Question

Sye Chase started and operated a small family architectural firm in Year 1. The firm was affected by two events: (1) Chase provided $24,400 of services on account, and (2) he purchased $5,100 of supplies on account. There were $1,100 of supplies on hand as of December 31, Year 1.

Required
a. b. & e. Record the two transactions in the accounts. Record the required year-end adjusting entry to reflect the use of supplies and the required closing entries. Post the entries in the T-accounts and prepare a post-closing trial balance. (Select "a1, a2, or b" for the transactions in the order they take place. Select "cl" for closing entries. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Accounts Receivable Supplies Beg. Bal. Beg. Bal. a2. End. Bal. End. Bal. Accounts Payable Retained Earnings Beg. Bal. Beg. Bal. End. Bal. End. Bal. Service Revenue Supplies Expense Beg. Bal. Beg. Bal. End. Bal. 0 End. Bal.

Answer 1

Journal Entries:

Post Journal Entries (for better student understanding) Account Date Title Ref. Debit Credit Accounts Receivable a1 $ 24,400 Service Revenue a1 $ 24,400 (To record services provided on account) Supplies a2 $ 5,100 Accounts Payable a2 (To record purchase of supplies on account) $ 5,100 Adjusting Entries: (Answer) 31-Dec Supplies Expense b $ 4,000 Supplies b $ (To record supplies consumed as per supplies on hand) 4,000

Journal Entries:

Account Post Date Title Ref. Debit Credit Closing Entries: (Answer) 31-Dec Service Revenue cl $ 24,400 Income Summary cl $ 24,400 (To close all income statement accounts with credit balances to income summary) 31-Dec Income Summary cl $ 4,000 Supplies Expense cl $ 4,000 (To close all income statement accounts with debit balances to income summary) 20,400 Income Summary 31-Dec (24,400 - 4,000) cl $ Retained Earnings cl (To close the income summary account) $ 20,400

T-accounts:

T-accounts Account Receivable Beg. Bal $ 24,400 Ending Bal. $ 24,400 24,400 $ 24,400 Supplies Beg. Bal $ 4,000 $ 5,100 Ending Bal. $ 1,100 5,100 $ 5,100 $ Accounts Payable 5,100 Beg. Bal $ Ending. Bal $ 5,100 5,100 5,100 Service Revenue 24,400 Beg. Bal. al $ 24,400 Ending Bal. $ $ 24,400 $ 24,400

T-accounts:

Supplies Expense Beg. Bal. $ $ 4,000 a2 $ 4,000 Ending. Bal. $ $ $ 4,000 4,000 Retained Earnings Beg. Bal. 20,400 Ending. Bal $ 20,400 20,400 $ 20,400 Income Summary 4,000 cl 20,400 Ending. Bal 24,400 cl $ $ $ $ 24,400 $ 24,400

Post Closing Trial Balance:

\

Credit Chase Architectural Services Post Closing Trial Balance December 31, Year 1 Accounts Titles Debit Accounts Receivable $ 24,400 Supplies $ 1,100 Accounts Payable Retained Earnings Service Revenue Supplies Expense Totals $ 25,500 $ 5,100 $ 20,400 $ $ 25,500

Accounting Equation:

Assets Liabilities + Stockholders Equity Revenue - Expenses = Net Income Accounts Payable Common Stock Retained + Earnings + $ 24,400 $ 24,400 a1 Accounts Receivable + Supplies $ 24,400 + + $ 5,100 $ (4,000) $ 24,400 + $ 1,100 = Statement of Cash Flows Operating Activities - Decreases by $24,400 Operating Activities - Increases by $5,100 Operating Activities - Decreases by $1,100 a2 $ b 5,100 + 5,100 + - $ - $ (4,000) 20,400 $ 24,400 $ $ 4,000 4,000 Bal. $ $ - $ 20,400 Net Income is $20,400. Net Cash flows from Operating Activities is Nil. $24,400 of revenue was earned on account, but none was collected. $4,000 of supplies was used, but none were paid for.