Question

Significant Technologies Corporation had the following transactions in the month of August.

1. Significant Technologies received $100,000 cash in exchange for shares of Significant Technologies' common stock.
2. Purchased store equipment for $11,000 cash.
3. Provided services for cash of $9,000.
4. Provided services on credit for $20,000.
5. Received bill and paid utilities of $5,000.
6. Paid sales salaries of $8,000. Ignore withholding and related payroll taxes.
7. Incurred legal fees of $6,000 to be paid later.
8. Declared and paid dividends to stockholders of $2,000.
9. Collected $15,000 for services to be provided over the coming year but has not yet provided those services
10. Paid $12,000 for a three-year insurance policy with coverage starting on September 1.
11. Paid $1,000 for rental of some servers which will be returned to the leasing company on August 30th.
12. Collected $10,000 from the transaction described in part D.
13. Paid $6,000 of the amount owed for legal fees incurred in the transaction described in part G.

If you were to record these transactions in proper form, what is the amount of income based on the unadjusted trial balance? $

If beginning stockholders' equity was $200,000, what is the total of stockholders equity if a balance sheet was prepared based on the unadjusted trial balance? $

Answer 1

$29,000 Net income Sales Less: Expenses Utilities expense $5,000 Salaries expense $8,000 Legal fees $6,000 Rent expense $1,000 Net Income $20,000 $9,000 Stockholders' Equity Opening balance Add: Issue of common shares Add: Net income $200,000 $100,000 $9,000 $309,000 $2,000 $307,000 Less: Dividend Closing balance Assets Prepaid Insurance Accounts Receivable Cash Liabilities Accounts Unearned Payable Revenue Stores Equipment Stockholder's equity Capital Retained Stock Earnings $100,000 Revenue Expenses a) b) C d) $100,000 -$11,000 $9,000 $11,000 $9,000 $20,000 $20,000 Check $0 $0 $0 $0 $0 $0 $0 $0 $0 $9,000 $20,000 -$5,000 -$8,000 $6,000 -$2,000 $5,000 -$8,000 f) -$5,000 -$8,000 -$6,000 $6,000 $15,000 $12,000 h) -$2,000 i) $15,000 j) -$12,000 k) -$1,000 1) $10,000 m) -$6,000 Totals $89,000 -$1,000 -$1,000 $0 -$10,000 -$6,000 $0 $10,000 $12,000 $11,000 $15,000 $100,000 $7,000 $29,000 -$20,000 $0 Total Assets $122,000 Total Liabilities $15,000 Total Equity $107,000