Question

On January 1, 2018, Red Flash Photography had the following balances: Cash, $13,000; Supplies, $8,100; Land, $61,000; Deferred Revenue, $5,100; Common Stock $51,000; and Retained Earnings, $26,000. During 2018, the company had the following transactions:  

1.	February	15		Issue additional shares of common stock, $21,000.
2.	May	20		Provide services to customers for cash, $36,000, and on account, $31,000.
3.	August	31		Pay salaries to employees for work in 2018, $24,000.
4.	October	1		Purchase rental space for one year, $13,000.
5.	November	17		Purchase supplies on account, $23,000.
6.	December	30		Pay dividends, $2,100.

The following information is available on December 31, 2018:
  
1. Employees are owed an additional $4,100 in salaries.
2. Three months of the rental space has expired.
3. Supplies of $5,100 remain on hand.
4. All of the services associated with the beginning deferred revenue have been performed.

Answer 1

No	Date	Accounts Title	Dr	Cr
1	15-Feb	Cash	$21,000
		Common stock		$21,000
2	20-May	Cash	$36,000
		Accounts Receivable	$31,000
		Service revenue		$67,000
3	31-Aug	Salaries expenses	$24,000
		Cash		$24,000
4	1-Oct	prepaid rent	$13,000
		Cash		$13,000
5	17-Nov	supplies	$23,000
		Accounts payable		$23,000
6	30-Dec	Cash dividend	$2,100
		Cash		$2,100
adjusting entries
1		Salaries expenses	$4,100
		Salaries payable		$4,100
2		Rent expenses	$3,250
		Prepaid rent (13000/12*3)		$3,250
3		Supplies expenses	26000
		Supplies (8100+23000-5100)		26000
4		Deferred Revenue	$5,100
		Service revenue		$5,100

Unadjusted Trial Balance			Adjusting entries		Adjusted Trial Balance
	Dr	Cr	Dr	Cr	Dr	Cr
Cash (13000+21000+36000-24000-13000-2100)	30900				30900
Accounts Receivable	$31,000				31000
Prepaid Reent	$13,000			3250	9750
Supplies	31100			26000	5100
Land	61000				61000
Accounts Payable		23000				23000
Salaries payable				4100		4100
Deferred Revenue		5100	5100			0
common stock (51000+21000)		72000				72000
Retained earnings		26000				26000
Cash dividend	2100				2100
Service Revenue		$67,000		5100		72100
Salaries expenses	24000		4100		28100
Rent expenses			3250		3250
Supplies expenses			26000		26000
Total	193100	193100	38450	38450	197200	197200
Income statement
Service Revenue		72100
Less: expenses
Salaries expenses	28100
Rent expenses	3250
Supplies expenses	26000	57350
Net Income		14750
Balance sheet
For the year ending 31st December 2018
Current assets
Cash	30900
Accounts Receivable	31000
Prepaid Reent	9750
Supplies	5100
Total current assets		76750
Land		61000
Total assets		137750
Liabilities & stockholder equity
Cureent liabilities
Accounts payable	23000
Salaries payable	4100
Deferred Revenue	0
Total Current liabilities		27100
stockholder equity
common stock	72000
Retained earnings (26000+14750-2100)	38650
Total stockholder equity		110650
Total Liabilities & stockholder equity		137750
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