Question

The general ledger of Red Storm Cleaners at January 1, 2015, includes the following account balances:

Accounts Debits Credits
Cash $ 13,500
Accounts Receivable 6,700
Supplies 2,700
Equipment 16,500
Accumulated Depreciation $ 5,600
Salaries Payable 8,100
Common Stock 18,500
Retained Earnings 7,200
Totals $ 39,400 $ 39,400
The following is a summary of the transactions for the year:
a. Sales of services, $47,000, of which $19,700 is on account.
b. Collect on accounts receivable, $16,700.
c. Issue shares of common stock in exchange for $6,000 cash.
d. Pay salaries, $24,700 (of which $8,100 is for salaries payable in 2014).
e. Pay repairs and maintenance expenses, $11,700.
f. Purchase equipment for $6,700 cash.
g. Pay $1,100 cash dividends to stockholders.
2. Record each of the summary transactions listed above.

4. Prepare an unadjusted trial balance.

Record adjusting entries. Accrued salaries at year-end amounted to $1,100. Depreciation for the year on the equipment is $3,700. Office supplies remaining on hand at the end of the year equal $1,000.

7. Prepare an adjusted trial balance.

8-a.

Prepare the income statement for the year ended December 31, 2015.

8-b. Prepare the classified balance sheet for the year ended December 31, 2015.

9. Record closing entries.

11. Prepare a post-closing trial balance.

Answer 1

Prepare Journal entries :

Transaction General Journal Debit Credit

a Cash 27,300

Accounts receivable 19,700

Service revenue 47,000

b Cash 16,700

Accounts receivable 16,700

c Cash 6000

Common stock 6000

d Salaries expense 16,6000

salaries payable 8,100

e Repairs and maintenance 11,700

Cash 11,700

f Equipment 6,700

Cash 6,700

g Dividends 1,100

Cash 1,100

Prepare an unadjusted trial balance :

Red Storm Cleaners

Unadjusted Trial balance, December 31, 2015

Accounts Debit Credit

Cash(13500+27300+16700+6000-24700-11700-1100) 19,300

Accounts receivable (6700+19700-16700) 9,700

Supplies 2,700

Equipment (16500+6700) 23,200

Accumulated depreciation 5,600

Salaries payable 0

Common stock (18500+6000) 24,500

Retained earnings 7,200

Dividends 1,100

Service revenue 47,000

Salaries expense 16,600

Repairs and maintenance expense 11,700

Totals 84,300 84,300

Prepare adjusted entries :

Transaction General Journal Debit Credit

1 Salaries expenses 1,100

Salaries payable 1,100

2. Depreciation expense 3,700

Accumulated depreciation 3,700

3. Supplies expense 1,000

Supplies 1,000

Prepare an adjusted trial balance :

Red Storm Cleaners

Adjusted Trial balance, December 31, 2015

Accounts Debit Credit

Cash(13500+27300+16700+6000-24700-11700-1100) 19,300

Accounts receivable (6700+19700-16700) 9,700

Supplies (2700-1000) 1,700

Equipment (16500+6700) 23,200

Accumulated depreciation (5600+3700) 9,300

Salaries payable 1,100

Common stock (18500+6000) 24,500

Retained earnings 7,200

Dividends 1,100

Service revenue 47,000

Salaries expense(16600+1100) 17,700

Repairs and maintenance expense 11,700

Depreciation 3,700

Supplies expense 1,000

Totals 89,100 89,100

Prepare Income statement

RS Cleaners

Income statement, Dec 31, 2015

Incomes:

Service revenue 47,000

Total Income 47,000

Expenses :

Dividends 1,100

Repairs and maintenance 11,700

Salaries 17,700

Supplies expense 1,000

Depreciation 3,700

Total Expenses 35,200

Net Income 11,800