Question

Part B: The second part of this assignment is very similar to Part A. You may reference the solution to the transaction analysis spreadsheet from Part A to help you in Part B. Your assignment in Part B is to first prepare journal entries in the General Journal tab of this spreadsheet for the same transactions that you analyzed in Part A. After preparing your journal entries, post your entries to the T-accounts in the General Ledger (T-Accounts) tab. Start by inserting the beginning balances in the T-accounts from the Year 0 Balance Sheet and then post your journal entries from the General Journal. Next, calculate the ending balance in each account. Then, prepare Year 1 financial statements based on the ending balances in each T-account. Finally, go back to the General Journal and prepare closing entries. Post your closing entries to the General Ledger T-accounts. Finally, prepare a Post-Closing Trial Balance,

Answer 1

Adomain Journal Enteries Date Particulars Jan-01 Patent a/c To Cash (Patent purchased) Dr. Debit in $ Credit in $ 32000 32000 Mar-15 18500 Long Term Assets a/c Dr. To Cash (Long term assets purchased) 18500 Dr. 36000 Apr-01 Prepaid Rent a/c To Cash (12 months rent paid) 36000 60000 Apr-01 Cash a/c Dr. To Common Stock (Common stock issued) 60000 120000 Apr-01 Accounts Receivable a/c Dr. To Sales (Sales on account) 120000 16000 Cost of goods sold a/c Dr. To Inventory (To record cost of goods sold) 16000 Dr. 10000 Sales Commission a/c To Cash (Sales commission paid) 10000 13400 Apr-05 Research and development cost a/c Dr. To Cash (Expense paid) 13400 Dr. 24000 May-01 Cash a/c 01 Cash a/c To Unearned Service Revenue (Advance from client) 24000

Dr. Date Particulars May-01 Cash a/c To Accounts Receivable (Cash from debtors) Debit in $ Credit in $ 65000 65000 Jun-30 Dr. 4300 Income Tax Payable a/c To Cash (Income tax paid) 4300 Jul-31 Dr. 15000 Inventory a/c To Cash To Accounts Payable (Inventory purchased) 3000 12000 Jul-31 20000 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 20000 7000 Sep-30 Accounts Receivable a/c Dr. To Cash (Supplies purchased) 7000 7000 Oct-01 Supplies a/c To Accounts Receivable (Correction entry) 7000 6000 Oct-01 Marketable Securities a/c Dr. To Cash (Marketable securities purchased) 6000 Dr. 20000 Oct-01 Cash a/c To Note Payable (Borrowed from Bank) 20000 34000 Dec-01 Salaries Expense a/c Dr. To Cash To Salary Payable (Salary expense incurred) 4000 30000

Dr. Adjusting Enteries Date Particulars Dec-31 Income Tax Expense a/c To Cash To Income Tax Payable (Income tax expense paid) Debit in $ Credit in $ 5500 3500 2000 Dr. 27000 Dec-31 Rent Expense a/c To Prepaid Rent (Rent expensed) 36000 x 9/12 27000 Dr. 4000 Dec-31 Unearned Service Revenue a/c To Service Revenue (Serices provided) 24000 / 6 4000 5000 Dec-31 Supplies Expense a/c Dr. To Supplies (Supplies expensed) 7000 - 2000 5000 500 Dec-31 Interest expense a/c Dr. To Interest Payable (Interest accrued) 20000 x 10% x 3/12 500

Worksheet For the period ending Dec 31 Particulars Cash Marketable Securities Accounts Receivable Inventory Supplies Prepaid Rent PP&E Intangible Assets Patent Other Long Term Assets Accounts Payable Salary Payable Interest Payable Unearned Revenue Income Tax Payable Notes Payable Common Stock Retained Earnings Service Revenue Sales Cost of goods sold Sales Commission Research and development cost Salaries Expense Rent Expense Supplies Expense Interest expense Income Tax Expense Totals Unadjusted Adjustments Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 134800 3500 131300 131300 12700 12700 12700 55000 55000 55000 24000 24000 24000 7000 5000 2000 2000 36000 27000 9000 9000 34700 34700 34700 10500 10500 10500 32000 32000 32000 33500 33500 33500 57000 57000 57000 30000 30000 30000 500 500 500 74000 4000 70000 70000 2000 2000 2000 48500 48500 48500 105000 105000 105000 19100 19100 31700 4000 4000 120000 120000 16000 16000 10000 10000 13400 13400 34000 34000 27000 27000 5000 5000 500 500 5500 5500 453600 453600 42000 42000 456100 456100 344700 344700 Statement of Income For the period ending Dec 31 Sales Cost of goods sold Gross Profit 120000 - 16000 104000 Sales Commission Research and development cost Salaries Expense Rent Expense Supplies Expense Operating Income Non Operating items: Service Revenue Interest expense 10000 13400 34000 27000 5000 89400 14600 4000 -500 3500 18100 -5500 12600 Income Tax Expense Net Income Statement of Retained Earnings For the period ending Dec 31 Beginning Balance Net Income 19100 12600 31700

Balance sheet As at Dec 31. Assets Current Assets Cash Marketable Securities Accounts Receivable Inventory Supplies Prepaid Rent Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Current Liabilities 131300 Accounts Payable 57000 12700 Salary Payable 30000 55000 Interest Payable 500 24000 Unearned Revenue 70000 2000 Income Tax Payable 2000 159500 9000 234000 Non Current Liabilities Notes Payable 48500 34700 33500 68200 Shareholders Equity 10500 Common Stock 105000 32000 42500 Retained Earnings 31700 136700 344700 Total Liabilities & Equity 344700 Non Current Assets PP&E Other Long Term Assets Intangible Patent Total Assets