Question

Required Information [The following information applies to the questions displayed below.) The following transactions pertain to Smith Training Company for Year 1: Jan. 30 Established the business when it acquired $45,000 cash from the issue of common stock. Feb. 1 Paid rent for office space for two years, $24,000 cash. Apr. 10 Purchased $3,200 of supplies on account. July 1 Received $24,000 cash in advance for services to be provided over the next year. 20 Paid $1,500 of the accounts payable from April 10. Aug. 15 Billed a customer $18,000 for services provided during August. Sept. 15 Completed a job and received $8,400 cash for services rendered. Oct. 1 Paid employee salaries of $12,000 cash. 15 Received $15,000 cash from accounts receivable. Nov. 16 Billed customers $42,000 for services rendered on account. Dec. 1 Paid a dividend of $15,000 cash to the stockholders. 31 Adjusted records to recognize the services provided on the contract of July 1. 31 Recorded $3,600 of accrued salaries as of December 31. 31 Recorded the rent expense for the year. (See February 1.) 31 Physically counted supplies; $280 was on hand at the end of the period. . Post the transactions to T-accounts and calculate the account balances. Cash Accounts Receivable Beg. Bal. Beg. Bal. End. Bal. End. Bal. 4

Answer 1

Solution: T-accounts: cash Beg bal Jan 30. Jul 1. Sep 15. Oct 15. 45000 24000 Feb 1. 24000 1500 Jul 20. 8400 12000 Oct 1. 15000 15000 Dec 1. End bal 39900 Prepaid rent Beg bal Feb 1. 24000 11000 Dec 31. (24000*11/24) End bal 13000 Accounts payable Beg bal Jul 20. 1500 3200 Apr 10. End bal 1700 Salaries payable Beg bal 3600 Dec 31. End bal 3600 Salaries expense Beg bal Oct 1. Dec 31. 12000 3600 End bal 15600

Dividend Supplies Beg bal Dec 1. Beg bal Apr 10. 15000 3200 2920 Dec 31. End bal 15000 End bal Rent expense Beg bal Dec 31. (24000*11/24) 11000 Unearned revenue Beg bal Dec 31. (24000*6/12) 12000 24000 Jul 1. End bal 11000 End bal 12000 Supplies expense common stock Beg bal Beg bal Dec 31. 2920 45000 Jan 30. End bal 2920 End bal 45000 Accounts receivable Service revenue Beg bal Beg bal Aug 15. Nov 16. 18000 15000 Oct 15. 42000 18000 Aug 15. 8400 Sep 15. 42000 Nov 16. 12000 Dec 31. (24000*6/12) End bal 45000 End bal 80400