Question

Colton Enterprises experienced the following events for Year 1, the first year of operation:

1. Acquired $50,000 cash from the issue of common stock.
2. Paid $13,500 cash in advance for rent. The payment was for the period April 1, Year 1, to March 31, Year 2.
3. Performed services for customers on account for $102,000.
4. Incurred operating expenses on account of $42,500.
5. Collected $78,000 cash from accounts receivable.
6. Paid $36,000 cash for salary expense.
7. Paid $34,000 cash as a partial payment on accounts payable.

Adjusting Entries

8. Made the adjusting entry for the expired rent. (See Event 2.)
9. Recorded $5,400 of accrued salaries at the end of Year 1.

Events for Year 2

1. Paid $5,400 cash for the salaries accrued at the end of the prior accounting period.
2. Performed services for cash of $51,000.
3. Purchased $4,300 of supplies on account.
4. Paid $15,000 cash in advance for rent. The payment was for one year beginning April 1, Year 2.
5. Performed services for customers on account for $118,000.
6. Incurred operating expenses on account of $56,500.
7. Collected $104,000 cash from accounts receivable.
8. Paid $54,000 cash as a partial payment on accounts payable.
9. Paid $33,000 cash for salary expense.
10. Paid a $12,000 cash dividend to stockholders.

Adjusting Entries

11. Made the adjusting entry for the expired rent. (Hint: Part of the rent was paid in Year 1.)
12. Recorded supplies expense. A physical count showed that $650 of supplies were still on hand.

Record the events and adjusting entries for Year 1 in general journal form. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Year 1

No.	Accounts	debit	credit
1	cash	50000
	common stock		50000
2	Prepaid rent	13500
	cash		13500
3	Accounts receivable	102000
	service revenue		102000
4	Operating expenses	42500
	accounts payable		42500
5	Cash	78000
	accounts receivable		78000
6	Salaries expense	36000
	cash		36000
7	Accounts payable	34000
	cash		34000
8	rent expense	10125
	prepaid rent		10125
9	salaries expense	5400
	salaries payable		5400

Year 2

No.	Accounts	debit	credit
1	Salaries payable	5400
	cash		5400
2	Cash	51000
	Service revenue		51000
3	Supplies	4300
	Accounts payable		4300
4	Prepaid rent	15000
	cash		15000
5	Accounts receivable	118000
	Service revenue		118000
6	Operating expenses	56500
	accounts payable		56500
7	Cash	104000
	Accounts receivable		104000
8	Accounts payable	54000
	cash		54000
9	salaries expense	33000
	cash		33000
10	Dividends	12000
	cash		12000
11	rent expense	14625
	prepaid rent		14625
	(3375 of year 1 and
	15000*9/12 for year 2)
12	Supplies expense	3650
	supplies		3650
	(4300-650)