Question

On November 1, 2017, Larkspur, Inc. had the following account balances. The company uses the perpetual inventory method. Debit Credit Cash $10,980 Accumulated Depreciation—Equipment $1,220 Accounts Receivable 2,733 Accounts Payable 4,148 Supplies 1,049 Unearned Service Revenue 4,880 Equipment 30,500 Salaries and Wages Payable 2,074 $45,262 Common Stock 24,400 Retained Earnings 8,540 $45,262 During November, the following summary transactions were completed. Nov. 8 Paid $4,331 for salaries due employees, of which $2,257 is for November and $2,074 is for October. 10 Received $2,318 cash from customers in payment of account. 11 Purchased merchandise on account from Dimas Discount Supply for $9,760, terms 2/10, n/30. 12 Sold merchandise on account for $6,710, terms 2/10, n/30. The cost of the merchandise sold was $4,880. 15 Received credit from Dimas Discount Supply for merchandise returned $366. 19 Received collections in full, less discounts, from customers billed on sales of $6,710 on November 12. 20 Paid Dimas Discount Supply in full, less discount. 22 Received $2,806 cash for services performed in November. 25 Purchased equipment on account $6,100. 27 Purchased supplies on account $2,074. 28 Paid creditors $3,660 of accounts payable due. 29 Paid November rent $458. 29 Paid salaries $1,586. 29 Performed services on account and billed customers $854 for those services. 29 Received $824 from customers for services to be performed in the future.

Prepare a multiple-step income statement for November.

Answer 1

Larkspur, Inc. Journal Enteries Date 8.11.2017Salary Expense a/c Debit in $ Credit in $ Particulars Dr. Dr. 2257 Salary Payable a/c 2074 To Cash 4331 (Salary paid) 10.11.2017 Cash a/c Dr. 2318 To Accounts Receivable 2318 (Cash received from debtors 11.11.2017 Inventory a/c Dr 9760 To Accounts Payable 9760 (Inventory purchased on account) 12.11.2017 Accounts Receivable a/c Dr To Sales 6710 6710 (Sales on account Cost of goods sold a/c Dr To record cost of goods sold) 4880 To Invento 4880 15.11.2017 Accounts Payable a/c Dr 366 366 To Invento (Credit for goods returned) 19.11.2017 Cash a/c Dr. Dr. To Accounts Receivable 6576 Sales Discount a/c 134 6710 (Cash received from debtors in discount period) 20.11.2017 Accounts Payable a/c Dr 9394 To Invento 188 To Cash 9206 (Paid creditors in full)

Debit in $ Credit in $ Date 22.11.2017 Cash a/c Particulars Dr. 2806 To Service Revenue 2806 (Service performed for cash) 25.11.2017 Equipment a/c 6100 Dr. To Accounts Payable 6100 (Equipment purchased on account) 27.11.2017 Supplies a/c Dr To Accounts Payable 2074 2074 (Supplies purchased on account) 28.11.2017 Accounts Payable a/c Dr To Cash Paid creditors 3660 3660 29.11.2017 Rent expense a/c Dr. 458 To Cash 458 Rent paid in cash 29.11.2017 Salary Expense a/c Dr. 1586 To Cash 1586 (Salary paid) 29.11.2017 Accounts Receivable a/c Dr 854 To Service Revenue 854 (Service performed on account 29.11.2017 Cash a/c Dr. 824 To Unearned Revenue 824 (Advance received from clients)

Trial Balance For the month ending 30.11.2017 Particulars Cash Accounts Receivable Inventory Supplies Equipment Accumulated Depreciation-Equipment Accounts Payable Unearned Service Revenue Salaries and Wages Payable Unearned Revenue Common Stock Retained Earnings Service Revenue Sales Sales Discount Cost of goods sold Rent expense Salary Expense Totals Debit in $ Credit in $ 4263 1269 4326 3123 36600 1220 8662 4880 0 824 24400 8540 3660 6710 134 4880 458 3843 58896 58896 Statement of Income For the month ending 30.11.2017 Sales Sales Discount Net Sales Cost of goods sold Gross Margin Rent expense Salary Expense Operating Loss Non Operating Items Service Revenue Net Income 6710 -134 6576 -4880 1696 458 3843 4301 2605 3660 1055