Question

Problem 3-8A Complete the full accounting cycle (LO3-3, 3-4, 3-5, 3-6, 3-7)

The general ledger of Red Storm Cleaners at January 1, 2021, includes the following account balances:

Accounts	Debits				Credits
Cash	$	17,500
Accounts Receivable		7,500
Supplies		3,500
Equipment		12,500
Accumulated Depreciation					$	4,000
Salaries Payable						6,000
Common Stock						22,500
Retained Earnings						8,500
Totals	$	41,000			$	41,000

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

1.		March		12		Provide services to customers, $55,000, of which $20,500 is on account.
2.		May		2		Collect on accounts receivable, $17,500.
3.		June		30		Issue shares of common stock in exchange for $4,000 cash.
4.		August		1		Pay salaries of $6,000 from 2020 (prior year).
5.		September		25		Pay repairs and maintenance expenses, $12,500.
6.		October		19		Purchase equipment for $7,500 cash.
7.		December		30		Pay $1,200 cash dividends to stockholders.

Problem 3-8A Parts 1, 3, 6 and 10

Required:

1., 3., 6., & 10. Post the transactions, adjusting entries and closing entries to the T-accounts. Be sure to include beginning balances.

Answer 1

Entries a Cr Adjusting Cash Ale ② $6. a Cash Alo 17850 Debtors ALC - af 34800 To Servill Revenuete 55000 al Cash Alo al 7500 To Debtors/Ale Renivable Alc. (Being collect from Account heceivable (Being service provided to standing Salary Alon 600 (Being previous yeas due Salary to customes 3 Cash Al - at 4000 6000 To Common stoch 4000 I To Cash Alc (Being common stock issued) * Repairsh Maintenanu Nc-. 12.500 To Fawipment Ale - d. 7.500 7500 To cash Alc. 12500 To Cash (Being repair & Maintenance (Being equipment purchased for enpeme paid) cash) I Dividend Alc a h Workings Notes 1200 12001, Accoent Receivable = 7500 +34500 To Cash - 17800 (Being cash dividend paid) = 24500 -2. Cash = 17500 +20,500 + 17500+ 4000 s closing Entries of T-Accounts -6000 - 12300 -7.00 - 1200 e as on 31/12/2022 = 32300 | lebit Credit) 3. Equipment: jasno +7550 - 20,000 Cash € 32300 Account Receivable 24800 4. Common Stock: 22500 + 4000=26500 € Suppilies 2300 Is. There are no such information Equipment Accumulated Liare 4000 related Depreciation and Ciation othes indirect expenses. Common stock 26500 Retained Earnings 8.500 servill Revenue 59000 Repair & Maintenan al 125.00 Diridend 1200 TOTAL 94000 94000 20.000