Question

Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $11. At the start of January 2018, VGC's income statement accounts had zero balances and its balance sheet account balances were as follows: Cash Accounts Receivable Supplies Equipment Buildings Land Accounts Payable Deferred Revenue Notes Payable (due 2025) Common Stock Retained Earnings $2,150,000 203,000 19,500 881,000 512,000 1,420,000 122,000 77,000 153,000 2,100,000 2,733,500 In addition to the above accounts, VGC's chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense. The January transactions are shown below: a. Received $62,250 cash from customers on 1/1 for subscriptions that had already been earned in 2017. b. Purchased 10 new computer servers for $34,200 on 1/2; paid $15,300 cash and signed a three-year note for the remainder owed. c. Paid $19,400 for an Internet advertisement run on 1/3. d. On January 4, purchased and received $3,400 of supplies on account. e. Received $180,000 cash on 1/5 from customers for service revenue earned in January. f. Paid $3,400 cash to a supplier on January 6. g. On January 7, sold 16,300 subscriptions at $11 each for services provided during January. Half was collected in cash and half was sold on account. h. Paid $326,000 in wages to employees on 1/30 for work done in January. i. On January 31, received an electric and gas utility bill for $5,670 for January utility services. The bill will be paid in February.

Answer 1

Credit Journal Entries : S.No Particulars Cash Accounts Receivables Debit 62,250 $ $ 62,250 Statement of Retained Earnings : Particulars Amount ($) Retained Earnings, January 1, 2018 | $ 27,33,500 Add: Net Income 8,230 Less: Dividends Retained Earnings, January 31, 2018 $ 27,41,730 $ 34,200 Equipment (Computer Servers) Cash Notes Payable toto 15,300 18,900 A mount ($) Trial Balance : Particulars Cash Accounts Receivables Supplies Equipment Buildings Land Accounts Payables Deferred Revenue Notes Payables (Long-term) Common Stock Retained Earnings Service Revenue Advertising Expense Wages Expense Utilities Expense Total $ 19,400 Advertising Expense Cash Debit Credit $ 21,17,800 $ 2,30,400 $ 22,900 $ 9,15,200 $ 5,12,000 $ 14,20,000 $ 1,27,670 $ 77,000 $ 1,71,900 $ 21,00,000 $ 27,33,500 $ 3,59,300 $ 19,400 $ 3,26,000 $ 5,670 $ 55,69,370 $ 55,69,370 $ 19,400 Balance Sheet : Particulars Assets : Cash Accounts Receivables Supplies $ 21,17,800 $ 2,30,400 $ 22,900 Supplies Accounts Payables $ 3,400 $ 3,400 $ 1,80,000 Cash Service Revenue $ 1,80,000 Property, Plant and Equipment: Land Buildings Equipment $ 14,20,000 $ 5,12,000 $ 9,15,200 $ 3,400 Accounts Payables Cash $ 3,400 Total Assets $ 52, 18,300 Income Statement : Particulars Service Revenue Total Revenue $ Cash Accounts Receivables Service Revenue $ $ 89,650 89,650 Amount ($) $ 3,59,300 $ 3,59,300 $ 1,79,300 Liabilities : Accounts Payables Deferred Revenue Notes Payables (long-term) $ $ $ 1,27,670 77,000 1,71,900 Salaries and Wages Expense Cash $ 3,26,000 $ 3,26,000 Less : Expenses Advertising Expense Salaries and Wages Expense Utilities Expense Total Expenses Net Income $ $ $ 19,400 3,26,000 5,670 Equity : Common Stock Retained Earnings Total Liabilities and Equity Utilities Expenses Accounts Payables 5,670 $ 3,51,070 8,230 $ 21,00,000 $ 27,41,730 $ 52,18,300 $ 5,670