Question

A six-column table for Yan Consulting Company follows. The first two columns contain the unadjustedtrial balance for the company as of December 31, 2017, and the last two columns contain the adjusted trialbalance as of the same date.

Unadjusted Adjusted

Trial Balance Adjustments Trial Balance

Cash . \( 45,000 \) 45,000

Accounts receivable . 60,000 66,660

Office supplies 40,000 17,000

Prepaid insurance . 8,200 3,600

Office equipment 120,000 120,000

Accumulated depreciation—

Office equip. . \( 20,000 \) 30,000

Accounts payable . 26,000 32,000

Interest payable 0 2,150

Salaries payable . 0 16,000

Unearned consulting fees 40,000 27,800

Long-term notes payable . 75,000 75,000

Common stock . 4,000 4,000

Retained earnings 76,200 76,200

Dividends 20,000 20,000

Consulting fees earned 234,600 253,460

Depreciation expense—

Office equip. . 0 10,000

Salaries expense . 112,000 128,000

Interest expense . 8,600 10,750

Insurance expense . 0 4,600

Rent expense 20,000 20,000

Office supplies expense . 0 23,000

Advertising expense . 42,000 48,000

Totals \(475,800 \)475,800 \(516,610 \)516,610

Required

Analysis Component

1. Analyze the differences between the unadjusted and adjusted trial balances to determine the eight adjustmentsthat likely were made. Show the results of your analysis by inserting these adjustmentamounts in the table’s two middle columns. Label each adjustment with a letter athrough hand providea short description of each

Preparation Component

2. Use the information in the adjusted trial balance to prepare this company’s (a) income statement andits statement of retained earnings for the year ended December 31, 2017 [Note:Retained earnings atDecember 31, 2016, was \(76,200, and the current-year dividends were \)20,000],

and (b) the balancesheet as of December 31, 2017.

Short answer

The total assets of the company are $124,960. Income statement, statement of retained earnings and balance sheet shown in step 2, 3 and 4 respectively.

Step-by-step solution

Step-by-Step SolutionStep 1: Definition of accounts receivable

The accounts receivable is the sum of payment pending from the creditors of the company.

Income Statement

Income Statement
Year ending December 31, 2017
Consulting Fees Earned		$134,240
Less:
Depreciation Expense- Equipment	$6,000
Salaries Expense	$74,000
Insurance Expense	$2,200
Interest Expense	$5,580
Office Supplies Expense	$14,500
Advertising Expense	$14,000
Rent Expense	$13,000	$129,280
Net Income		$4,960

Statement of retained earnings

Statement of Retained Earnings
For Year Ending December 31, 2017
Beginning Balance	$25,000
Net Income	$4,960
Dividends	-$5,000
Retained Earnings	$24,960

Balance Sheet

Balance Sheet
For the year ending December 31, 2017
Assets
Current Assets:
Cash	$34,000
Accounts Receivable	$22,000
Prepaid Insurance	$2,960
Office Supplies	$2,000
Non-Current Assets
Equipment	$84,000
Accumulated Depreciation	-$20,000
Total Assets		$124,960
Liabilities
Current Liabilities
Accounts Payable	$10,000
Salaries Payable	$7,000
Interest Payable	$1,000
Unearned Consulting Fees	$15,000
Long-term liabilities
Long-term Notes Payable	$52,000
Stockholder’s Equity
Common Stock	$15,000
Retained Earnings	$24,960
Total liabilities & Stockholder’s Equity		$124,960