Question

The following events apply to Montgomery Company for Year 1, its first year of operation: 1. Received cash of $46,000 from the issue of common stock. 2. Performed $65,000 of services on account. 3. Incurred $9,900 of other operating expenses on account. 4. Paid $38,000 cash for salaries expense. 5. Collected $43,000 of accounts receivable. 6. Paid a $4,700 dividend to the stockholders. 7. Performed $11,200 of services for cash. 8. Paid $7,200 of the accounts payable. Required a. Record the preceding transactions in general journal form. b. Post the entries to T-accounts and determine the ending balance in each account. c. & d. Determine the amount of total assets at the end of Year 1, and the amount of net income for Year 1.

I just need to know the amount of total assets and net income, ignore the rest. Thanks!

Answer 1

Ans:

a. Journal Entry
S. No.	Account title & Explanation	Debit	Credit
1	Cash	$46,000
	Common Stock		$46,000
	To Record Issuance of Common Stock
2	Accounts Receivable	$65,000
	Service Revenue		$65,000
	To Record Service Revenue
3	Other operating expenses	$9,900
	Accounts Payable		$9,900
	To Record Operating Expense
4	Salaries expense	$38,000
	Cash		$38,000
	To Record Operating Expense
5	Cash	$43,000
	Accounts Receivable		$43,000
	To Record received AR
6	Dividends	$4,700
	Cash		$4,700
	To Record Dividend Paid
7	Cash	$11,200
	Service Revenue		$11,200
	To Record Service Revenue
8	Accounts Payable	$7,200
	Cash		$7,200
	To Record Payment made to AP

b:- T's Account
Cash
Beg. Bal.	0
1	$46,000	$38,000	4
5	$43,000	$4,700	6
7	$11,200	$7,200	8
End. Bal.	$50,300

Accounts Payable
Beg. Bal.		0
8	$7,200	$9,900	3
End. Bal.		$2,700

Dividends
Beg. Bal.	$0
6	$4,700
End. Bal.	$4,700
Salaries expense
Beg. Bal.	$0
4	$38,000
End. Bal.	$38,000

Accounts Receivable
Beg. Bal.	0
2	$65,000
		$43,000	5
End Bal	$22,000
Common Stock
Beg. Bal.
		$46,000	1
End. Bal.		$46,000
Service Revenue
Beg. Bal.		$0
		$65,000	2
		$11,200	7
End. Bal.		$76,200
Other operating expenses
Beg. Bal.	$0
3	$9,900
End. Bal.	$9,900

Computation of Total Amount of Asset
Cash		$50,300
Account Receivable		$22,000
Total Asset		$72300
Computation of Net Income
Service Revenue		$76,200
Less: Salaries Expense		$38,000
Other Operating expense		$9,900
Net income		$28,300

Hope this helped ! Let me know in case of any queries.