Table 3-1
the Unadjusted Trial Balance of Danvon Collection Services

question 130

Essay

Table 3-1
The unadjusted trial balance of Danvon Collection Services at December 31, 2019 follows. $$\begin{array} { l r r } & \underline { \text { Debit } } & \underline {\text { Credit } }\\\text { Cash } & \$ 4,800 & \\\text { Accounts receivable } & 10,400 & \\\text { Prepaid insurance } & 2,000 & \\\text { Prepaid rent } & 1,000 & \\\text { Office supplies } & 400 & \\\text { Equipment } & 16,500 & \\\text { Accumulated amortization } & & \$ 2,400 \\\text { Salaries payable } & & 0 \\\text { Interest payable } & & 0 \\\text { Unearned service revenue } & & 600 \\\text { Note payable } & & 8,000 \\\text { Ted Danvon, capital } & & 15,200 \\\text { Ted Danvon, withdrawals } & 3,000 & \\\text { Service revenue } & & 32,700 \\\text { Salaries expense } & 20,500 & \\\text { Amortization expense } & 0 & \\\text { Rent expense } & 0 & \\\text { Insurance expense } & 0 & \\\text { Office supplies expense } & 0 & \\\text { Interest expense } & 300 & \underline{\quad\quad} \\&\underline{\$58,900}&\underline{\$58,900}\end{array}$$
-Refer to Table 3-1. Given the following information, prepare the necessary adjusting entries at year end, December 31, 2019, for Danvon Collection Services.
a)A count revealed that $100 of office supplies were still on hand at December 31, 2019.
b)The accountant has determined that the prepaid insurance balance at December 31, 2019, should be in the amount of $450.
c)The equipment is amortized at the rate of $200 per month.
d)The accountant has determined that the unearned service revenue balance at December 31, 2019, should be in the amount of $350.
e)Interest of $200 on the note payable has accrued to the end of the year.
f)Salaries accrued at December 31, 2019, amounted to $650.
g)The accountant has determined that the prepaid rent balance at December 31, 2019, should be in the amount of $100.

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Definitions:

States Require

A phrase indicating that individual U.S. states may have specific legal requirements or regulations that must be followed.

Merchantability

A warranty implied by law that goods sold are fit for the ordinary purpose for which such goods are used.

Webster v. Blue Ship Tea Room, Inc.

A legal case from Massachusetts in 1964 that centered around what constituted a "fish chowder," illustrating how courts interpret contractual obligations and representations in business.

Implied Warranty of Merchantability

An implicit guarantee that a product will meet a minimum level of quality and functionality as expected for goods of its kind.