Question

Required information The following information applies to the questions displayed below.) On January 1, 2021, the general ledger of Grand Finale Fireworks includes the following account balances: Accounts Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Accounts Payable Common Stock 1 par value Additional Paid-in Capital Retained Earnings Totals Debit Credit $ 44,100 47,300 8.900 78,000 $ 10,400 16.000 14.000 94.000 43,900 $178,300 $178,300 During January 2021, the following transactions occur: January 2 Issue an additional 2,000 shares of $1 par value common stock for $40,000. January 9 Provide services to customers on account, $18, 200. January 10 Purchase additional supplies on account, $6,300. January 12 Purchase 1,100 shares of treasury stock for $21 per share January 15 Pay cash on accounts payable, $17,900. January 21 Provide services to customers for cash, $50, 500. January 22 Receive cash on accounts receivable, $18,000. January 29 Declare a cash dividend of $0.30 per share to all shares outstanding on January 29. The dividend is payable on February 15. (Hint: Grand Finale Fireworks had 14,000 shares outstanding on January 1, 2021, and dividends are not paid on treasury stock.) January 30 Resell B00 shares of treasury stock for $23 per share. January 31 Pay cash for salaries during January, $43,400.

Answer 1

January transactions:

Date	Account title and explanation	Debit	Credit
Jan 2	Cash	$40,000
	Common stock		$2,000
	Additional paid-in capital		$38,000
	[Issuance of common stock for cash]
Jan 9	Accounts receivable	$18,200
	Service revenue		$18,200
	[Services performed on account]
Jan 10	Supplies	$6,300
	Accounts payable		$6,300
	[Purchase of supplies on account]
Jan 12	Treasury stock [1,100 x $21]	$23,100
	Cash		$23,100
	[Repurchase of own shares]
Jan 15	Accounts payable	$17,900
	Cash		$17,900
	[Paid for accounts payable]
Jan 21	Cash	$50,500
	Service revenue		$50,500
	[Services performed for cash]
Jan 22	Cash	$18,000
	Accounts receivable		$18,000
	[Cash collected from customers]
Jan 29	Dividends [14,900 x $0.30]	$4,470
	Dividends payable		$4,470
	[Declaration of cash dividends]
Jan 30	Cash [800 x $23]	$18,400
	Treasury stock [800 x $21]		$16,800
	Additional paid-in capital from treasury stock		$1,600
	[Resell 800 shares of treasury stock]
Jan 31	Salaries expense	$43,400
	Cash		$43,400
	[Paid salaries for cash]

Adjusting entries:

Date	Account title and explanation	Debit	Credit
Jan 31	Utilities expense	$7,600
	Utilities payable		$7,600
Jan 31	Supplies expense [8,900+6,300-6,500]	$8,700
	Supplies		$8,700
Jan 31	Depreciation expense {[78,000-11,400]/3} x 1/12	$1,850
	Accumulated depreciation-Equipment		$1,850
Jan 31	Income tax expense	$2,500
	Income tax payable		$2,500

Adjusted Trial balance:

GRAND FINALE FIREWORKS
Adjusted Trial Balance
Jan 31,2011
Account title and explanation	Debit	Credit
Cash	$86,600
Accounts receivable	$47,500
Supplies	$6,500
Equipment	$78,000
Accumulated depreciation		$12,250
Accounts payable		$4,400
Dividends payable		$4,470
Income tax payable		$2,500
Utilities payable		$7,600
Common stock		$16,000
Additional paid-in capital		$132,000
Additional paid-in capital from treasury stock		$1,600
Retained earnings		$43,900
Treasury stock	$6,300
Dividends	$4,470
Service revenue		$68,700
Salaries expense	$43,400
Depreciation expense {[78,000-11,400]/3} x 1/12	$1,850
Income tax expense	$2,500
Utilities expense	$7,600
Supplies expense	$8,700
Total	$293,420	$293,420

Income Statement:

GRAND FINALE FIREWORKS
Income Statement
Jan 31,2011
Revenues:
Service revenue	$68,700
Total revenues	$68,700
Expenses:
Salaries expense	$43,400
Depreciation expense	$1,850
Utilities expense	$7,600
Supplies expense	$8,700
Total expenses	$61,550
Income before Taxes	$7,150
Income tax expense	$2,500
Net income	$4,650

Balance Sheet:

GRAND FINALE FIREWORKS
Balance Sheet
Jan 31,2011
Assets		Liabilities and stockholders' equity
Current assets:		Current liabilities:
Cash	$86,600	Accounts payable	$4,400
Accounts receivable	$47,500	Dividends payable	$4,470
Supplies	$6,500	Income tax payable	$2,500
Total current assets	$140,600	Utilities payable	$7,600
Property,plant, and equipment:		Total current liabilities	$18,970
Equipment	$78,000	Stockholders' equity:
Accumulated depreciation	($12,250)	Common stock	$16,000
Net Property,plant, and equipment	$65,750	Additional paid-in capital	$132,000
		Additional paid-in capital from treasury stock	$1,600
		Retained earnings*	$44,080
		Treasury stock	($6,300)
		Total stockholders' equity	$187,380
Total assets	$206,350	Total liabilities and stockholders' equity	$206,350

*

Retained earnings
Beginning	$43,900
Net income	$4,650
Dividends	($4,470)
Ending	$44,080

Closing entries:

Date	Account title and explanation	Debit	Credit
Jan 31	Service revenue	$68,700
	Income summary		$68,700
	[To close revenue accounts
Jan 31	Income summary	$64,050
	Salaries expense		$43,400
	Depreciation expense		$1,850
	Utilities expense		$7,600
	Supplies expense		$8,700
	Income tax expense		$2,500
	[To close expenses account]
Jan 31	Income summary	$4,650
	Retained earnings		$4,650
	[To close income summary account]
Jan 31	Retained earnings	$4,470
	Dividends		$4,470
	[To close dividends accounts]