Question

On January 1, 2020, Mr. Wild formed a corporation to provide services to clients. Information about the first year of operation follows:
	Jan. 1	Investors provided $1,500,000 in cash in exchange for stock of The Wild Corporation.
	Jan. 1	Purchased equipment in exchange for $100,000 cash and a $1,900,000 note payable at an annual rate of 5%, payable every 6 months.
	Jan. 1	Purchased $45,000 of insurance that will cover the next 3 years. This was recorded as prepaid insurance.
	Feb. 1	Purchased $5,000 of office supplies on account that will be needed during the upcoming year.
	Mar. 15	Paid Salaries of $20,000.
	Mar. 31	Billed customers for services in the amount of $500,000.
	Apr. 15	Paid the vendor who sold Wild the office supplies on Feb. 1.
	Apr. 30	Collected $400,000 on accounts receivable.
	June 15	Paid salaries of $40,000.
	June 30	Paid $4,000 for employee travel costs.
	June 30	Paid $10,000 for a company party.
	June 30	Paid the interest due and $400,000 to reduce the balance of the note payable.
	July 1	Billed customers for services provided in the amount of $750,000.
	Aug 1	Collected $200,000 on accounts receivable.
	Aug. 15	Purchased $15,000 of office supplies on account.
	Sept. 15	Paid salaries of $40,000.
	Sept. 30	Paid $25,000 for a customer appreciation event.
	Sept. 30	Paid $40,000 for employee travel costs incurred by staff.
	Dec. 1	Collected $300,000 as deposits from customers who contracted for 2021.
	Dec. 31	Declared and paid a $50,000 dividend to shareholders.
The Wild Corporation uses the following accounts in it's Chart of Accounts:
	Cash
	Accounts Receivable
	Office Supplies
	Prepaid Insurance
	Equipment
	Accumulated Depreciation
	Accounts Payable
	Interest Payable
	Unearned Revenue
	Notes Payable
	Capital Stock
	Retained Earnings
	Dividends
	Service Revenue
	Salaries Expense
	Meals & Entertainment Expense
	Travel Expense
	Insurance Expense
	Office Supplies Expense
	Interest Expense
	Depreciation Expense
	Income Summary
COMPLETE THE FOLLOWING:
(a)	Journalize the listed transactions.
(b)	Post the transactions to the appropriate general ledger accounts.
(c)	Prepare a trial balance as of December 31.
(d)	Journalize and post adjusting entries based on the following additional information.
	There was $6,000 of Office Supplies on hand at year.
	The equipment had 20-year life, with $200,000 salvage value.
	At year end, Wild Corp. had provided $90,000 of unbilled services to customers. These services will be billed in early 2018.
(e)	Prepare an adjusted trial balance as of December 31.
(f)	Prepare an income statement and Statement of Retained Earnings for 2016, and a classified Balance Sheet as of December 31.
(g)	Journalize and post closing entries.
(h)	Prepare a post-closing trial balance as of December 31.

Answer 1

The Wild Corporation. Journal Enteries Date Particulars 1.1.2020 Cash a/c To Common Stock (Capital invested) Dr. Debit in $ Credit in $ 1500000 1500000 1.1.2020 Dr. 2000000 Equipment a/c To Cash To Note Payable (Equipment purchased) 100000 1900000 1.1.2020 Dr. 45000 Prepaid Insurance a/c To Cash (3 years insurance paid) 45000 1.2.2020 Dr. 5000 Office Supplies a/c To Accounts Payable (Supplies on account) 5000 15.3.2020 Dr. 20000 Salaries Expense a/c To Cash (Salaries paid) 20000 31.3.2020 500000 Accounts Receivable a/c Dr. To Service Revenue (Services provided on account) 500000 Dr. 5000 15.4.2020 Accounts Payable a/c To Cash (Creditors paid) 5000 30.4.2020 400000 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 400000 15.6.2020 Dr. 40000 Salaries Expense a/c To Cash (Salaries paid) 40000

