Question

Hawking, Inc. had the following activities occur in the current year: 6. Purchased $189,000 of inventory on account. 7. Earned $536,000 worth of sales revenue, receiving 85% in cash. 8. Incurred selling expenses of $210,000, Baying half in cash and still owing the rest. 9. Incurred $33,000 in interest expense to be paid at the beginning of next year. ok & Required 1. a) Show the effects of the above transactions on the accounting equation. 2. b) Prepare journal entries for each transaction. 3. c) Post journal entries to the general ledger/T-accounts, summarize accounts, and find balances. 4. d) Prepare an unadjusted trial balance. 5. e) Match your numbers to the prepared financial statements: Income Statement, Retained Earnings Statement, and Balance Sheet

Yes, this is all one problem.

Answer 1

Since we only answer upto 4 subparts, we will answer first 4 subparts.

1.

No Assets Equity + + Building Liabilities Accounts Payable Accounts receivable + Equipment + Common Stock + Inventory + Income Expenses + 1 + + + 7,00,000+ + Short term Cash + investments 7,00,000 + + -2,00,000 + -10,000+ 10,000+ 5,000 + -5,000 + 2 + 1,75,000 + 80,000 + + + + 55,000 3 + + + + + 4 + + + + = + + 5 + + + + + + + ||||||||||| 6 + + + + + 1,89,000 + + 1,89,000 7 + + + 80,400 + + 5,36,000 + 4,55,600 + -1,05,000 + 8 + + + + + 9 + + + + + + 2,10,000+ 33,000 + 2,43,000 + 1,05,000 33,000 3,82,000 8,45,600 + 5,000+ 1,75,000 + 80,000 + 80,400 + 1,89,000 7,00,000+ 5,36,000

2.

Credit No Description 1 Cash Common stock Debit 7,00,000 7,00,000 1,75,000 80,000 2 Building Equipment Cash Note Payable 2,00,000 55,000 10,000 3 Short-term investment Cash 10,000 5,000 4 Cash Short-term investments 5,000 1,89,000 6 Inventory Accounts Payable 1,89,000 7 Cash Accounts Receivable Sales revenue 4,55,600 80,400 5,36,000 2,10,000 8 Selling expenses Cash Accounts payable 1,05,000 1,05,000 33,000 9 Interest expense Interest payable 33,000

3.

Cash Debit 7,00,000 Asset Purchased 5,000 Short-term investments 4,55,600 Selling expenses Note Payable Debit Asset Purchased Credit 55,000 Common stock Short-term investments Sales revenue Credit 2,00,000 10,000 1,05,000 Bal 55,000 Bal 8,45,600 Common stock Debit Cash Accounts payable Debit Credit Inventory 1,89,000 Selling expenses 1,05,000 Bal 2,94,000 Credit 7,00,000 Bal 7,00,000 Accounts receivable Debit 80,400 Credit Sales revenue Building Debit 1,75,000 Credit Purchased Bal 80,400 Bal 1,75,000 Equipment Debit 80,000 Credit Purchased Short-term investments Debit 10,000 Cash Credit 5,000 Cash Bal 80,000 Bal 5,000 Inventory

Bal 5,000 Inventory Debit Accounts Payable 1,89,000 Credit Selling expenses Debit 2,10,000 Credit Cash Bal 1,89,000 Bal 2,10,000 Interest payable Debit Interest expense Credit 33,000 Interest expense Debit 33,000 Credit Interest payable Bal 33,000 Bal 33,000

4.

Trial balance Particulars Debit Credit Cash 8,45,600 Common stock 7,00,000 Building 1,75,000 Short-term investments 5,000 Note Payable 55,000 Accounts payable 2,94,000 Accounts receivable 80,400 Equipment 80,000 Inventory 1,89,000 Interest payable 33,000 Selling expenses 2,10,000 Interest expense 33,000 Sales revenue 5,36,000 16,18,000 16,18,000