Question

The general ledger of the Karlin Company, a consulting company, at January 1, 2021, contained the following account balances:

Account Title	Debits		Credits
Cash	30,000
Accounts receivable	15,000
Equipment	20,000
Accumulated depreciation			6,000
Salaries payable			9,000
Common stock			40,500
Retained earnings			9,500
Total	65,000		65,000

The following is a summary of the transactions for the year:

1. Service revenue, $100,000, of which $30,000 was on account and the balance was received in cash.
2. Collected on accounts receivable, $27,300.
3. Issued shares of common stock in exchange for $10,000 in cash.
4. Paid salaries, $50,000 (of which $9,000 was for salaries payable at the end of the prior year).
5. Paid miscellaneous expense for various items, $24,000.
6. Purchased equipment for $15,000 in cash.
7. Paid $2,500 in cash dividends to shareholders.

1. Accrued salaries at year-end amounted to $1,000.
2. Depreciation for the year on the equipment is $2,000.

Required:
2., 5, & 8. Prepare the summary, adjusting and closing entries for each of the transactions listed.
3. Post the transactions, adjusting and closing entries into the appropriate t-accounts.
4. Prepare an unadjusted trial balance.
6. Prepare an adjusted trial balance.
7-a. Prepare an income statement for 2021.
7-b. Prepare a balance sheet as of December 31, 2021.
9. Prepare a post-closing trial balance.

Answer 1

Credit Debit $30,000 $70,000 $1,00,000 $27,300 $27,300 $10,000 $10,000 $41,000 $9,000 $50,000 $24,000 $24,000 $15,000 $15,000 Journal Entry Date Particulars 1 Accounts Receivable Cash To Service Revenue (Service revenue for the year accounted) 2 Cash To Accounts Receivable (Cash collected from accounts receivable) 3 Cash To Common Stock (Issue of common stock by payment cash) 4 Salaries Salary payable To Cash (Salary for tha current year and salary payable) 5 Miscellaneous Expense To Cash (Miscellaneous expense paid) 6 Equipment To Cash (Equipment purchased by cash) 7 Dividend To Cash (Cash dividend paid) Adjusting Journal Entry Date Particulars 1 Salaries To Salaries Payable (Accrued salary for the year) 2 Depreciation To Accumulated Depreciation (Depreciation for the year) Closing Journal Entry Date Particulars Salaries Payable Common Stock Retained Earnings Accumulated Depreciation To Cash To Accounts Receivable To Equipment (Closing Journal Entry) $2,500 $2,500 Credit Debit $1,000 $1,000 $2,000 $2,000 Credit Debit $1,000 $50,500 $39,000 $8,000 $45,800 $17,700 $35,000

Date 2) Ledger Accounts Dr. Date Particulars Opening Balance Service Revenue Accounts Receivable Cmmon Stock Cash Amount 30,000 70,000 27,300 10,000 Particulars By Salary Payable BY Salaries BY Miscellaneous Exp. By Equipment By Dividend Balance C/d Cr. Amount 9,000 41,000 24,000 15,000 2,500 45,800 1,37,300 Balance b/d 1,37,300 45,800 Service Revenue Amount Date Dr. Date Particulars Particulars Cash Accounts Receivable Cr. Amount 70,000 30,000 Balance C/d 1,00,000 1,00,000 Balance b/d Dr. Date Particulars To Balance B/d To Service Revenue Particulars By Cash Balance C/d Accounts Receivable Amount Date 15,000 30,000 45,000 17,700 Common Stock Amount Date 1,00,000 1,00,000 Cr. Amount 27,300 17,700 45,000 Balance b/d Dr. Cr. Date Particulars Particulars By Balance B/d By Cash Amount 40,500 10,000 Balance C/d 50,500 50,500 Balance b/d Dr. Date 50,500 50,500 Cr. Amount 9,000 1,000 Salary Payable Amount Date 9,000 Particulars To cash Particulars By Balance B/d By Salaries Balance C/d 1,000 10,000 Balance b/d 10,000 1,000 Cr. Amount Dr. Date Date Particulars Particulars To Cash To Salary Payable Salaries Amount 41,000 1,000 Balance C/d 42,000 42,000 42,000 42,000 Balance b/d

Cr. Dr. Date Amount 24,000 24,000 Dr. Date Cr. Amount 2,500 2,500 Dr. Cr. Date Amount Miscellaneous Expense Particulars Amount Date Particulars To Cash 24,000 Balance C/d 24,000 Balance b/d 24,000 Dividend Particulars Amount Date Particulars To Cash 2,500 Balance C/d 2,500 Balance b/d 2,500 Equipment Particulars Amount Date Particulars To Balance B/d 20,000 To Cash 15,000 Balance C/d 35,000 Balance b/d 35,000 Depreciation Particulars Amount Date Particulars To Accumulared Derepciation 2,000 Balance C/d 2,000 Balance b/d 2,000 Accumulated Depreciation Particulars Amount Date Particulars By Balance B/d By Derepciation Balance C/d 8,000 8,000 Balance b/d 35,000 35,000 Dr. Date Cr. Amount 2,000 2,000 Dr. Date Cr. Amount 6,000 2,000 8,000 8,000

Credit Debit $45,800 $17,700 $35,000 Unadjusted Trial Balance Particulars Cash Accounts Receivable Equipment Accumulated Depreciation Common Stock Retained Earnings Dividend Miscellaneous Expense Salaries Service Revenue $6,000 $50,500 $9,500 $2,500 $24,000 $41,000 $1,00,000 $1,66,000 $1,66,000 Credit Debit $45,800 $17,700 $35,000 Adjusted Trial Balance Particulars Cash Accounts Receivable Equipment Accumulated Depreciation Salaries Payable Common Stock Retained Earnings Dividend Depreciation Miscellaneous Expense Salaries Service Revenue $8,000 $1,000 $50,500 $9,500 $2,500 $2,000 $24,000 $42,000 $1,00,000 $1,69,000 $1,69,000 Credit Post Closing Trial Balance Particulars Cash Accounts Receivable Equipment Accumulated Depreciation Salaries Payable Common Stock Retained Earnings Debit $45,800 $17,700 $35,000 $8,000 $1,000 $50,500 $39,000 $98,500 $98,500

Amount $1,00,000 Income Statement Particulars Service Revenue Less: Operating Expense Salaries Miscellaneous expense Depreciation Total Expense Operating Income Less: Dividend Net Income $42,000 $24,000 $2,000 $68,000 $32,000 $2,500 $29,500 Liabilities Salaries Payable Common Stock Retained Earnings 9,500 Add : Current Year 29,500 Balance Sheet as on Amount Assets $1,000 Cash $50,500 Accounts Receivable Equipment 35,000 $39,000 Less : Accumulated Depreciation 8,000 Amount $45,800 $17,700 $27,000 90,500 90,500