Question

Fill out the summary of T-Accounts for

1. Revenue and Expenses (Temporary Income Statement Accounts)

       -Includes: Sales and Service Revenue, Costs of Goods sold, Wages Expense, Insurance Expense, Rent Expense, Depreciation Expense.

2. Assets (Permanent Balance Sheet Accounts)

      -Includes: Cash, Inventory, accounts receivable, prepaid insurance, equipment, accumulated depreciation, prepaid rent.

3. Liabilities and Equities (Permanent Balance Sheet Accounts)

      -Includes: Accounts payable, unearned revenue, wages payable, common stock, retained earnings

4. What are the total Assets?

5. What are the total Liabilities & Shareholder's Equity?

    Note: Total assets and Liabilities + Shareholders equity should balance.

1. Jan. 1: Log issued $40,000 of common stock.
2. Jan. 1: Log paid $18,000 cash to purchase an equipment. The equipment has an estimated useful life of 5 years and an estimated salvage value of $3,000.
3. Jan. 1: Log paid $7,000 cash for two years of insurance coverage starting on Jan. 1, 2020.
4. March 1:Log rented a building and paid $2,400 for one year’s rent (starting 3/1).
5. April 1: Log purchased $5,700 of inventory on account.
6. June 1:Log sold $23,000 of software on account. The cost is $3,500.
7. Sept. 1: Log collected $7,000 cash from its customers for the previous sales on account.
8. Oct 31: Log paid $5,000 cash for employee wages earned during the first ten months (Jan 1 to October 31, $500 per month).
9. Nov 1: Log paid $3,300 cash to suppliers for inventory purchases made on account.
10. Dec 1: Log started an on-line service where customers pay an annual subscription fee when they sign up for a 12-month service plan. On Dec. 1, Log received $3,600 of cash from customers for one year of subscription fees (for online services from Dec 1, 2020 to Nov 30, 2021).

Additional Info:

-Xenon uses Straight Line Depreciation

-Two months of employee wages was accrued on Dec. 31, 2020. Xenon plans to pay employees Jan. 1 2021

Answer 1

1		Sales and Service Revenue			Costs of Goods sold
	Date	Debit	Date	Credit		Date	Debit	Date	Credit
	Dec 31-Cl	23300	June 1.	23000		June 1.	3500	Dec 31-Cl	3500
			Dec 31.	300			3500		3500
			(3600/12)
		23300		23300
		Wages Expense				Insurance Expense
	Date	Debit	Date	Credit		Date	Debit	Date	Credit
	Oct 31.	5000	Dec 31-Cl	6000		Dec 31.	3500	Dec 31-Cl	3500
	Dec 31.	1000				(7000/2)
	(2*500)						3500		3500
		6000		6000
		Rent Expense				Depreciation Expense
	Date	Debit	Date	Credit		Date	Debit	Date	Credit
	Dec 31.	2000	Dec 31-Cl	2000		Dec 31.	3000	Dec 31-Cl	3000
	2400*(10/12)					(18000-3000)/5
		2000		2000			3000		3000
2		Cash					Inventory
	Date	Debit	Date	Credit		Date	Debit	Date	Credit
	Jan 1.	40000	Jan 1.	18000		Apr 1.	5700	June 1.	3500
	Sep 1.	7000	Jan 1.	7000			5700		3500
	Dec 1.	3600	Mar 1.	2400		Bal.	2200
			Oct 31.	5000
			Nov 1.	3300
		50600		35700
	Bal.	14900
		Accounts receivable				Prepaid insurance
	Date	Debit	Date	Credit		Date	Debit	Date	Credit
	June 1.	23000	Sep 1.	7000		Jan 1.	7000	Dec 31.	3500
		23000		7000				(7000/2)
	Bal.	16000					7000		3500
						Bal.	3500
		Equipment				Accumulated depreciation
	Date	Debit	Date	Credit		Date	Debit	Date	Credit
	Jan 1.	18000						Dec 31.	3000
								(18000-3000)/5