Question

Required information The following information applies to the questions displayed below.] Colton Enterprises experienced the following events for Year 1, the first year of operation: 1. Acquired $47,000 cash from the issue of common stock. 2. Paid $13,200 cash in advance for rent. The payment was for the period April 1, Year 1, to March 31, Year 2 3. Performed services for customers on account for $96,000. 4. Incurred operating expenses on account of $41,000. 5. Collected $73,500 cash from accounts receivable. 6. Paid $33,000 cash for salary expense. 7. Paid $32,800 cash as a partial payment on accounts payable. Adjusting Entries 8. Made the adjusting entry for the expired rent. (See Event 2.) 9. Recorded $4,800 of accrued salaries at the end of Year 1. Events for Year 2 1. Paid $4,800 cash for the salaries accrued at the end of the prior accounting period. 2. Performed services for cash of $45,000. 3. Purchased $4,000 of supplies on account 4. Paid $14,100 cash in advance for rent. The payment was for one year beginning April 1, Year 2. 5. Performed services for customers on account for $112,000.

Answer 1

K M Ο 1 2 Credit ($) Date a. $ 96,000 L Ν Closing Journal Entries - Year - 1 Account Titles Debit ($) Service Revenue $ 96,000 Retained Earnings (To close revenue accounts) Retained Earnings $ 85,400 Operating Expenses Salaries and Wages Expense Rent Expense (To close expenses accounts) b. 6 7 8 $ 41,000 $ 37,800 $ 6,600 9 10 11

D I E F G H Year - 1 Accounts Receivable Beg. Bal. 3 $ 96,000 $ 73,500 5 A B C 1 2 Cash 3 Beg. Bal. $ 13,200 4 1 $ 47,000 $33,000 5 5 $ 73,500 $ 32,800 6 End. Bal. $ 41,500 7 Prepaid Rent 9 Beg. Bal. 10 2 $ 13,200 $ 6,6008 7 End. Bal. $ 22,500 8 Accounts Payable Beg. Bal. 7 $32,800 $41,000 4 11 12 End. Bal. $ 6,600 End. Bal. $ 8,200 13 Salaries Payable 14 15 Beg. Bal. 16 Common Stock $ 47,000 Beg. Bal. $ 4,800 17 $ 4,800 End. Bal. $ 47,000 Retained Earnings 18 End. Bal. 19 20 21 Beg. Bal. 22 b. 23 b. 24 b. 25 End. Bal. 26 3 Service Revenue $ 96,000 $ 96,000 Beg. Bal. a. $ 41,000 $ 96,000 $ 37,800 $ 6,600 $ 10,600 End. Bal. $

D E F G H I Rent Expense b. Beg. Bal. 8 $ 6,600 $ 6,600 b. End. Bal. $ - 2 A B C 26 27 Operating Expenses 28 Beg. Bal. 29 4 $ 41,000 $41,000 30 31 32 End. Bal. $ . 33 34 Salaries Expense 35 Beg. Bal. 36 6 $ 33,000 $37,800 37 9 $ 4,800 38 39 End. Bal. $ . 40 b.

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