Question

Required information Problem 3-32A Comprehensive problem: single cycle LO 3-1, 3-2, 3-3, 3-4 [The following information applies to the questions displayed below.) The following transactions pertain to Smith Training Company for Year 1: Jan. 30 Established the business when it acquired $45,000 cash from the issue of common stock. Feb. 1 Paid rent for office space for two years, $24,000 cash. Apr. 10 Purchased $3,200 of supplies on account. July 1 Received $24,000 cash in advance for services to be provided over the next year. 20 Paid $1,500 of the accounts payable from April 10. Aug. 15 Billed a customer $18,000 for services provided during August. Sept. 15 Completed a job and received $8,400 cash for services rendered. Oct. 1 Paid employee salaries of $12,000 cash. 15 Received $15,000 cash from accounts receivable. Nov. 16 Billed customers $42,000 for services rendered on account. Dec. 1 Paid a dividend of $15,000 cash to the stockholders. 31 Adjusted records to recognize the services provided on the contract of July 1. 31 Recorded $3,600 of accrued salaries as of December 31. 31 Recorded the rent expense for the year. (See February 1.) 31 Physically counted supplies; $280 was on hand at the end of the period.

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 $ 45000 45000 24000 Feb-01 Prepaid Rent a/c Dr. To Cash (Rent paid for 2 years) 24000 3200 Apr-10 Supplies a/c Dr. To Accounts Payable (Supplies on account) 3200 24000 Jul-01 Cash a/c Dr. To Unearned Revenue (Advance from client) 24000 Jul-20 1500 Accounts Payable a/c Dr. To Cash (Creditors paid) 1500 18000 Aug-15 Accounts Receivable a/c Dr. To Service Revenue (Services on account) 18000 8400 Sep-15 Cash a/c Dr. To Service Revenue (Services provided for cash) 8400 Dr. 12000 Oct-01 Salaries Expense a/c To Cash (Salary paid) 12000 Oct-15 15000 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 15000 42000 Nov-16 Accounts Receivable a/c Dr. To Service Revenue (Services on account) 42000 Dr. 15000 Dec-01 Dividend a/c To Cash (Dividend paid) 15000 Adjusting Enteries Date Particulars Debit in $ Credit in $ Dec-31 Unearned Revenue a/c Dr. 12000 To Service Revenue 12000 (Revenue recognized) 24000 x 6/12 3600 Dec-31 Salaries Expense a/c Dr. To Salaries Payable (Salary accrued) 3600 11000 Dec-31 Rent Expense a/c Dr. To Prepaid Rent (Rent Expensed)24000 x 11/24 11000 2920 Dec-31 Supplies Expense a/c Dr. To Supplies (Supplies Expensed) 3200 - 280 2920

Closing Enteries Date Particulars Dec-31 Income Summary Salaries Expense Rent Expense Supplies Expense (Expense accounts closed) Debit in $ Credit in $ 29520 15600 11000 2920 80400 Dec-31 Service Revenue Income Summary (Revenue accounts closed) 80400 50880 Dec-31 Income Summary Retained Earnings (Profits transferred) 50880 15000 Dec-31 Retained Earnings Dividends (Dividend account closed) 15000