Date 30.6.2020 Dr. Particulars Travel Expense a/c To Cash (Travel expense paid) Debit in $ Credit in $ 4000 4000 30.6.2020 10000 Entertainment Expense a/c Dr. To Cash (Party expense) 10000 30.6.2020 Dr. Dr. 400000 47500 Note Payable a/c Interest Expense a/c To Cash (Note Payable payments) 1900000 x 5% x 1/2 447500 1.7.2020 750000 Accounts Receivable a/c Dr. To Service Revenue (Services provided on account) 750000 1.8.2020 200000 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 200000 15.8.2020 Dr. 15000 Office Supplies a/c To Accounts Payable (Supplies on account) 15000 15.9.2020 Dr. 40000 Salaries Expense a/c To Cash (Salaries paid) 40000 30.9.2020 Dr. 25000 Entertainment Expense a/c To Cash (Event expense) 25000 30.9.2020 Dr. 40000 Travel Expense a/c To Cash (Travel expense paid) 40000 1.12.2020 300000 Cash a/c Dr. To Unearned Revenue (Cash deposits from customers) 300000 Dr. 50000 31.12.2020 Dividend a/c To Cash (Dividend paid) 50000

Adjustin Enteris Date Particulars Debit in $ Credit in $ 31.12.2020 Supplies Expense a/c Dr. 14000 To Office Supplies 14000 (Supplies expensed) 5000 + 15000 - 6000 90000 90000 31.12.2020 Depreciation Expense a/c Dr. To Accum. Depreciation - Equip. (To record depreciation) (2000000 - 200000)/20 Dr. 90000 31.12.2020 Unearned Revenue a/c To Service Revenue (Revenue recognized) 90000 Cloisng Enteries Date Particulars 31.12.2020 Income Summary a/c Dr. To Salaries Expense To Travel Expense To Entertainment Expense To Interest Expense To Supplies Expense To Depreciation Expense (Expense accounts closed) Debit in $ Credit in $ 330500 100000 44000 35000 47500 14000 90000 Dr. 1340000 31.12.2020 Service Revenue a/c To Income Summary (Revenue accounts closed) 1340000 Dr. 1009500 31.12.2020 Income Summary a/c To Retained Earnings (Profits transferred) 1009500 Dr. 50000 31.12.2020 Retained Earnings a/c To Dividend (Dividends charged) 50000

Worksheet For the period ending 31.12.2020 Particulars Cash Accounts Receivable Prepaid Insurance Office Supplies Equipment Accum. Depreciation - Equip. Accounts Payable Unearned Revenue Note Payable Common Stock Retained Earnings Dividend Service Revenue Salaries Expense Travel Expense Entertainment Expense Interest Expense Supplies Expense Depreciation Expense Totals Unadjusted Adjustments Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 1573500 1573500 1573500 650000 650000 650000 45000 45000 45000 20000 14000 6000 6000 2000000 2000000 2000000 90000 90000 90000 15000 15000 15000 300000 90000 210000 210000 1500000 1500000 1500000 1500000 1500000 1500000 959500 50000 50000 1250000 90000 1340000 100000 100000 44000 44000 35000 35000 47500 47500 14000 14000 90000 90000 4565000 4565000 194000 194000 4655000 4655000 4274500 4274500 1340000 Statement of Income For the period ending 31.12.2020 Service Revenue Less: Salaries Expense Travel Expense Entertainment Expense Interest Expense Supplies Expense Depreciation Expense Net Income 100000 44000 35000 47500 14000 90000 330500 1009500 Statement of Retained Earnings For the period ending 31.12.2020 Net Income Less:Dividends 1009500 -50000 959500

Balance sheet As at 31.12.2020 Assets Current Assets Cash Accounts Receivable Prepaid Insurance Office Supplies Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Current Liabilities 1573500 Accounts Payable 15000 650000 Unearned Revenue 210000 225000 45000 6000 2274500 Non Current Liabilities Note Payable 1500000 Non Current Assets Equipment Accum. Depreciation - Total Assets 2000000 -90000 Shareholders Equity Common Stock 1910000 Retained Earnings 4184500 Total Liabilities & Equity 1500000 959500 2459500 4184500