Question

Required information The general ledger of Red Storm Cleaners at January 1, 2021, includes the following account balances: Accounts Debits Credits Cash $ 12,000 Accounts Receivable 6,400 Supplies 2,400 Equipment 18,000 Accumulated Depreciation $ 6,200 Salaries Payable 8,700 Common Stock 17,000 Retained Earnings 6,900 Totals $ 38,800 $ 38,800 The following is a summary of the transactions for the year: 1. March 12 Provide services to customers, $44,000, of which $19,400 is on account. 2. May 2 Collect on accounts receivable, $16,400. 3. June 30 Issue shares of common stock in exchange for $6,000 cash. 4. August 1 Pay salaries of $8,700 from 2020 (prior year). 5. September 25 Pay repairs and maintenance expenses, $11,400. 6. October 19 Purchase equipment for $6,400 cash. 7. December 30 Pay $1,100 cash dividends to stockholders. 11. Prepare a post-closing trial balance.

Answer 1

Post Closing Trial Balance
Particulars			Debit	Credit
Cash			$ 31,400.00
Accounts Receivable			$   9,400.00
Supplies			$   2,400.00
Equipment			$ 24,400.00
Accumulated Depreciation				$   6,200.00
Common Stock				$ 23,000.00
Retained Earnings				$ 38,400.00
Total			$67,600.00	$67,600.00

Workings:

Journal Entries
Date	Particulars			Debit	Credit
12-Mar	Accounts Receivable			$ 19,400.00
	Cash			$ 24,600.00
	To Service Revenue				$ 44,000.00
02-May	Cash			$ 16,400.00
	To Accounts Receivable				$ 16,400.00
30-Jun	Cash			$   6,000.00
	To Common Stock				$   6,000.00
01-Aug	Salaries Payable			$   8,700.00
	To Cash				$   8,700.00
25-Sep	Repairs and Maintenance Expense			$ 11,400.00
	To Cash				$ 11,400.00
19-Oct	Equipment			$   6,400.00
	To Cash				$   6,400.00
30-Dec	Dividends			$   1,100.00
	To Cash				$   1,100.00

Closing Entries
Date	Particulars			Debit	Credit
31-Dec	Service Revenue			$ 44,000.00
	To Income Summary				$ 44,000.00
31-Dec	Income Summary			$ 11,400.00
	To Repairs and Maintenance Expense				$ 11,400.00
31-Dec	Income Summary			$ 32,600.00
	To Retained Earnings				$ 32,600.00
31-Dec	Retained Earnings			$   1,100.00
	To Dividends				$   1,100.00

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