Question

SA Comp #1

The general ledger of the Karlin Company, a consulting company, at January 1, 2018, contained the following account balances:

   

Account Title	Debits		Credits
Cash	30,200
Accounts receivable	15,500
Equipment	26,000
Accumulated depreciation			7,800
Salaries payable			8,750
Common stock			46,500
Retained earnings			8,650
Total	71,700		71,700

The following is a summary of the transactions for the year:

1. Sales of services, $124,000, of which $37,200 was on credit.
2. Collected on accounts receivable, $25,300.
3. Issued shares of common stock in exchange for $13,500 in cash.
4. Paid salaries, $45,250 (of which $8,750 was for salaries payable).
5. Paid miscellaneous expenses, $24,400.
6. Purchased equipment for $16,000 in cash.
7. Paid $3,000 in cash dividends to shareholders.

1. Accrued salaries at year-end amounted to $905.
2. Depreciation for the year on the equipment is $2,600.

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 2018.
7-b. Prepare a balance sheet as of December 31, 2018.
9. Prepare a post-closing trial balance.

Answer 1

Karlin Company Journal Enteries Trans. Particulars Cash a/c Dr. Accounts Receivable a/c Dr. To Service Revenue (Services provided) Debit in $ Credit in $ 86800 37200 124000 b. Dr. 25300 Cash a/c To Accounts Receivable (Cash collected from debtors) 25300 C. 13500 Cash a/c Dr. To Common Stock (Common stock issued) 13500 8750 Dr. Dr. 36500 Salaries Payable a/c Salaries Expense a/c To Cash (Salary expense paid) 45250 e. 24400 Miscellaneous Expense a/c Dr. To Cash (Miscellaneous expense paid) 24400 16000 Equipment a/c Dr. To Cash (Equipment purchased) 16000 g. Dr. 3000 Dividends a/c To Cash (Dividends paid) 3000

Adjusting Enteries Trans. Particulars 1 Salaries Expense a/c Dr. To Salaries Payable (Salary accrued) Debit in $ Credit in $ 905 905 2 2600 Depreciation Expense a/c Dr. To Accum Depre - Equip (To record depreciation) 2600 Closing Enteries Date Particulars Debit in $ Credit in $ 31.12.2018 Income Summary a/c Dr. 64405 To Salaries Expense 37405 To Miscellaneous Expense 24400 To Depreciation Expense 2600 (Expense accounts closed) 124000 31.12.2018 Service Revenue a/c Dr. To Income Summary (Revenue accounts closed) 124000 59595 31.12.2018 Income Summary a/c Dr. To Retained Earnings (Profits transferred) 59595 Dr. 3000 31.12.2018 Retained Earnings a/c To Dividends (Dividends charged) 3000

Worksheet For the period ending 31.12.2018 Particulars Cash Accounts Receivable Equipment Accum Depre - Equip Salaries Payable Common Stock Retained Earnings Dividends Service Revenue Salaries Expense Miscellaneous Expense Depreciation Expense Totals Unadjusted Adjustment Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 67150 67150 67150 27400 27400 27400 42000 42000 42000 7800 2600 10400 10400 905 905 905 60000 60000 60000 8650 8650 65245 3000 3000 124000 124000 36500 905 37405 24400 24400 2600 2600 200450 200450 3505 3 505 203955 203955 136550 136550

124000 Statement of Income For the period ending 31.12.2018 Service Revenue Less: Salaries Expense 37405 Miscellaneous Expense 24400 Depreciation Expense 2600 Net Income 64405 59595 Statement of Retained Earnings For the period ending 31.12.2018 Beginning 8650 Add:Net Income 59595 68245 Less:Dividends -3000 65245

Amounts in $ Amounts in $ Balance sheet As at 31.12.2018 Assets Current Assets Cash Accounts Receivable Amounts in $ Amounts in $ Liabilities Current Liabilities 67150 Salaries Payable 27400 94550 905 Non Current Assets Equipment Accum Depre - Equip Total Assets 42000 - 10400 Shareholders Equity Common Stock 31600 Retained Earnings 126150 Total Liabilities & Equity 60000 65245 125245 126150