Two complete accounting cycles
Pacific Machining experienced the following events during 2011.
1. Started operations by acquiring $50,000 of cash from the issue of common stock.
2. Paid $6,000 cash in advance for rent during the period from February 1, 2011, to February 1, 2012.
3. Received $4,800 cash in advance for services to be performed evenly over the period from September 1, 2011, to September 1, 2012.
4. Performed services for customers on account for $65,200.
5. Incurred operating expenses on account of $31,500.
6. Collected $56,900 cash from accounts receivable.
7. Paid $22,000 cash for salaries expense.
8. Paid $28,000 cash as a partial payment on accounts payable.
Adjusting Entries
9. Made the adjusting entry for the expired rent. (See Event 2.)
10. Recognized revenue for services performed in accordance with Event 3.
11. Recorded $2,100 of accrued salaries at the end of 2011.
Events for 2012
1. Paid $2,100 cash for the salaries accrued at the end of the previous year.
2. Performed services for cash, $40,500.
3. Paid $25,000 cash to purchase land.
4. Paid $5,400 cash in advance for rent during the period from February 1, 2012, to February 1, 2013.
5. Performed services for customers on account for $82,000.
6. Incurred operating expenses on account of $49,100.
7. Collected $76,300 cash from accounts receivable.
8. Paid $48,000 cash as a partial payment on accounts payable.
9. Paid $41,000 cash for salaries expense.
10. Paid a $5,000 cash dividend to the stockholders.
Adjusting Entries
11. Recognized revenue for services performed in accordance with Event 3 in 2011.
12. Made the adjusting entry for the expired rent. (Hint: Part of the rent was paid in 2011.)
13. Recorded $3,500 of accrued salaries at the end of 2012.
Required
a. Record the events and adjusting entries for 2011 in general journal form.
b. Post the events for 2011 to T-accounts.
c. Prepare a trial balance for 2011.
d. Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for 2011.
e. Record the entries to close the 2011 temporary accounts to Retained Earnings in the general journal and post to the T-accounts.
f. Prepare a post-closing trial balance for December 31,2011.
g. Repeat requirements a through/for 2012.
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