Question

Credits Debits 30,000 15,000 20,000 Account Title 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 summary of the transactions for the year: a. Service revenue, $100,000, of which $30,000 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. 1. Accrued salaries at year-end amounted to $1,000. 2. Depreciation for the year on the equipment is $2,000. Required: 2., 5, & 8. Prepare the summary, adjusting and closing entries for each of the transactions listed. 3. Post the transactions, adjusting and closing entries into the appropriate t-accounts. 4. Prepare an unadjusted trial balance. 6. Prepare an adjusted trial balance. 7-a. Prepare an income statement for 2021. 7-b. Prepare a balance sheet as of December 31, 2021. 9. Prepare a post-closing trial balance.

Answer 1

Requirement 2,5&8:

Journal entries:

	Account title and explanation	Debit	Credit
a	Cash	$70,000
	Accounts receivable	$30,000
	Service revenue		$100,000
	[To record service revenue]
b	Cash	$27,300
	Accounts receivable		$27,300
	[To record collections from customers]
c	Cash	$10,000
	Common stock		$10,000
	[To record issuance of common stock]
d	Salaries payable	$9,000
	Salaries expense	$41,000
	Cash		$50,000
	[To record payment of salaries]
e	Miscellaneous expense	$24,000
	Cash		$24,000
	[To record miscellaneous expense]
f	Equipment	$15,000
	Cash		$15,000
	[To record purchase of equipment]
g	Dividends	$2,500
	Cash		$2,500
	[To record payment of dividends]

Adjusting entries:

	Account title and explanation	Debit	Credit
Adj.1	Salaries expense	$1,000
	Salaries payable		$1,000
	[To record accrued salaries expense]
Adj.2	Depreciation expenses	$2,000
	Accumulated depreciation		$2,000
	[To record depreciation expense]

Closing Entries:

	Account title and explanation	Debit	Credit
Cl.1	Service revenue	$100,000
	Income Summary		$100,000
	[To close revenue accounts]
Cl.2	Income Summary	$68,000
	Salaries expense		$42,000
	Miscellaneous expense		$24,000
	Depreciation expense		$2,000
	[To close expenses accounts]
Cl.3	Income Summary	$32,000
	Retained earnings		$32,000
	[To close income summary account]
Cl.4	Retained earnings	$2,500
	Dividends		$2,500
	[To close dividends account]

Requirement 3:

Cash					Retained Earning
Beg.Bal.	$30,000	d	$50,000		Cl.4	$2,500	Beg. Bal.	$9,500
a	$70,000	e	$24,000				Cl.3	$32,000
b	$27,300	f	$15,000				End. Bal.	$39,000
c	$10,000	g	$2,500
End. Bal.	$45,800				Dividends
					g	$2,500	Cl.4	$2,500
Accounts receivable
Beg.Bal.	$15,000	b	$27,300		Service Revenue
a	$30,000				Cl.1	$100,000	a	$100,000
End. Bal.	$17,700
					Salaries expense
Equipment					d	$41,000	Cl.2	$42,000
Beg.Bal.	$20,000				Adj.2	$1,000
f	$15,000
End. Bal.	$35,000				Miscellaneous expense
					e	$24,000	Cl.2	$24,000
Accumulated depreciation
		Beg.Bal.	$6,000		Depreciation expense
		Adj.2	$2,000		Adj.2	$2,000	Cl.2	$2,000
		End. Bal.	$8,000
					Income Summary
Salaries payable					Cl.2	$68,000	Cl.1	$100,000
d	$9,000	Beg.Bal.	$9,000		Cl.3	$32,000
		Adj.1	$1,000
		End. Bal.	$1,000
Common stock
		Beg. Bal.	$40,500
		c	$10,000
		End. Bal.	$50,500

Requirement 4:

Unadjusted Trial Balance
Account title	Debit	Credit
Cash	$45,800
Accounts receivable	$17,700
Equipment	$35,000
Accumulated depreciation		$6,000
Common stock		$50,500
Retained earnings		$9,500
Dividends	$2,500
Service revenue		$100,000
Salaries expense	$41,000
Miscellaneous expense	$24,000
Total	$166,000	$166,000

Requirement 6:

Adjusted Trial balance
Account title	Debit	Credit
Cash	$45,800
Accounts receivable	$17,700
Equipment	$35,000
Accumulated depreciation		$8,000
Salaries payable		$1,000
Common stock		$50,500
Retained earnings		$9,500
Dividends	$2,500
Service revenue		$100,000
Salaries expense	$42,000
Miscellaneous expense	$24,000
Depreciation expense	$2,000
Total	$169,000	$169,000

Requirement 7a:

Income Statement
For the year ended December 31,2021
Revenues:
Service revenue		$100,000
Expenses:
Salaries expense	$42,000
Miscellaneous expense	$24,000
Depreciation expense	$2,000
Total expenses		$68,000
Net income		$32,000

Requirement 7b:

Balance sheet
For the year ended December 31,2021
Assets		Liabilities and stockholder's equity
Cash	$45,800	Liabilities:
Accounts receivable	$17,700	Salaries payable	$1,000
Equipment	$35,000	Stockholder's equity:
Accumulated depreciation	($8,000)	Common stock	$50,500
		Retained earnings	$39,000
Total Assets	$90,500	Total liabilities and stockholder's equity	$90,500

Requirement 9:

Post-closing Trial balance
Account title	Debit	Credit
Cash	$45,800
Accounts receivable	$17,700
Equipment	$35,000
Accumulated depreciation		$8,000
Salaries payable		$1,000
Common stock		$50,500
Retained earnings		$39,000
Total	$98,500	$98,500