Question

Exercise 3-20A Record transactions and prepare adjusting entries, adjusted trial balance, financial statements, and closing entries (LO3-3, 3-4, 3-5, 3-6, 3-7) (GL) On January 1, 2021, Red Flash Photography had the following balances: Cash, $13,000; Supplies, $8,100; Land, $61,000; Deferred Revenue, $5,100: Common Stock $51,000; and Retained Earnings, $26,000. During 2021, the company had the following transactions: 1. February 15 Issue additional shares of common stock, $21,000. 2. May 20 Provide services to customers for cash, $36,000, and on account, $31,000. 3. August 31 Pay salaries to employees for work in 2021, $24,000. 4. October 1Purchase rental space for one year, $13,000. 5. November 17 Purchase supplies on account, $23,000. 6. December 30 Pay dividends, $2,100. The following information is available on December 31, 2021: 1. Employees are owed an additional $4,100 in salaries. 2. Three months of the rental space has expired. 3. Supplies of $5,100 remain on hand. 4. All of the services associated with the beginning deferred revenue have been performed.

Answer 1

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Complete Naming convention is not available, can be slightly different: Solution: Credit Date Dec.31 Journal entries Account title and explaination Supplies Expense Supplies (To recognize the supplies expense) Debit| 26,000 9) $ $ 26,000 Credit Date Dec.31 Debit 72,100 $ $ 72,100 Dec.31 $ 57,350 Closing Entries: Account title and explaination Service Revenue (36000+31000)+(5100) Retained Earning or Income Summary (To close the revenue accounts) Retained Earning or Income Summary (plug) Salaries Expense (24000+4100) Rent Expense Supplies Expense (To close the expense accounts) Retained Earning Dividends (To close the dividends accounts) $ $ $ 28,100 3,250 26,000 Dec.31 $ 2,100 $ 2,100