Company ABC performs consultancy projects. The company adjusts its accounts on monthly basis. An unadjusted trial balance on December 31, 2020 is produced below.

Company ABC

Unadjusted Trial Balance

December 31, 2020

Item	Debit ($)	Credit ($)
Cash	4,360
Accounts Receivable	3,000
Unexpired Insurance	250
Prepaid Rent	1,400
Office Supplies	3,000
Office Equipment	5,000
Notes Payable		5,000
Accounts Payable		1,000
Capital Stock		10,000
Consulting Revenue		7,000

Rent Expense	600
Wages Expense	2,500
Supplies Expense	1,200
Utilities Expense	700
Insurance Expense	990
Total	23,000	23,000

 

Other Information:

1.      Accrued and unrecorded consulting revenue $1,000.

2.      The company observes office supplies $550 on hand.

3.      The company undergoes a rental agreement for building on 15-days basis. Rent was prepaid on Nov 15.

4.      A 13 months health insurance policy was purchased on Feb 2.

5.      The company acquired all of its office equipment upon commencement of business. Half of the equipment ($2,500) was purchased on credit. However, estimated useful life was 5 years. Depreciation is estimated to be $1,000.

6.      Received the utilities bill $150.

7.      Saturday is the day for wages payment for a 5-days work week. Wages total $500 per week and December 31, 2020 falls on Thursday. Monday and Friday are unpaid.

Instructions:

1. Record the transactions in general journal form. Post to appropriate ledger account. Prepare adjusted trial balance dated December 31, 2020.
2. Will the $150 dividend paid December 31 decrease the company’s income? Explain.

Answer rating: 100% (QA)

Dividend paid will not decrease the companys income It wi... View the full answer