Question

The general ledger of the Karlin Company, a consulting company, at January 1, 2021, contained the following account balances:

   

Account Title	Debits		Credits
Cash	33,200
Accounts receivable	10,500
Equipment	16,000
Accumulated depreciation			4,800
Salaries payable			6,250
Common stock			41,500
Retained earnings			7,150
Total	59,700		59,700

The following is a summary of the transactions for the year:

1. Service revenue, $104,000, of which $31,200 was on account and the balance was received in cash.
2. Collected on accounts receivable, $22,300.
3. Issued shares of common stock in exchange for $8,000 in cash.
4. Paid salaries, $37,750 (of which $6,250 was for salaries payable at the end of the prior year).
5. Paid miscellaneous expense for various items, $20,400.
6. Purchased equipment for $10,500 in cash.
7. Paid $2,475 in cash dividends to shareholders.

1. Accrued salaries at year-end amounted to $755.
2. Depreciation for the year on the equipment is $1,600.

Required:

2., 5, & 8. Prepare the summary, adjusting and closing entries for each of the transactions listed.
3. Post the transactions, adjusting and closing entries into the appropriate t-accounts.
4. Prepare an unadjusted trial balance.
6. Prepare an adjusted trial balance.
7-a. Prepare an income statement for 2021.
7-b. Prepare a balance sheet as of December 31, 2021.
9. Prepare a post-closing trial balance.

Answer 1

Journal Entries
	Particulars	Debit	Credit
a.	Cash A/c……Dr	$           72,800
	Account Recievables …Dr	$           31,200
	To Service Revenue A/c		$             104,000
b.	Cash A/c……Dr	$           22,300
	To Account Recievables A/c		$               22,300
c.	Cash A/c……Dr	$             8,000
	To Share Capital A/c		$                  8,000
d.	Salary Expense…Dr	$           32,255
	To Salary Payable A/c		$               32,255
	Salary Payable A/c…..Dr	$           37,750
	To Cash A/c		$               37,750
e	Misc Expenses……Dr	$           20,400
	To Cash A/c		$               20,400
f.	Retained Earnings…Dr	$             2,475
	To Dividend Payable		$                  2,475
	Divided Payable…..Dr	$             2,475
	To Cash A/c		$                  2,475
g.	Equipment A/c…….Dr	$           10,500
	To Cash A/c		$               10,500
h.	Depreciation Expense…Dr	$             1,600
	To Accumulated Dep. A/c		$                  1,600

Cash A/c
Debit	Amount	Credit	Amount
To Service Revenue	$        72,800	By Salary Payable	$    37,750
To Accounts Recievable	$        31,200	By Misc Expenses	$    20,400
To Share Capital	$          8,000	By Equipment A/c	$    10,500
To Accounts Recievables	$        22,300	By Dividend Payable	$      2,475
		By Balance C/d	$    63,175
	$     134,300		$ 134,300
Accounts Recievables A/c
Debit	Amount	Credit	Amount
To Balance B/d	$        10,500	By Cash A/c	$    22,300
To Service Revenue A/c	$        31,200	By Balance C/d	$    19,400
	$        41,700		$    41,700
Trial Balance
Debit	Amount	Credit	Amount
Cash	$        63,175	Accumulated Depreciation	$      6,400
Accounts Recievables	$        19,400	Salaries Payable	$          755
Equipment	$        26,500	Common Stock	$    49,500
		Retained Earnings	$    52,420
	$     109,075		$ 109,075

	Karlin Company
	Income Statement
	Particulars	Amount	Amount
	Service Revenue		$             104,000
	Total		$             104,000
	Salary Expenses		$               32,255
	Depreciation		$                  1,600
	Other Operating Expenses		$               22,400
	Profit before taxes and interest		$               47,745
Less :	Taxes		$                         -
	Retained Earnings		$               47,745

Karlin Company
Balance Sheet
Particulars	Amount
Assets
Cash	$        63,175
Accounts Recievables	$        19,400
Equipment	$        26,500
Total	$     109,075
Liabilities
Salary Payable	$              755
Accumultaed Depreciation	$          6,400
Common Stock	$        49,500
Retained Earnings	$        52,420
Total	$     109,075