Question

On January 1, 2018, the general ledger of Grand Finale Fireworks includes the following account balances:

Accounts	Debit			Credit
Cash	$	44,100
Accounts Receivable		47,300
Supplies		8,900
Equipment		78,000
Accumulated Depreciation				$	10,400
Accounts Payable					16,000
Common Stock, $1 par value					14,000
Paid-in Capital-Excess of Par					94,000
Retained Earnings					43,900
Totals	$	178,300		$	178,300

During January 2018, the following transactions occur:

January		2		Issue an additional 2,000 shares of $1 par value common stock for $40,000.
January		9		Provide services to customers on account, $18,200.
January		10		Purchase additional supplies on account, $6,300.
January		12		Repurchase 1,100 shares of treasury stock for $21 per share.
January		15		Pay cash on accounts payable, $17,900.
January		21		Provide services to customers for cash, $50,500.
January		22		Receive cash on accounts receivable, $18,000.
January		29		Declare a cash dividend of $0.30 per share to all shares outstanding on January 29. The dividend is payable on February 15.
				(Hint: Grand Finale Fireworks had 14,000 shares outstanding on January 1, 2018 and dividends are not paid on treasury stock.)
January		30		Reissue 800 shares of treasury stock for $23 per share.
January		31		Pay cash for salaries during January, $43,400.

The following information is available on January 31, 2018.

1. Unpaid utilities for the month of January are $7,600.
2. Supplies at the end of January total $6,500.
3. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a service life of three years and a residual value of $11,400.
4. Accrued income taxes at the end of January are $2,500.

No	Date	Account Title	Debit	Credit
1	Jan 02	Cash	40,000
		Common stock		2,000
		Paid-in capital-excess of par		38,000
2	Jan 09	Accounts receivable	18,200
		Service revenue		18,200
3	Jan 10	Supplies	6,300
		Accounts payable		6,300
4	Jan 12	Treasury stock	23,100
		Cash		23,100
5	Jan 15	Accounts payable	17,900
		Cash		17,900
6	Jan 21	Cash	50,500
		Service revenue		50,500
7	Jan 22	Cash	18,000
		Accounts receivable		18,000
8	Jan 29	Retained earnings	4,470
		Dividends payable		4,470
9	Jan 30	Cash	18,400
		Treasury stock		16,800
		Paid-in capital-share repurchase		1,600
10	Jan 31	Salaries expense	43,400
		Cash		43,400
11	Jan 31	Utilities expense	7,600
		Utilities payable		7,600
12	Jan 31	Supplies expense	8,700
		Supplies		8,700
13	Jan 31	Depreciation expense	1,200
		Accumulated depreciation		1,200
14	Jan 31	Income tax expense	2,500
		Income tax payable		2,500
15	Jan 31	Income tax payable	68,700
		Retained earnings		68,700
16	Jan 31	Record closing entry for expenses

Answer 1

ANSWER

Grand Finale Fireworks Journal Entry Date Particulars 2.1.2018 Cash a/c Dr. To Common Stock To Additional Paid in Capital Debit in $Credit in $ 40000 2000 38000 18200 9.1.2018 Accounts Receivable a/c Dr. To Services Revenue 18200 6300 10.1.2018 Supplies a/c Dr. To Accounts Payable 6300 Dr. 23100 12.1.2018 Treasury Stock a/c To Cash Adjusted Trial Balance For the period ending 31.1.2018 Particulars Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Accounts Payable Dividend Payable Income Tax Payable Utilities Payable Common Stock $1 par value Additional Paid in Capital Additional Paid in Capital - Treasury Retained Earnings Dividend Treasury Stock Services Revenue Salary expense Utilities expense Supplies expense Depreciation expense Income Tax expense Total 23100 Debit in $ Credit in $ 86600 47500 6500 78000 32600 4400 4470 2500 7600 16000 132000 1600 43900 4470 6300 68700 43400 7600 8700 22200 2500 313770 313770 17900 15.1.2018 Accounts Payable a/c Dr. To Cash 17900 Dr. 50500 21.1.2018 Cash a/c To Services Revenue 50500 18000 22.1.2018 Cash a/c Dr. To Accounts Receivable 18000 29.1.2018 Dividend a/c Dr. To Dividend Payable (14000 + 2000 - 1100) x 0.3 4470 18400 30.1.2018 Cash a/c Dr. To Treasury Stock To Additional Paid in Capital - Treasury 16800 1600 Dr. 43400 31.1.2018 Salary expense a/c To Cash 43400

Adjusting Enteries Date Particulars 31.1.2018 Utilities expense a/c To Utilities Payable Dr. Debit in $Credit in $ 7600 7600 Dr. 31.1.2018 Supplies expense a/c To Supplies 8700 L 8700 22200 31.1.2018 Depreciation expense a/c Dr. To Accumulated Depreciation - Equip (78000 - 11400)/3 22200 2500 31.1.2018 Income Tax expense a/c Dr. To Income Tax Payable 2500

68700 Statement of Income For the period ending 31.1.2018 Services Revenue Less: Salary expense Utilities expense Supplies expense Depreciation expense Income Tax expense Net Loss 43400 7600 8700 22200 2500 84400 -15700 Statement of Retained Earnings For the period ending 31.1.2018 1.1.2018 Add:Net loss 43900 - 15700 28200 -4470 Less:Dividends 31.1.2018 23730 Return on Equity = Net Income / Shareholders equity = -15700 / 167030 = -9.4% Since there is loss for th month of January it is less profitable Shares Issued Less:Treasury Shares Outstanding 16000 -300 15700 Earning per share = - 15700 / 15700 = -1

Amounts in $ Amounts in $ 4400 4470 2500 7600 18970 Balance sheet As at 31.1.2018 Assets Amounts in $ Amounts in $ Liabilities Current Assets Current Liabilities Cash 86600 Accounts Payable Accounts Receivable 47500 Dividend Payable Supplies 6500 140600 Income Tax Payable Utilities Payable Non Current Assets Equipment 78000 Shareholders Equity Accumulated Depreci -32600 45400 Common Stock $1 par value Additional Paid in Capital Additional Paid in Capital - Treasury Retained Earnings Less:Treasury Stock Total Assets 186000 Total Liabilities & Equity 16000 132000 1600 23730 173330 -6300 186000

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