Question

1 Transactions for April 2018 2 3 1 On April 1. 2018, Redmond Company, an information technology (IT) consulting company received $650 000 cash from the owner, Ron Larson 4 5 2 On April 3, Redmond paid $225,000 cash for land 6 7 3 Redmond purchased $1250 of office supplies on account on April 5. 8 9 4 On April 6, Redmond provided IT consulting services for a client and collected $12,000 cash, 10 11 5 Redmond provided IT consulting services of $14,000 for clients on April 7. The clients will pay Redmond in the future 12 13 6 Redmond paid cash expenses on April 10 salaries of $8,000 and office rent of $5,000 14 15 7 On April 12, Redmond paid $750 on the accounts payable created in Transaction #3 16 17 8 Redmond collected $3,000 cash on April 14 from a client in transaction 5 18 19 9 On April 16 Ron Larson withdrew $2.500 cash 20 21 10 On April 18, Redmond prepaid office rent of $15,000 for the months of May June and July 22 23 11 Redmond paid $8,000 salaries to employees on April 20 24 25 12 Redmond purchased a building for $520,000 on April 25 A note payable was issued for the entire amount 26 27 13 On April 26. Redmond received a contribution of furniture with a fair market value of $25.000 from Ron Larson 2B 29 14 Redmond received a cell phone bill for $1 100 on Apnl 28 and will pay this amount in May. Use Utilities Payable 30 31 15 on April 30 Redmond paid employee salaries of $8,000 32 33 16 Redmond meets with a client on April 30 who pays $22.000 in advance for consulting services to be performed during May and June 34 35 17 On April 30, Redmond performed consulting services clients and received 516000 in cash 36 Instructions Transactions Journal Entries T-Accounts Trial Balance Income Statement Statement of OE Balance Sheet

Answer 1

Solution:

Debit Credit Requirement 1 Journal Entries Date Accounts Title 2018 Apr-01 Cash Larson, Capital (Record cash introduced into business) $6,50,000 $6,50,000 $2,25,000 Apr-03 Land Cash (Record acquisition of land for cash) $2,25,000 $1,250 Apr-05 Office Supplies Accounts Payable (Record purchase of office supplies on credit) $1,250 $12,000 Apr-06 Cash Service Revenue (Record cash received for service provided) $12,000 $14,000 Apr-07 Accounts Receivable Service Revenue (Record service provided on account) $14,000 $8,000 $5,000 Apr-10 Salaries Expense Rent Expense Cash (Record cash paid for expenses) $13,000 $750 Apr-12 Accounts Payable Cash (Record payment made on account) $750

$3,000 Apr-14 Cash Accounts Receivable (Record cash collection on account) $3,000 $2,500 Apr-16 Larson, Withdrawals Cash (Record cash withdrawal for personal use) $2,500 $15,000 Apr-18 Prepaid Rent Cash (Record payment of office rent in advance) $15,000 $8,000 Apr-20 salaries Expense Cash (Record payment of salaries to employees) $8,000 $5,20,000 Apr-25 Building Notes Payable (Record purchase of building via note payable) $5,20,000 $25,000 Apr-26 Furniture Larson, Capital (Record furniture introduced by Larson) $25,000 $1,100 Apr-28 Utilities Expense Utilities Payable (Record utilities bill to be paid in future) $1,100 $8,000 Apr-30 Salaries Expense Cash (Record payment of salaries to employees) $8,000 $22,000 Apr-30 Cash Unearned Service Revenue (Record cash received in advance from client) $22,000 $16,000 Apr-30 Cash Service Revenue (Record cash received for service provided) $16,000

Requirement 2 Trial Balance Accounts Title Credit Debit $4,30,750 $11,000 $1,250 $15,000 $2,25,000 $5,20,000 $25,000 Cash Accounts Receivable Office Supplies Prepaid Rent Land Building Furniture Accounts Payable Utilities Payable Unearned Revenue Notes Payable Larson, Capital Larson, Withdrawals Service Revenue Rent Expense Salaries Expense Utilities Expense $500 $1,100 $22,000 $5,20,000 $6,75,000 $2,500 $42,000 $5,000 $24,000 $1,100 Totals $12,60,600 $12,60,600

Requirement 3 Income Statement For the month ended April 30, 2018 Revenues: Service Revenue $42,000 Expenses: Rent Expense Salaries Expense Utilities Expense Total Expenses Net Income $5,000 $24,000 $1,100 $30,100 $11,900 Requirement 4 Statement of Owner's Equity For the month ended April 30, 2018 Larson, Capital (introduced) Add: Net Income Less: Larson, Withdrawals Larson, Capital at the end $6,75,000 $11,900 -$2,500 $6,84,400

Requirement 5 Balance Sheet April 30, 2018 ASSETS Current Assets: Cash Accounts Receivable Office Supplies Prepaid Rent Total Current Assets Property,Plant & Equipment: Land Buildings Furniture Total Property, Plant & Equipment $4,30,750 $11,000 $1,250 $15,000 $4,58,000 $2,25,000 $5,20,000 $25,000 $7,70,000 Total Assets $12,28,000 LIABILITIES AND OWNER'S EQUITY Current Liabilities: Accounts Payable Utilities Payable Unearned Service Revenue Total Current liabilities Long-Term Liabilities: Notes Payable $500 $1,100 $22,000 $23,600 $5,20,000 Owner's Equity: Larson, Capital $6,84,400 Total Liabilities and Owner's Equity $12,28,000