Question

At the beginning of Year 1, Oak Consulting had the following normal balances in its accounts:

Account	Balance
Cash	$	32,900
Accounts receivable		15,900
Accounts payable		10,800
Common stock		24,200
Retained earnings		13,800

The following events apply to Oak Consulting for Year 1:

1. Provided $68,000 of services on account.
2. Incurred $3,000 of operating expenses on account.
3. Collected $49,100 of accounts receivable.
4. Paid $35,300 cash for salaries expense.
5. Paid $12,420 cash as a partial payment on accounts payable.
6. Paid a $8,300 cash dividend to the stockholders.  
7. b & d. Post the beginning balances and the transactions from Parts a&d to the appropriate accounts
8. Show the beginning balances and the events in a horizontal statements model such as the following one:
9. d-1. Record the closing entries in the general journal
10. What is the amount of change in retained earnings for the year?
11. Prepare a post-closing trial balance. Thank you

Answer 1

Income Stmt heads + Oak Consulting Assets = Liabilties + Stockholders Equity Accounts = Accounts + Common + Retained No. Cash Receivable = Payable + Stock + Earnings + Revenues - Expenses - Dividends Op bal 32,900 15,900 = 10,800 + 24,200 + 13,800 + 68,000 68,000 3,000 + (3,000) - 49,100 (49,100) = (35,300) (35,300) - (12,420) (12,420) + (8,300) (8,300) Totals 25,980 34,800 = 1,380 + 24,200 + 13,800 + 68,000 - (38,300) - (8,300) Service Revenue Operating expense + + + Salaries expense + +

Credit Date Date Oak Consulting T Accounts Date Debit Date Cash Op bal $32,900 3 $ 49,100 Debit Date Credit Accounts Receivable $ 15,900 $ 68,000 3 $ 49,100 Debit Date Credit Accounts Payable Op bal $10,800 $ 12,420 2 $ 3,000 4 5 6 $ 35,300 Op bal $12,420 $ 8,300 1 5 Bal. Bal. $ 1,380 $ 25,980 Common Stock Op bal $ 34,800 Retained Earnings $ 38,300 Op bal $ 8,3001 Bal. Dividends $ 8,300 $ 24,200 6 C2 C3 $ 13,800 $ 68,000 C3 $ 8,300 $ 24,200 $ 35,200 Bal. Bal. Operating Expenses $ 3,000c2 Service Revenue $68,000 1 $ - Salaries Expenses $ 35,300 C2 ci $ 68,000 2 $3,000 4 $35,300 Bal. $ - Bal. $ . Bal. $ -

Oak Consulting Journal entries Debit $ 68,000 ci Service Revenue Retained Earnings $ 68,000 $ 38,300 C2 Retained Earnings Operating Expenses Salaries expense $ 3,000 $ 35,300 $ 8,300 C3 Retained Earnings Dividends $ 8,300

68,000 Oak Consulting Income Statement For year ended Dec 31 Service Revenue Expenses Operating Expenses Salaries expense Total Expenses Net Income 3,000 35,300 38,300 29,700 13,800 Statement of Retained Earnings For year ended Dec 31 Beginning balance Net Income Less Dividends paid Changes during the year Ending Balance 29,700 (8,300) 21,400 35,200 Reqd-2 Net income 29,700 Reqe Change in retained earnings 21,400

Oak Consulting Account Names Cash Accounts Receivable Accounts Payable Common Stock Retained Earnings Dividends Service Revenue Operating Expenses Salaries expense Totals Adjusted TB Debit Credit 25,980 34,800 1,380 24,200 13,800 8,300 68,000 3,000 35,300 107,380 107,380 Post Closing TB Debit Credit 25,980 34,800 1,380 24,200 35,200 60,780 60,780