Background: Matthews Delivery Service Completed The F 227390

Backgroundmatthews Delivery Service Completed The Following Transacti

Background: Matthews Delivery Service completed the following transactions during December 2014. Adjustment data: a. Accrued Salaries Expense, $1700 b. Depreciation was recorded on the truck using the straight-line method. Assume a useful life of 5 years and a salvage value of $5,000. c. Prepaid Insurance for the month has expired. d. Office Supplies on hand, $200. e. Unearned Revenue earned during the month, $500. f. Accrued Service Revenue, $450. Assignment: Requirements : The accounts used by the business are provided in the Chart of Accounts (click on "Chart of Accounts" to view.) Record each December transaction in the general journal. Explanations are not required. Review each of the accounts in the ledger to see the results of posting the journal entries, including the changes in each account as well as the unadjusted balance. (Click on "General Ledger" to view.) Review the unadjusted trial balance as of December 31, 2014. Note: This is an unadjusted trial balance since the adjusting entries have not yet been prepared and posted. (Click on "Trial Balance" to view.) Review the adjusted trial balance as of December 31, 2014. Note: This is an adjusted trial balance since the adjusting entries have been prepared and posted. (Click on "Trial Balance" to view.) Review the income statement for the month ended December 31, 2014 (click on "Income Statement" to view) and the classified balance sheet on December 31, 2014 (click on "Balance Sheet" to view). Journalize the closing entries. Explanations are not required. Transactions: 12/01/2014 Matthews Delivery Service began operations by receiving $6,000 cash and a truck with a fair value of $20,000 from Robert Matthews. The business issued Matthews shares of common stock in exchange for this contribution. 12/01/2014 Paid $600 cash for a 6-month insurance policy. The policy begins December 1. 12/04/2014 Paid $300 cash for office supplies. 12/12/2014 Performed delivery services for a customer and received $800 cash. 12/15/2014 Completed a large delivery job, billed the customer, $1,500, and received a promise to collect the $1,500 within one week. 12/18/2014 Paid employee salary, $700. 12/20/2014 Received $12,000 cash for performing delivery services. 12/22/2014 Collected $600 in advance for delivery service to be performed later. 12/25/2014 Collected $1,500 cash from customer on account. 12/27/2014 Purchased fuel for the truck, paying $200 with a company credit card. (Credit Accounts Payable.) 12/28/2014 Performed delivery services on account, $900. 12/29/2014 Paid office rent, $600, for the month of December. 12/30/2014 Paid $200 on account. 12/31/2014 Cash dividends of $2,100 were paid to stockholders. View the post-closing trial balance as of December 31, 2014.

Paper For Above instruction

The accounting process for Matthews Delivery Service for December 2014 involves recording initial transactions, adjusting entries, and closing procedures to reflect an accurate financial position at month-end. This comprehensive process ensures financial statements accurately represent the company's economic activities during this period. The process begins with recording the initial December transactions in the general journal, followed by reviewing the ledger balances to observe the effects of these transactions. An unadjusted trial balance is prepared, which lists all account balances before adjustments, serving as a foundation for the necessary adjustments to account for accrued and deferred items.

Key initial transactions include the company's formation, asset contributions, and various cash and credit income and expense activities. For instance, on December 1, the company received cash and the truck from Robert Matthews, recorded by debiting cash and trucks and crediting capital stock. Additionally, the company paid premiums for insurance and supplies, performed multiple delivery services both on cash and credit, and conducted transactions involving expenses such as fuel and rent. Each of these transactions affects specific accounts such as cash, accounts receivable, supplies, prepaid insurance, and various revenue and expense accounts.

Adjusting entries are critical to match revenues with expenses and recognize assets' consumption within the period. For example, the accrued salaries expense of $1,700 is recorded to reflect salaries earned but unpaid at period-end, while depreciation on the truck is calculated using the straight-line method over its useful life of 5 years with a salvage value of $5,000. The monthly expired portion of prepaid insurance and the supplies on hand also require recording as adjusting entries. Additionally, revenue earned but not yet received, such as $500 of unearned revenue, needs to be recognized, along with accrued service revenue of $450.

After posting the adjusting entries, an adjusted trial balance consolidates all finalized account balances, providing a basis for preparing financial statements. These include the income statement for December 2014, which summarizes revenues and expenses, resulting in net income, and the classified balance sheet, presenting assets, liabilities, and equity at month-end. The company then proceeds with closing entries to transfer net income and dividends to retained earnings, resetting temporary accounts for the new accounting period. This comprehensive accounting process ensures that Matthews Delivery Service's financial statements accurately reflect its financial position and operational results as of December 31, 2014.

References

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  • Wikipedia contributors. (2023). Straight-line depreciation. Wikipedia. https://en.wikipedia.org/wiki/Straight-line_depreciation
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