Question

Required Information [The following information applies to the questions displayed below.] Colton Enterprises experienced the following events for Year 1, the first year of operation: 1. Acquired $42.000 cash from the issue of common stock. 2 Poid $12.700 cash in advance for rent. The payment was for the period April 1. Year 1, to March 31. Year 2 3. Performed services for customers on account for $86.000. 4. Incurred operating expenses on account of $38,500. 5. Collected $66,000 cash from accounts receivable. 6. Paid $28,000 cash for salary expense. 7. Paid $30.800 cash as a partial payment on accounts payable. Adjusting Entries 8. Made the adjusting entry for the expired rent. (See Event 2) 9. Recorded $3.800 of accrued salaries at the end of Year 1. Events for Year 2 1. Paid $3.800 cash for the salaries accrued at the end of the prior accounting period. 2 Performed services for cash of $35.000. 3. Purchased $3.500 of supplies on account. 4. Peid $12,600 cash in advance for rent. The payment was for one year beginning April 1. Year 2 5. Performed services for customers on account for $102,000. 6. Incurred operating expenses on account of $48,500. 7. Collected $96,000 cash from accounts receivable. 8. Paid $46.000 cash as a partial payment on accounts payable. 9. Paid $32,200 cash for salary expense. 10. Paid a $10.000 cash dividend to stockholders. Adjusting Entries 11. Made the adjusting entry for the expired rent. (Hint: Port of the rent was paid in Year 1.) 12. Recorded supplies expense. A physical count showed that $800 of supplies were still on hand. Record the entries to close the Year 1 temporary accounts to Retained Earnings in the general journal and post to the T-accounts. (If o entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction let Journal entry worksheet < 1 > Record entry to close service revenue. Note: Enter debits before credits. General Journal Debit Credit Date Dec. 31 Record entry Clear entry View general Journal

Answer 1

Solution:

Year 1 Journal entries along with adjusting entries:

Colton Enterprises
General Journal
Date	Account titles	Debit (in $)	Credit (in $)
Year 1
1	Cash	42,000
	Common Stock		42,000
	(To record issue of common stock for cash)
2	Prepaid rent	12,700
	Cash		12,700
	(To record rent paid in advance)
3	Accounts receivables	86,000
	Service revenue		86,000
	(To record revenue earned from services provided on account)
4	Operating expenses	38,500
	Accounts payable		38,500
	(To record operating expenses incurred on account)
5	Cash	66,000
	Accounts receivables		66,000
	(To record cash collected from accounts receivables)
6	Salaries expenses	28,000
	Cash		28,000
	(To record salaries paid)
7	Accounts payable	30,800
	Cash		30,800
	(To record partial payment to Accounts payables)
8	Rent expense	9,525
	Prepaid rent		9,525
	(To record rent expenses for 9 months) ($12,700*9/12)
9	Salary expense	3,800
	Salary payable		3,800
	(To record salary accrued but not paid)
Entries to close Year 1 temporary accounts to Retained Earnings
Date	General Journal	Debit (in $)	Credit (in $)
Year 1
Dec 31	Service revenue	86,000
	Retained earnings		86,000
	(To record closure of temporary accounts to Retained earnings)
Dec 31	Retained earnings	79,825
	Operating expenses		38,500
	Salaries expenses		31,800
	Rent expense		9,525
	(To record closure of temporary accounts to Retained earnings)