Question

Required information The general ledger of Red Storm Cleaners at January 1, 2021, includes the following account balances: Debits Credits Асcounts $12,500 6,500 2,500 17,500 Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Salaries Payable Common Stock Retained Earnings 6,000 8,500 17,500 7,000 $39,000 $39,000 Totals The following is a summary of the transactions for the year: 1. March 2. Мay 3. June 4. August 5. September 25 Pay repairs and maintenance expenses, $11,500. 6. Оctober 7. December 12 Provide services to customers, $45,000, of which $19,500 is on account. 2 Collect on accounts receivable, $16,500. 30 Issue shares of common stock in exchange for $5,000 cash. 1 Pay salaries of $8,500 from 2020 (prior year). 19 Purchase equipment for $6,500 cash. 30 Pay $1,000 cash dividends to stockholders.

Answer 1

1. Computation of balances in each account as mentioned in below attached balance sheet,
   1. Cash = 12500(opening) + (45000-19500)(cash received for services rendered other than that on account) + 16500(collect from account receivable) + 5000(issues shares) - 8500 (salaries) - 11500(paid for repairs and maintenance) - 6500(purchase equipment) - 1000(cash dividends) =32000.
   2. Accounts receivable = 6500(opening) + 19500(services rendered) - 16500(collected) = 9500.
   3. Supplies, no information is provided so continuing the same balance.
   4. Equipment = 17500 (opening) + 6500(purchases) = 24000
   5. accumulated depreciation = continuing same balance and also not providing depreciation as no information is provided regarding the same.
   6. Common stock = 17500(opening) + 5000(fresh issue) = 22500.
   7. Retained earnings = 7000(opening) + 45000(services) - 11500(repairs paid) - 1000(dividends paid) =​​​​​​ 39500.​​​​​
   8. Salaries expense paid relates to previous which is shown as payable in opening balance, so we should not consider it in calculating retained earnings.

Red Storm Cleaners Balance Sheet December 31, 2021 Assets Liabilities Curents Assets Cuvet Cabilities Accumwared depreciation Stock holdes ellity 6,000 cash 32,000 9,500 receiable Accounts Supplies 2,500 Common stock Retained earrings 22,500 39,500 Total auvent assets 44000 long term assets Total stockholdos equity 62,50 24,00 Equipment Total Assets 68000 Total 6800