Answer:
1) On April 1, 2019, 10,000 shares of $1 par value common stock were issued for $20 per share.
Dr Cash 200,000
Cr Common stock 10,000
Cr Additional paid in capital 190,000
On April 2, 2019, a one year rent for $64,000 a year was signed on a store. The corporation paid the entire $64,000 on this date.
Dr Prepaid rent 64,000
Cr Cash 64,000
On April 2, 2019 the company borrowed $50,000 from the bank by signing a three year, 8% note with interest payable each April 1 (first interest payment due April 1, 2020).
Dr Cash 50,000
Cr Notes payable 50,000
The company purchased furniture and equipment for $40,000 in cash on April 2, 2019. The furniture and equipment has an estimated life of 5 years with no residual value.
Dr Furniture & equipment 40,000
Cr Cash 40,000
During the 2019 the company purchased $130,000 worth of merchandise for cash.
Dr Merchandise inventory
Cr Cash 130,000
Merchandise costing $120,000 was sold for $290,000 in 2019. All sales were cash sales.
Dr Cash 290,000
Cr Sales revenue 290,000
Dr Cost of goods sold 120,000
Cr Merchandise inventory 120,000
Salaries and wages of $50,000 were paid during 2019.
Dr Wages expense 50,000
Cr Cash 50,000
Other operating expenses totaled $10,000 in 2019 and were paid in cash.
Dr Operating expenses 10,000
Cr Cash 10,000
Dividends of $1 per share were declared on December 15, 2019 to be paid on January 15, 2020.
Dr Dividends 10,000
Cr Dividends payable 10,000
2) unadjusted trial balance
debit credit
Cash $246,000
Merchandise inventory $10,000
Prepaid rent $64,000
Furniture & equipment $40,000
Notes payable $50,000
Dividends payable $10,000
Common stock $10,000
Additional paid in capital $190,000
Sales revenue $290,000
Cost of goods sold $120,000
Wages expense $50,000
Operating expenses $10,000
Dividends $10,000
Totals $550,000 $550,000
3) adjusting entries
Dr Rent expense 48,000
Cr Prepaid rent 48,000
Dr Wages expense 3,000
Cr Wages payable 3,000
Dr Depreciation expense 6,000
Cr Accumulated depreciation: furniture & equipment 6,000
Dr Interest expense 3,000
Cr Interest payable 3,000
4) adjusted trial balance
debit credit
Cash $246,000
Merchandise inventory $10,000
Prepaid rent $16,000
Furniture & equipment $34,000
Notes payable $50,000
Wages payable $3,000
Interest payable $3,000
Dividends payable $10,000
Common stock $10,000
Additional paid in capital $190,000
Sales revenue $290,000
Cost of goods sold $120,000
Wages expense $53,000
Operating expenses $10,000
Rent expense $48,000
Depreciation expense $6,000
Interest expense $3,000
Dividends $10,000
Totals $556,000 $556,000
5) Income statement
Revenues $290,000
COGS ($120,000)
Gross profit $170,000
Operating expenses:
- Wages expense $53,000
- Operating expenses $10,000
- Rent expense $48,000
- Depreciation expense $6,000 ($117,000)
Operating profit $53,000
Other revenues and expenses:
- Interest expense $3,000 ($3,000)
Net income before taxes $50,000
Retained earnings = $50,000 - $10,000 = $40,000
balance sheet
Assets:
Cash $246,000
Merchandise inventory $10,000
Prepaid rent $16,000
Furniture & equipment $34,000
Total assets $306,000
Liabilities:
Notes payable $50,000
Wages payable $3,000
Interest payable $3,000
Dividends payable $10,000
Total liabilities $66,000
Stockholders' equity:
Common stock $10,000
Additional paid in capital $190,000
Retained earnings $40,000
Total stockholders' equity $240,000
Total liabilities + stockholders' equity $306,000