M&S advertising agency had the following adjusted account balances on Dec.31.2021:

Cash 50,000; Account receivable 1,500; supplies 2,500; equipment 21,000; Accumulated depreciation - equipment 3,000; account payable 22,000; share capital ordinary 20,000; Retained earnings 30,000. The following transactions occurred during the month Jan.2022:

Jan.2.2022. M & S received $24,000 from customers in advance for services to be provided until the end of the year.

Jan.5.2022. M & S purchased $11,000 supplies and paid the amount in cash.

Jan. 10.2022. M & S performed $7,000 of advertising services on account. Jan. 1. 2022. M & S purchased $70,200 building and signed a 10%, 18 months, 70,200 note. Jan.25.2022. M & S paid $15,000 in advance for insurance policy. This insurance policy will cover one year starting from feb. 1.2022.

Jan.28.2022. M & S paid its employees $28,000 for salaries and wages. You also know the following information regarding M&S advertising agency: -The company prepares its financial statements monthly. - On Jan.31.2022, A count of supplies had shown $1,100 of supplies on hand. - On Jan.31.2022, it was found that $30,300 services that were performed on account during the previous month are not recorded.

- Jan.31.2022 is a Tuesday, employees are paid $7,000 each

Thursday on a 5 working days week. - Depreciation on equipment is 13,200 per year, Depreciation on building is $25,200 per year.

-Each month the company performs the same amount of its services obligation.

Required:

(1) Prepare the Trial balance on Jan.31.2022 for M&S advertising agency 

(2) Prepare the adjusted trial balance on Jan.31.2022 for M&S advertising agency 

(3) Prepare the income statement for the first month of 2022 for M&S advertising agency

(4) Prepare the Retained earnings statement for the first month of 2022 for M&S advertising agency 

(5) Prepare the balance sheet at Jan.31.2022 for M&S Advertising agency.

Answer rating: 100% (QA)

Journal entries during the month Date Account Dr Cr Cash 24000 Deferred unearned Revenue 24000 Date Account Dr Cr Supplies 11000 Cash 11000 Date Account Dr Cr Cash 7000 Service Revenue 7000 Date Accou... View the full answer