Question

Required information 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) (The following information applies to the questions displayed below! On January 1, 2021, Red Flash Photography had the following balances: Cash, $27,000, Supplies, 59,500, Land, $75,000 Deferred Revenue, $6,500; Common Stock $65,000; and Retained Earnings, $40,000. During 2021, the company had the following transactions: 1. February 15 Issue additional shares of common stock, $35,000. 2. May 20 provide services to customers for cash, $50,000, and on account, $45,000. 3. August 31 Pay salaries to employees for work in 2021, $38,000. 4. October 1Purchase rental space for one year. $27,000. 5. November 17 Purchase supplies on account, $37,600. 6. December 38 Pay dividends, $3,500. The following information is available on December 31, 2021 1. Employees are owed an additional $5,500 in salaries. 2. Three months of the rental space has expired. 3. Supplies of $6,500 remain on hand. 4. All of the services associated with the beginning deferred revenue have been performed. Exercise 3-20A Part 4 4. Prepare an income statement, statement of stockholders' equity, and classified balance sheet. Complete this question by entering your answers in the tabs below. Income Statement Stmt of Stockholders Balance Sheet Font

Answer 1

Statement of Income
Revenue
Service revenue	$           1,01,500
	$           1,01,500
Expenses
Salaries Expense	$         43,500
Rent Expense	$           6,750
Supplies Expense	$         40,000
Total Expenses	$              90,250
Net Income	$              11,250

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Statement of Stockholders Equity
	Common Stock	Retained Earnings	Total Stockholders Equity
Opening balance	$                  65,000	$                     40,000	$                  1,05,000
Shares issued	$                  35,000	$                              -	$                      35,000
Net Income	$                            -	$                     11,250	$                      11,250
Cash Dividend	$                            -	$                     (3,500)	$                      (3,500)
Closing Balance	$               1,00,000	$                     47,750	$                  1,47,750

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Balance Sheet
Assets
Cash	$              43,500
Accounts Receivable	$              45,000
Prepaid Rent	$              20,250
Supplies	$                 6,500
Total Current Asset	$           1,15,250
Land	$              75,000
Total Assets	$           1,90,250
Liabilities
Accounts Payable	$              37,000
Salaries Payable	$                 5,500
Total Current Liabilities	$              42,500
Total Liabilities	$              42,500
Stockholder's Equity
Common Stock	$           1,00,000
Retained Earnings	$              47,750
Total	$           1,47,750
Total Liabilities and Stockholder's Equity	$           1,90,250

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Workings:

Adjusted Trial Balance
	Debit	Credit
Cash	$          43,500
Accounts Receivable	$          45,000
Prepaid Rent	$          20,250
Supplies	$             6,500
Land	$          75,000
Deferred revenue		$                      -
Accounts Payable		$             37,000
Salaries Payable		$               5,500
Common Stock		$         1,00,000
Retained Earnings		$             40,000
Service revenue		$         1,01,500
Salaries Expense	$          43,500
Rent Expense	$             6,750
Supplies Expense	$          40,000
Dividend Paid	$             3,500
	$       2,84,000	$         2,84,000

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