The equipment was purchased on january 1 2014 it has a

Reference no: EM13585716

Comet Graphics Company was organized on January 1, 2013. The trial balance before adjustment at December 31,2014 contained the following account balances:

Debits Credits

Cash $9,500 (D)

Accounts Receivable 14,000 (D)

Supplies 2,700 (D)

Prepaid Insurance 1,800 (D)

Equipment 45,000 (D)

Accounts Payable 9,000 (C)

Notes Payable 17,000 (C)

Common Stock 15,000 (C)

Retained Earnings (Beginning) 12,000 (C)

Dividend 2,000 (D)

Graphic Fees Revenue 52,100 (C)

Consulting Fees Revenue 5,000 (C)

Salaries Expense 30,000 (D)

Advertising Expense 1,900 (D)

Rent Expense 1,500 (D)

Utilities Expense 1,700 (D)

$110,100 (D) $110,100 (C)

Analysis reveals the following additional data:

1. The $2,700 balance in Supplies represents supplies purchased in January. At December 31, there was $1,500 ofsupplies on hand.

2. The note payable was issued on September 1. It is a 12%, 6-month note, with principle and interest due atmaturity.

3. The balance in Prepaid Insurance is the premium on a one-year policy, dated March 1, 2014.

4. Consulting Fees are credited to revenue when received. At December 31, consulting fees of $1,000 contractedfor January 2015 have yet to be performed. All other consulting projects have been finished. [Hint: Have theyrecognized revenue at the correct time?]

5. The equipment was purchased on January 1, 2014. It has a 10-year useful life and no salvage value. Thecompany uses the straight-line depreciation method.

Required: Determine Ending Retained Earnings at December 31, 2014 (after adjusting entries and closing)$

Reference no: EM13585716

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