Question

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The following transactions pertain to Smith Training Company for Year 1:

Jan.	30		Established the business when it acquired $47,000 cash from the issue of common stock.
Feb.	1		Paid rent for office space for two years, $15,100 cash.
Apr.	10		Purchased $880 of supplies on account.
July	1		Received $29,000 cash in advance for services to be provided over the next year.
	20		Paid $660 of the accounts payable from April 10.
Aug.	15		Billed a customer $9,700 for services provided during August.
Sept.	15		Completed a job and received $2,500 cash for services rendered.
Oct.	1		Paid employee salaries of $31,000 cash.
	15		Received $8,500 cash from accounts receivable.
Nov.	16		Billed customers $33,000 for services rendered on account.
Dec.	1		Paid a dividend of $500 cash to the stockholders.
	31		Adjusted records to recognize the services provided on the contract of July 1.
	31		Recorded $2,400 of accrued salaries as of December 31.
	31		Recorded the rent expense for the year. (See February 1.)
	31		Physically counted supplies; $120 was on hand at the end of the period.

Required
a. Record the preceding transactions in the general journal, in the given order.

b. Post the transactions to T-accounts and calculate the account balances.

c. Prepare a trial balance.

d. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Year 1.

e. Record the entries to close the Year 1 temporary accounts to Retained Earnings in the general journal and post to the T-accounts.

f. Prepare a post-closing trial balance for Year 1.

Answer 1

Smith Training Company Journal Enteries Date Particulars Jan-30 Cash a/c Dr. To Common Stock (Common Stock issued) Debit in $ Credit in $ 47000 47000 15100 Feb-01 Prepaid Rent a/c Dr. To Cash (Rent paid for 2 years) 15100 Apr-10 880 Supplies a/c Dr. To Accounts Payable (Supplies on account) 880 Jul-01 29000 Cash a/c Dr. To Unearned Revenue (Advance from client) 29000 Jul-20 660 Accounts Payable a/c Dr. To Cash (Creditors paid) 660 9700 Aug-15 Accounts Receivable a/c Dr. To Service Revenue (Services on account) 9700 Dr. 2500 Sep-15 Cash a/c To Service Revenue (Services provided for cash) 2500 Dr. 31000 Oct-01 Salaries Expense a/c To Cash (Salary paid) 31000 Oct-15 Dr. 8500 Cash a/c To Accounts Receivable (Cash from debtors) 8500 33000 Nov-16 Accounts Receivable a/c Dr. To Service Revenue (Services on account) 33000 Dr. 500 Dec-01 Dividend a/c To Cash (Dividend paid) 500

Adjusting Enteries Date Particulars Debit in $ Credit in $ Dec-31 Unearned Revenue a/c Dr. 14500 To Service Revenue 14500 (Revenue recognized) 29000 x 6/12 2400 Dec-31 Salaries Expense a/c Dr. To Salaries Payable (Salary accrued) 2400 6920.833 Dec-31 Rent Expense a/c Dr. To Prepaid Rent (Rent Expensed)15100 x 11/24 6920.8333 760 Dec-31 Supplies Expense a/c Dr. To Supplies (Supplies Expensed) 880-120 760 Closing Enteries Date Particulars Dec-31 Income Summary a/c Dr. To Salaries Expense To Rent Expense To Supplies Expense (Expense accounts closed) Debit in $ Credit in $ 41081 33400 6921 760 59700 Dec-31 Service Revenue a/c Dr. To Income Summary (Revenue accounts closed) 59700 Dec-31 Income Summary a/c Dr. To Retained Earnings (Profits transferred) 18619 Dr. 500 Dec-31 Retained Earnings a/c To Dividend (Dividend charged) 500

Worksheet For the period ending Dec 31, Year 1 Particulars Cash Accounts Receivable Prepaid Rent Supplies Accounts Payable Salaries Payable Unearned Revenue Common Stock Retained Earnings Dividend Service Revenue Salaries Expense Rent Expense Supplies Expense Totals Unadjusted Adjustments Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 39740 39740 39740 34200 34200 34200 15100 6921 8179 8179 880 760 120 120 220 220 220 2400 2400 2400 29000 14500 14500 14500 47000 47000 47000 18119 500 500 45200 14500 59700 31000 2400 33400 6921 6921 760 760 121420 121420 24581 24581 123820 123820 82239 8 2239 59700 Statement of Income For the period ending Dec 31, Year 1 Service Revenue Less: Salaries Expense Rent Expense Supplies Expense Net Income 33400 6921 760 41081 18619.167 Statement of Retained Earnings For the period ending Dec 31, Year 1 Net Income Less:Dividends 18619 -500 18119

Amounts in $ Amounts in $ Balance sheet As at Dec 31, Year 1 Assets Current Assets Cash Accounts Receivable Prepaid Rent Supplies Amounts in $ Amounts in $ Liabilities Current Liabilities 39740 Accounts Payable 34200 Salaries Payable 8179 Unearned Revenue 120 82239 220 2400 14500 17120 Shareholders Equity Common Stock Retained Earnings 82239 Total Liabilities & Equity 47000 18119 65119 82239 Total Assets