Question

Required information [The following information applies to the questions displayed below.] On January 1, 2021, Red Flash Photography had the following balances: Cash, $20,000; Supplies, $8,800; Land, $68,000; Deferred Revenue, $5,800; Common Stock $58,000; and Retained Earnings, $33,000. During 2021, the company had the following transactions: 1. February 15 Issue additional shares of common stock, $28,000. 2. May 20 Provide services to customers for cash, $43,000, and on account, $38,000. 3. August 31 Pay salaries to employees for work in 2021, $31,000. 4. October 1 Purchase rental space for one year, $20,000. 5. November 17 Purchase supplies on account, $30,000. 6. December 30 Pay dividends, $2,800. The following information is available on December 31, 2021: 1. Employees are owed an additional $4,800 in salaries. 2. Three months of the rental space has expired. 3. Supplies of $5,800 remain on hand. 4. All of the services associated with the beginning deferred revenue have been performed.

Answer 1

Red Flash Photography Journal Enteries Date Particulars 15.2.2021 Cash a/c Dr. To Common Stock (Additional stock issued) Debit in $ Credit in $ 28000 28000 43000 38000 20.5.2021 Cash a/c Dr. Accounts Receivable a/c Dr. To Service Revenue (Services provided) 81000 Dr. 31000 31.8.2021 Salaries Expense a/c To Cash (Salaries paid) 31000 Dr. 20000 1.10.2021 Prepaid Rent a/c To Cash (1 year rental paid) 20000 30000 17.11.2021 Supplies a/c Dr. To Accounts Payable (Supplies on account) 30000 Dr. 2800 30.12.2021 Dividend a/c To Cash (dividend paid) 2800 Adjusting Enteries Date Particulars 31.12.2021 Salaries Expense a/c To Salaries Payable (Salary accrued) Dr. Debit in $ Credit in $ 4800 4800 5000 31.12.2021 Rent Expense a/c Dr. To Prepaid Rent (Rent expensed) 20000 x 3/12 5000 31.12.2021 Supplies Expense a/c Dr. 33000 To Supplies (Supplies expensed) 8800 + 30000 - 5800 33000 Dr. 5800 31.12.2021 Deferred Revenue a/c To Service Revenue (Services provided) 5800

Worksheet For the period ending 31.12.2021 Particulars Cash Accounts Receivable Supplies Prepaid Rent Land Accounts Payable Deferred Revenue Salaries Payable Common Stock Retained Earnings Dividend Service Revenue Salaries Expense Rent Expense Supplies Expense Totals Unadjusted Adjustment Adjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 37200 37200 38000 38000 38800 33000 5800 20000 5000 15000 68000 68000 30000 30000 5800 5800 4800 4800 86000 86000 33000 2800 2800 81000 5800 86800 31000 4800 35800 5000 5000 33000 33000 235800 235800 48600 4 8600240600240600 33000 86800 Statement of Income For the period ending 31.12.2021 Service Revenue Less: Salaries Expense Rent Expense Supplies Expense Net Income 35800 5000 33000 73800 13000 Statement of Stockholders Equity For the period ending 31.12.2021 Balance at 1.1.2021 Add:Issuance of Common Stock Add:Net Income Less:Dividends Balance at 31.12.2021 Common Retained Total Stock Earnings Stockholders 58000 33000 91000 28000 28000 13000 13000 -2800 - 2800 86000 43200 129200

Balance sheet As at 31.12.2021 Assets Current Assets Cash Accounts Receivable Supplies Prepaid Rent Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Current Liabilities 37200 Accounts Payable 30000 38000 Salaries Payable 4800 34800 5800 15000 96000 Stockholders Equity Common Stock 86000 68000 Retained Earnings 43200 129200 164000 Total Liabilities & Equity 164000 Non Current Assets Land Total Assets