Question

Required: Prepare the adjusting journal entries that were recorded at December 31, 2021 The general ledger of the Karlin Company, a consulting company, at January 1.2021. contained the account balances: Account Title Debits Credits 30,000 15,000 20,000 Cash Accounts receivable Equipment Accumulated depreciation Salaries payable Common stock Retained earnings Total 6,000 9,000 40,500 9.500 65,000 65,000 The following is a su u sactions for the year: a. Service revenue, S u ch 50,000 was on account and the balance was received in cash b. Collected on accounts receivable, $27,300. c. Issued shares of common stock in exchange for $10,000 in cash. d. Paid salaries, $50,000 (of which $9,000 was for salaries payable at the end of the prior year). e. Paid miscellaneous expense for various items, $24,000. f. Purchased equipment for $15,000 in cash. g. Paid $2,500 in cash dividends to shareholders. Required: 1. Set up the necessary T-accounts and enter the beginning balances from the trial balance. 2. Prepare a general journal entry for each of the summary transactions listed above.

Answer 1

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Ans: 1. T-accounts: Cash A/C Amount $ 30,000 Description Description Opening Balance Amount Accounts Receivable Amount Description $ 15,000 Description Opening Balance Amount Equipments Amount $ 20,000 Description Description Opening Balance Amount Description Accumulated Depreciation Amount Description Opening Balance Amount 6,000 $ Description Salaries Payable Amount Description Opening Balance Amount 9,000 $

Description Common Stock Amount Description Opening Balance Amount 40,500 $ Description Retained earnings Amount Description Opening Balance Amount 9,500 $ 2. Journal Entries: Credit: a. Service revenues, $100,000, of which $30,000 on account and remaining on cash: Accounts Debit: Accounts Receivable 30,000 Cash $ 70,000 Service Revenues $ 1,00,000 b. Collection on accounts receivable, $27,300: Cash Accounts Receivable 27,300 $ 27,300 c. Issued shares of common stock in exchange for $10,000 in cash: Common Stock Cash $ 10,000 $ 10.000

d. Paid salaries, $50,000 (of which $9,000 was for salaries payable at the end of the prior period: Salaries 41,000 Salaries Payable $ 9,000 Cash $ 50,000 e. Paid miscellaneous expense for various items, $24,000: Miscellaneous Expense Cash $ 24,000 $ 24,000 f. Purchased equipment for $15,000 in cash: Equipment Cash 15,000 $ 15,000 g. Paid $2,500 in cash dividends to shareholders: Dividends Cash 2,500 2,500

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