Question

The general ledger of the Karlin Company, a consulting company, at January 1, 2021, contained the following account balances: Credits Debits 31,400 13,500 22,eee Account Title Cash Accounts receivable Equipment Accumulated depreciation Salaries payable Common stock Retained earnings Total 6,6ee 7,750 44,500 8,050 66,900 66,900 The following is a summary of the transactions for the year: a. Service revenue, $115,000, of which $34,800 was on account and the balance was recelved in cash. b. Collected on accounts recevable, $24,100. c. Issued shares of common stock in exchange for $11,500 in cash. d. Pald salarles, $42,250 (of which $7,750 was for salaries payable at the end of the prior year). e. Pald miscellaneous expense for various items, $22,800. f. Purchased equipment for $13,500 in cash. g. Pald $2,800 in cash dividends to shareholders. 1. Accrued salaries at year-end amounted to $845. 2. Depreciation for the year on the equipment is $2,200. Required: 2., 5, & 8. Prepare the summary, adjusting and closing entries for each of the transactions listed. 3. Post the transactions, adjusting and closing entries into the appropriate t-accounts. 4. Prepare an unadjusted trial balance. 6. Prepare an adjusted trial balance. 7-a. Prepare an income statement for 2021. 7-b. Prepare a balance sheet as of December 31, 2021. 9. Prepare a post-closing trial balance.

Answer 1

2,5 & 8: Journal Enties: CREDIT EVENT CREDIT EVENT a) S.No. 1) DEBIT $34,800 $81,200 g) S.No. 7) DEBIT $2,800 $116000 - $34800] $2,800 $116,000 Adjust-1 8) $845 b) 2) $24,100 $845 $24,100 Adjust-2 $2,200 c) 3) $11,500 $2,200 ACCOUNT TITLES Accounts Receivable Cash Service Revenue Cash Accounts Receivable Cash Common Stock Salaries Payable Salaries Expense Cash Miscellaneous Expense Cash Equipment Cash $11,500 Close-1 10) ACCOUNT TITLES Dividends Cash Salaries Expense Salaries Payable Depreciation Expense Accum. Depreciation Service Revenue Retained Earnings Retained Earnings Salaries Expense Miscellaneous Expense Depreciation Expense Retained Earnings Dividends $116,000 [Ref: Entry-(a) --> S.No.1] d) 4) $116,000 ) $7,750 $34,500 ($42250 - $7750] Close-2 11) $60,345 $42,250 e) 5) $22,800 $35,345 [Ref: Entry-(d) & Adjust-1 --> S.No.4 & 8] $22,800 [Ref: Entry-(e) --> S.No.5] $2,200 [Ref: Entry-Adjust-2 --> S.No.9] $22,800 f) 6) $13,500 Close-3 12) $2,800 $13,500 $2,800

3: T-Accounts: Service Revenue $116,000 $116,000 d) Close-1 a) Beg. Bal. a) b) Cash $31,400 $42,250 $81,200 $22,800 $24,100 $13,500 $11,500 $2,800 $66,850 d) e) f) Salaries Payable $7,750 $7,750 $845 $845 Beg. Bal. Adjust-2 End. Bal. End. Bal. $0 g) End. Bal. Miscellaneous Expense $22,800 $22,800 e) Close-2 Common Stock $44,500 Beg. Bal. $11,500 c) $56,000 Beg. Bal. b) End. Bal. End. Bal. $o Accounts Receivable $13,500 $24,100 $34,800 $24,200 a) End. Bal. Close-2 Close-2 Close-3 End. Bal. Retained Earnings $60,345 $8,050 Beg. Bal. $2,800 $116,000 Close-1 $60,905 d) Adjust-1 End. Bal. Salaries Expense $34,500 $35,345 $845 $0 Beg. Bal. Equipment $22,000 $13,500 $35,500 f) End. Bal. Depreciation Expense $2,200 $2,200 Adjust-2 Close-2 Dividends $2,800 $2,800 Close-3 End. Bal. $0 Accumulated Depreciation $6,600 Beg. Bal. $2,200 Adjust-2 End. Bal. $8,800 End. Bal. $0

CREDIT CREDIT KARLIN COMPANY 4) Unadjusted Trial Balance December 31, 2021 ACCOUNT TITLES DEBIT Cash $66,850 Accounts Receivable $24,200 Equipment $35,500 Accumulated Depreciation Common Stock Retained Earnings Dividends $2,800 Service Revenue Miscellaneous Expense $22,800 Salaries Expense $34,500 TOTALS $186,650 $6,600 $56,000 $8,050 KARLIN COMPANY 5) Adjusted Trial Balance December 31, 2021 ACCOUNT TITLES DEBIT Cash $66,850 Accounts Receivable $24,200 Equipment $35,500 Accumulated Depreciation Salaries Payable Common Stock Retained Earnings Dividends $2,800 Service Revenue Miscellaneous Expense $22,800 Salaries Expense $35,345 Depreciation Expense $2,200 TOTALS $189,695 $8,800 [$6600 + $2200] $845 [Ref: Adjust-1 entry] $56,000 $8,050 $116,000 $116,000 $186,650 [$34500 + $845] [Ref: Adjust-2 entry] $189,695

$116,000 KARLIN COMPANY 7-a) Income Statement For the Year Ended December 31, 2021 Revenues: Service Revenue Expenses: Miscellaneous Expense $22,800 Salaries Expense $35,345 Depreciation Expense $2,200 Total Expenses Net Income KARLIN COMPANY Statement of Retained Earnings For the Year Ended December 31, 2021 Retained Earnings - Beginning Balance $8,050 Add: Net Income $55,655 [Ref: Income Statement] Less: Dividends -$2,800 Net increase in retained earnings $52,855 Retained Earnings - Ending Balance $60,905 $60,345 $55,655 CREDIT KARLIN COMPANY 7-b) Balance Sheet December 31, 2021 Assets Liabilities & Shareholders' Equity Current Assets: Current Liabilities: Cash $66,850 Salaries Payable $845 Accounts Receivable $24,200 Total Liabilities Total Current Assets $91,050 Shareholders' Equity: Property, Plant and Equipment: Common Stock $56,000 Equipment $35,500 Retained Earnings $60,905 Less: Accumulated Depreciation $8,800 Shareholders' Equity Property, Plant and Equipment, Net $26,700 Total Assets $117,750 Total Liabilities & Shareholders' equity KARLIN COMPANY 9) Post-Closing Trial Balance December 31, 2021 ACCOUNT TITLES DEBIT Cash $66,850 Accounts Receivable $24,200 Equipment $35,500 Accumulated Depreciation Salaries Payable Common Stock Retained Earnings TOTALS $126,550 $845 $8,800 $845 $56,000 $60,905 $126,550 $116,905 $117,750