Acct 10 EXTRA CREDIT Prof. Million Bill Johnson is an entrepreneur

QUESTION

Acct 10 EXTRA CREDITProf. MillionBill Johnson is an entrepreneur. After receiving a large sum of money as an inheritance, Bill decided to use some of hismoney to try and make Nana proud and make even more money. Bill invested $20,000 into a mobile auto detailingbusiness. With that decision Johnson Detailing was born. Bill believes his mobile detailing has real potential to grow, andhe is especially happy to finally not be working for his old boss. Bills strategic plan is to target large businesses toestablish contracts to detail multiple vehicles in a single stop, and is willing to offer long-term agreements at discountsto get his business rolling. Bill also believes he can advertise successfully on the radio and expand his brand recognition.In September Bill paid $1,200 for one year of local radio advertising which began on October 2015.Bill initially had his brothers son, Joey, who had basic accounting skills he learned at a local college, helping him duringhis start up. But Bill fired Joey on December 10 because, as he puts it, œthat idiots inability to show up to work on timewas absurd! Bill has worked since he was 13 when he started his first business mowing neighbors lawns. Bill explainedfurther, œI was working harder than this kid was willing to when I couldnt even drive. Bill assumed if this lazy kid canhelp with his accounting, that clearly he could do it. Bill admits now, that maybe he was a little hasty in firing his nephewand that he isnt sure how to maintain his accounting records.Bill has asked for you to review the activity recorded in the General Journal for accuracy, propose and record anyadjustments necessary. Bill has provided receipts and supporting information for the year.On December 20, Bill agreed to detail a motor home and other related tour vehicles for country music star Charlene.Because Bill is a huge country fan, he agreed to accept payment in 30 days in the amount of $2,500. Bill said œif shewasnt the most beautiful woman I had ever seen, I would have charged twice as much and demanded cash. Im justhappy she gave me an autograph. As of December 31, Bill had detailed 60% of the vehicles he was contracted to.An inventory count completed on December 31 revealed $400 of supplies remained.In discussion with Bill, you determine he doesnt know what depreciation is. Upon inquiry Bill believes the truck hepurchased July 1, 2015 should last 5 years and he would like to use straight line deprecation. In your attempt to try andunderstand Joeys experience, Bill stated that œJoey probably knew what he was doing. He has always been bright andsince I let him go, he has found a new job at a local accounting firm. Bill has provided the December 2015 UnadjustedTrial Balance.1. Make all necessary adjustments.2. Complete the worksheet.3. Journalize any adjustments from 1.Johnson DetailingUnadjusted Trial BalanceDecember 31, 2015ACCOUNTNUMBERACCOUNT NAME101Cash111Accounts Receivable121Supplies132Prepaid Advertising141Equipment – Autos201Accounts Payable301Bill Johnson, Capital401Fees Income511Insurance ExpenseTRIAL BALANCEDEBITCREDIT15 8 0 0 002 0 0 002 2 0 0 001 2 0 0 0012 0 0 0 003 0 0 0 0020 0 0 0 0010 8 0 0 004 2 0 0 0035 6 0 0 0033 8 0 0 00GENERAL JOURNALDATEDESCRIPTION2015Jun 28 CashBill Johnson, CapitalInitial investmentJul1 Equipment – AutosCashAccounts PayablePurchased used Chevy Silverado,Check 1001 and on accountPAGEPOST.REF.DEBIT10130112 0 0 0 001 Insurance ExpenseCashCar insruance for one year, 7/15 – 6/1620 0 0 0 006 0 0 0 006 0 0 0 002 4 0 0 002 4 0 0 0015 SuppliesCashPurchased supplies, Check 10021211017 0 0 0031 CashFees IncomePerformed services for cash1014015 0 0 002011011 0 0 0 0031 CashFees IncomePerformed services for cash1014011 9 0 0 0015 Prepaid AdvertisingCashPaid for advertising on radio, Check 10031321011 2 0 0 0030 CashFees IncomePerformed services for cash1014012 2 0 0 00Aug 31 Accounts PayableCashMade payment on accountSepCREDIT20 0 0 0 0014110120117 0 0 005 0 0 001 0 0 0 001 9 0 0 001 2 0 0 002 2 0 0 00GENERAL JOURNALDATEDESCRIPTION2015Sep 30 Accounts PayableCashMade payment on accountPAGEPOST.REF.DEBIT1211011 5 0 0 001014012 4 0 0 0031 Accounts PayableCashMade payment on account2011011 0 0 0 001014011 8 0 0 005 Cash101Accounts Receivable111Fees Income401Performed services for cash and on account for SCE8 0 0 002 0 0 008 SuppliesCashBought supplies for cash, Check 1005Nov 30 CashFees IncomePerformed services for cashDecCREDIT1 0 0 0 0031 CashFees IncomePerformed services for cashOct201101231 CashFees IncomePerformed services for cash1014011 0 0 0 001 5 0 0 002 4 0 0 001 0 0 0 001 8 0 0 001 0 0 0 001 0 0 0 001 0 0 0 00GENERAL JOURNALDATE2015Dec. 31DESCRIPTIONAdjusting EntiresPAGEPOST.REF.DEBITCREDIT3Johnson DetailingWorksheetMonth Ended December 31, 2015ACCOUNTNUMBER101111121132134141151201301401505511526551ACCOUNT NAMECashAccounts ReceivableSuppliesPrepaid AdvertisingPrepaid InsuranceEquipment – AutosAccum. DepreciationAccounts PayableBill Johnson, CapitalFees IncomeSupplies ExpenseInsurance ExpenseAdvertising ExpenseDepreciation ExpenseTRIAL BALANCEDEBITCREDITADJUSTMENTSDEBITCREDITADJUSTED TRIAL BALANCEDEBITCREDITINCOME STATEMENTDEBITCREDITBALANCE SHEETDEBITCREDIT1234567891011121415Totals16Net Income171819

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