Question

On August 31, the balance sheet of Skysong, Inc. showed Cash $11,000, Accounts Receivable $3,700, Supplies $600, Equipment $6,000, Accounts Payable $5,600, Common Stock $15,000, and Retained Earnings $700. During September, the following transactions occurred.

1.		Paid $3,050 cash for accounts payable due.
2.		Collected $1,500 of accounts receivable.
3.		Purchased additional equipment for $2,600, paying $850 in cash and the balance on account.
4.		Recognized revenue of $8,800, of which $3,200 is collected in cash and the balance is due in October.
5.		Declared and paid a $500 cash dividend.
6.		Paid salaries $2,350, rent for September $1,150, and advertising expense $100.
7.		Incurred utilities expense for month on account $240.
8.		Received $13,500 from Capital Bank on a 6-month note payable.

Answer 1

Above given transactions can be processed for accounting in following manner.

1. Journal Entries:

Credit 1 $ Debit 3,050 $ 3,050 1,500 $ 1,500 $ 2,600 Date Particulars 1 Accounts Payable Cash (Paid cash for Accounts payable due) 2 Cash Accounts Receivable (Collected from Accounts Receivable) 3 Equipment Cash Accounts Receivable (Additional Equipment purchased with Cash payment of 850 and rest on account.) 4 Cash Accounts Receivable Revenue |(Revenue recognised ) 5 Retained Earning cash (Cash Dividend paid) $ $ 850 1,750 $ $ 3,200 5,600 $ 8,800 500 $ 500

$ $ $ 2,350 1,150 100 $ 3,600 6 Salaries Rent Advertising Expense Cash (Salaries, Rent, Advertising Expense Paid) 7 Utility Accounts Payable (Utility incurred on account) 8 Cash Capital Bank Note Payable (Received 6-Month Note Payable from Capital Bank) 240 240 $ 13,500 $ 13,500 $ 33,790 $ 33,790

2. General Ledger:

Date Pdll Date Particulars Balance b/d Accounts Receivable Cash Amount $ 11,000 $ 1,500 Particulars Accounts Payable Equipment | Amount $ 3,050 $ 850 N 2 3 Revenue Capital Bank Note Payable $ 3,200 $ 13,500 8 6 6 Retained Earning Salaries Rent $ $ 500 2,350 1,150 Advertisement Exp Balance c/f $ $ 21,200 $ 29,200 $ 29,200

Date Particulars Balance b/d Revenue Account Receivable Amount Date $ 3,700 2 $ 5,600 Particulars Cash Amount $ 1,500 Balance c/f $ $ 7,800 9,300 $ 9,300 Date Supplies Amount 600 Date Particulars Particulars Balance b/d Amount Balance c/f $ 600 600 $ 600 Date Date Particulars Amount Particulars Balance b/d Cash Accounts Payable 3 3 Equipment Amount $ 6,000 $ 850 $ 1,750 $ 8,600 Balance c/f $ $ 8,600 8,600

Particulars | Date 1 Accounts Payable Amount Date $ 3,050 Cash Particulars Balance b/d Equipment Utility Amount $ 5,600 $ 1,750 $ 240 $ 7,590 Balance c/f $ 4,540 $ 7,590 Common Stock Amount Date Date Particulars Particulars Balance b/d Amount $ 15,000 Balance c/f $ 15,000 $ 15,000 $ 15,000 Particulars Date 8 Retained Earning Amount Date $ 500 Cash Particulars Balance b/d Amount $ 700 Balance c/f $ $ 200 700 $ 700

Revenue Amount Date Particulars Date Particulars Amount Cash $ 3,200 Accounts Receivable $ 5,600 Balance c/f $ 8,800 $ 8,800 $ 8,800 Particulars Salaries Amount $ 2,350 Date Particulars Date 6 Amount Cash Balance c/f $ $ $ 2,350 2,350 2,350 Date Particulars Rent | Amount $ 1,150 Date Particulars Amount Cash Balance c/f $ $ 1,150 1,150 $ 1,150

Particulars Advertisement Expense Amount Date $ 100 Particulars Date 6 | Amount Cash Balance c/f $ 100 100 100 Date Utility Amount $ 240 Particulars Date 7 Amount Particulars Accounts Payable Balance c/f $ 240 240 240 Date Particulars Capital Bank Note Payable Amount Date Particulars 8 Cash Amount $ 13,500 Balance c/f $ 13,500 $ 13,500 $ 13,500

3. Trial Balance:

Trial Balance of Skysong, Inc. as on September 30 L Ledger Name Cash Accounts Receivable Supplies Equipment Common Stock Revenue Accounts Payable Salaries Rent Advertisement Expense Utility Capital Bank Note Payable Retained Earning Debit Credit $ 21,200 $ 7,800 $ 600 $ 8,600 $ 15,000 $ 8,800 $ 4,540 2,350 $ 1,150 $ 100 $ 240 $ 13,500 $ 200 $ 42,040 $ 42,040

4. Financial Statement:

Income Statement of Skysong, Inc. for month ending on September 30 Particulars Amount $ 8,800 Revenue Less: Salaries Rent Advertisement Expense Utility $ $ 2,350 1,150 00 $ 240 Net Income To be Transfered to Retained Earning $ 4,960

Balance Sheet of Skysong, Inc. as on September 30 Particulars Amount Assets Equipment Supplies Accounts Receivable Cash $ 8,600 $ 600 $ 7,800 $ 21,200 Total Assets $ 38,200 Liabilities Common Stock Retained Earning (200+4960) Accounts Payable Capital Bank Note Payable $ 15,000 $ 5,160 $ 4,540 $ 13,500 Total Liabilities $ 38,200