Question

Alison and Chuck Renny began operations of their furniture repair shop (Lazy Sofa Furniture, Inc.) on January 1, 2017. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (amounts are rounded to thousands of dollars to simplify).

Account Titles	Debit				Credit
Cash	$	4
Accounts Receivable		5
Supplies		1
Equipment		7
Accumulated Depreciation					$	0
Software		11
Accumulated Amortization						5
Accounts Payable						8
Notes Payable (long-term)						0
Salaries and Wages Payable						0
Interest Payable						0
Income Tax Payable						0
Deferred Revenue						0
Common Stock						10
Retained Earnings						5
Service Revenue						0
Supplies Expense		0
Depreciation Expense		0
Salaries and Wages Expense		0
Amortization Expense		0
Interest Expense		0
Income Tax Expense		0
Totals	$	28			$	28

Transactions during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $14 cash on July 1, 2018, signing a six-month note payable.
2. Purchased equipment for $16 cash on July 2.
3. Issued additional shares of common stock on July 3 for $6.
4. Purchased additional equipment on August 4, $2 cash.
5. Purchased, on account, supplies on September 5 for future use, $8.
6. On December 6, recorded revenues in the amount of $56, including $7 on credit and $49 received in cash.
7. Paid salaries and wages expenses on December 7, $26.
8. Collected accounts receivable on December 8, $9.
9. Paid accounts payable on December 9, $12.
10. Received a $5 deposit on December 10 for work to start January 15, 2019.

Data for adjusting journal entries on December 31:

11. Amortization for 2018, $5.
12. Supplies of $6 were counted on December 31, 2018.
13. Depreciation for 2018, $3.
14. Accrued interest on notes payable of $1.
15. Wages earned but not yet paid, $4.
16. Income tax for 2018 was $6 and will be paid in 2019.

Required:

2. Record journal entries for transactions (a) through (j). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)

3. 1, 3, 5 and 8. Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions a-j, adjusting entries k-p, and closing entry. (Enter your answers in thousands of dollars.)

4. Prepare an unadjusted trial balance. (Enter your answers in thousands of dollars.)
5. Record adjusting journal entries (k) through (p). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in thousands of dollars.)
6. Post the adjusting entries from requirement 4 and prepare an adjusted trial balance. (Enter your answers in thousands of dollars.)

Answer 1

Note - As per HomeworkLib guidlines we are allowed to process 1 question at a time. When there are multiple questions we can do 1st one. Also only 4 sub-questions in a single question.

1. Journal Entries -

Date Lazy Sofa Furniture, Inc. Journal Entries Accounts Title Debit $' 000 Cash $ 14 Notes Payable (Being Borrowed Fund) Credit $'000 July 1 $ 14 July 2 Equipment $ 16 Cash (Being Equipment Purchased) $ 16 6 July 3 Cash $ Common stock (Being Common Stock Issued) $ 6 2 Aug 4 Equipment $ Cash (Being Equipment Purchased) $ 2 8 Sept 5 Supplies $ Accounts Payable (Being Supplies Purchased) $ 8 Dec 6 Cash $ 49 Accounts Receivable $ 7 Service Revenue (Being Service Revenue Earned) $ 56 Dec 7 Salaries and Wages Expense $ 26 Cash $ (Being Salaries and Wages Expense paid) 26 Dec 8 9 Cash $ Accounts Receivable (Being Amount received on account) $ 9 Dec 9 Accounts Payable $ 12 Cash (Being Payment made on account) $ 12 Dec 10 Cash $ 5 Unearned Revenue (Being amount received in advance) 5

2. Unadjusted Trial Balance -

ol $ Lazy Sofa Furniture, Inc. Unadjusted Trial Balance For the Year Ended December 31, 2018 Account Titles Debit Credit $'000 $'000 Cash $ 31 Accounts Receivable $ 3 Supplies $ Equipment $ 25 Accumulated Depreciation $ Software $ 11 Accumulated Amortization $ 5 Accounts Payable $ 4 Notes Payable (long-term) $ 14 Salaries and Wages Payable $ Interest Payable $ Income Tax Payable $ Deferred Revenue $ 5 Common Stock $ 16 Retained Earnings $ 5 Service Revenue $ 56 Supplies Expense $ Depreciation Expense $ Salaries and Wages Expense $ 26 Amortization Expense $ Interest Expense $ Income Tax Expense $ Totals $ 105 $ 105

3. Adjusting Entries -

Date Lazy Sofa Furniture, Inc. Adjusting Entries Accounts Title Debit $' 000 Amortization Expense $ 5 Accumulated Amortization (Being Amortisation Expense incurred) Credit $'000 a $ 5 b 6 Supplies Expense $ Supplies (Being Supplies Expense incurred) $ 6 с Depreciation Expense $ 3 Accumulated Depreciation (Being Depreciation Expense incurred) $ 3 1 d Interest Expense $ Interest Payable $ (Being Interest Expense incurred and Accrued) 1 e 4 Salaries and Wages Expense $ Salaries and Wages Payable (Being Salaries and Wages accrued) $ 4 f 6 Income Tax Expense $ Income Tax Payable (Being income tax expense incurred) 6

4. Adjusted Trial Balance -

Ululu 3 Lazy Sofa Furniture, Inc. Adjusted Trial Balance For the Year Ended December 31, 2018 Account Titles Debit Credit $'000 $'000 Cash $ 31 Accounts Receivable $ 3 Supplies $ Equipment $ 25 Accumulated Depreciation $ 3 Software $ 11 Accumulated Amortization $ 10 Accounts Payable $ 4 Notes Payable (long-term) $ 14 Salaries and Wages Payable $ 4 Interest Payable $ 1 Income Tax Payable $ 6 Deferred Revenue $ 5 Common Stock $ 16 Retained Earnings $ 5 Service Revenue $ 56 Supplies Expense $ 6 Depreciation Expense $ 3 Salaries and Wages Expense $ 30 Amortization Expense $ 5 Interest Expense $ Income Tax Expense $ 6 1 Totals $ 124 $ 124

5. Closing Entries -

Date Lazy Sofa Furniture, Inc. Closing Entries Accounts Title Debit $' 000 Service Revenue $ 56 Income Summary (Being Revenue Account Closed) Credit $'000 1 $ $ 56 2 $ 6 3 30 Income Summary $ 51 Supplies Expense Depreciation Expense Salaries and Wages Expense Amortization Expense Interest Expense Income Tax Expense (Being Expense accounts Closed) $ $ $ $ $ $ 5 1 6 $ 5 3 Income Summary $ 5 Retained Earnings $ (Being Balance transferred to Retained Earnings) $ 5