3. William Jones (a customer) pays $11,400 cash to B&G on January 2 for application design services to be completed by March 31. B&G agrees to perform the services uniformly across the months of January, February, and March. By the end of January, B&G has provided one-third of the design services as agreed.
4. B&G pays Johnson Real Estate $10,400 cash on January 3 for January’s office rent. B&G records rent payments as rent expenses.
5. On January 3, B&G pays $7,500 cash for a one-year liability insurance policy that expires on December 31, 202X. Because the insurance coverage transcends accounting periods, B&G records an asset for the cash payment.
6. On January 10, B&G purchases computer supplies from AEP Technologies for $27,300 on account with payment due in 60 days. At January 31, a physical count shows $13,870 of office supplies remain. B&G records supply purchases as an asset.
7. On January 13, B&G signs a contract with an on-line news company to design, code, and test an advertising application to appear in March 202X. B&G will commence the contracted work in February, and payment of $8,700 is due following the client’s design acceptance and successful uploading of the application.
8. B&G’s board of directors declared and paid a cash dividend of $4,300 on January 23. B&G records the cash distribution using a “Dividends” account.
9. B&G pays its employees on the last Friday of each month. The total payroll is $12,000 per workweek (prorated daily over five days). In January, the pay period began Thursday, January 3. Martin Luther King Day is a paid holiday. The pay period ended on Friday, January 25 with salaries paid on that day. Consequently, although employees worked the last four days in January (Monday through Thursday), they will not be paid for these four days until the last Friday of February.
10. On January 31, B&G receives $15,000 cash and bills an additional $75,000 for $90,000 of advertising design and coding services provided for a variety of clients during January.
11. B&G provided advertising design services worth $3,000 during January for Striker, Inc. B&G billed the client, but has not yet recorded the transaction as of January 31. Any unrecorded journal entries are entered at the end of the month as adjusting entries.
12. B&G estimates that 1.5% of its ending accounts receivable balance will be uncollectible.

1. Journal Entries:
   1. Record journal entries for the above transactions using the spreadsheet area titled "January Transactions Journal Entries."
   2. In the spreadsheet area titled “January Month-End Adjusting Entries,” record the adjusting journal entries needed to prepare accrual-based financial statements. When possible, use cell references and provide calculations within the appropriate cells.
2. T-Accounts: Using cell references to the journal entries, post all of the journal entries and adjusting journal entries to the appropriate T-Accounts on the spreadsheet titled “T-Accounts.” Compute a balance for each t-account as of the end of the month using excel arithmetic formulas.
3. Adjusted Trial Balance: Using cell references to the T-Account balances, prepare a January 31 adjusted trial balance using the spreadsheet titled “Adjusted Trial Balance.” Provide totals using excel arithmetic formulas.
4. Income Statement: Using cell references to the adjusted trial balance, prepare an income statement for the month of January using the spreadsheet titled “Income Statement.”
5. Statement of Retained Earnings: Using cell references (to the adjusted trial balance and the income statement), prepare a statement of retained earnings for the month of January using the spreadsheet titled “Statement of RE.”
6. Balance Sheet: Using cell references (to the adjusted trial balance and statement of retained earnings), prepare a balance sheet as of January 31 using the spreadsheet titled “Balance Sheet.”
7. Closing Entries: Using cell references (to the adjusted trial balance), prepare entries to close the temporary accounts to retained earnings as of January 31 using the spreadsheet titled “Closing Entries”

Answer rating: 100% (QA)

Journal entries Transactions of a company are recorded in the general journal by debiting and crediting accounts These entries are called as journal entries Date Account Dr Cr Cash 50000 Common Stock ... View the full answer