Question

Acquired $54,000 cash from the issue of common stock. Paid $13,900 cash in advance for rent....

Acquired $54,000 cash from the issue of common stock.
Paid $13,900 cash in advance for rent. The payment was for the period April 1, Year 1, to March 31, Year 2.
Performed services for customers on account for $110,000.
Incurred operating expenses on account of $44,500.
Collected $84,000 cash from accounts receivable.
Paid $40,000 cash for salary expense.
Paid $35,600 cash as a partial payment on accounts payable.


Adjusting Entries

Made the adjusting entry for the expired rent. (See Event 2.)
Recorded $6,200 of accrued salaries at the end of Year 1.


Events for Year 2

Paid $6,200 cash for the salaries accrued at the end of the prior accounting period.
Performed services for cash of $59,000.
Purchased $4,700 of supplies on account.
Paid $16,200 cash in advance for rent. The payment was for one year beginning April 1, Year 2.
Performed services for customers on account for $126,000.
Incurred operating expenses on account of $60,500.
Collected $108,000 cash from accounts receivable.
Paid $58,000 cash as a partial payment on accounts payable.
Paid $33,400 cash for salary expense.
Paid a $10,000 cash dividend to stockholders.
Adjusting Entries

Made the adjusting entry for the expired rent. (Hint: Part of the rent was paid in Year 1.)
Recorded supplies expense. A physical count showed that $400 of supplies were still on hand.


A. Record the events and adjusting entries for Year 1 in general journal form

B. Post the Year 1 events to T-accounts.

C.Prepare a trial balance for Year 1.

D. Prepare an income statement for Year 1.

E. Prepare a statement of changes in stockholders’ equity for Year 1.

F. Prepare a balance sheet for Year 1.

G. Prepare a statement of cash flows for Year 1.

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

I. Prepare a post-closing trial balance for December 31, Year 1

J. Repeat parts a through i for Year 2.

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Answer #1

Debit Credit Calculation Journal entries Date Account Year 1 1 Cash Common Stock $ 54,000 $ 54,000 2 $ 13,900 Prepaid Rent CaT Accounts Date Debit Credit Date Credit Date Credit Date Credit Date Cash Debit Date Accounts Receivable Debit Date PrepaidAdjusted TB Year 1 Debit Credit 48,500 26,000 3,475 Company Trial Balance Cash Accounts Receivable Prepaid Rent Supplies Acco

110,000 Company Income Statement For year ended Dec 31, Year 1 Service Revenue Operating expenses Operating Expenses SalariesCompany Balance Sheet As of Dec 31, Year 1 Assets Cash Accounts Receivable Prepaid Rent Total Assets 48,500 26,000 3,475 77,9

Company Calculation Statement of cashflows For year ended Dec 31, Year 1 Cashflows from operating activities Received from cu

Post-Closing TB Year 1 Debit Credit 48,500 26,000 3,475 Company Trial Balance Cash Accounts Receivable Prepaid Rent Supplies

YEAR 2

Credit Calculation Year 2 Date Account 1 Salaries Payable Cash Debit $ 6,200 $ 6,200 2 $ 59,000 Cash Service Revenue $ 59,000

Credit Date Date Credit Date Credit Colton Enterprises T Accounts Date Debit Date Cash Year 1 1 $ 54,000 5 $ 84,000 Debit DatAdjusted TB Year 2 Debit Credit 91,700 44,000 4,050 400 16,100 Company Trial Balance Cash Accounts Receivable Prepaid Rent Su

185,000 Company Income Statement For year ended Dec 31, Year 2 Service Revenue Operating expenses Operating Expenses SalariesCompany Balance Sheet As of Dec 31, Year 2 Assets Cash Accounts Receivable Prepaid Rent Supplies Total Assets 91,700 44,000 4Company Statement of cashflows For year ended Dec 31, Year 2 Cashflows from operating activities Received from customers PaidPost-Closing TB Year 2 Debit Credit 91,700 44,000 4,050 400 16,100 Company Trial Balance Cash Accounts Receivable Prepaid Ren

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