Question

On January 1, 2021, the general ledger of Dynamite Fireworks includes the following account balances:

Accounts	Debit				Credit
Cash	$	24,500
Accounts Receivable		5,900
Supplies		3,800
Land		57,000
Accounts Payable					$	3,900
Common Stock						72,000
Retained Earnings						15,300
Totals	$	91,200			$	91,200

During January 2021, the following transactions occur:

January		2		Purchase rental space for one year in advance, $8,100 ($675/month).
January		9		Purchase additional supplies on account, $4,200.
January		13		Provide services to customers on account, $26,200.
January		17		Receive cash in advance from customers for services to be provided in the future, $4,400.
January		20		Pay cash for salaries, $12,200.
January		22		Receive cash on accounts receivable, $24,800.
January		29		Pay cash on accounts payable, $4,700.

The following information is available on January 31.

• Rent for the month of January has expired.
• Supplies remaining at the end of January total $3,500.
• By the end of January, $3,725 of services has been provided to customers who paid in advance on January 17.
• Unpaid salaries at the end of January are $5,310.

Record each of the transactions listed above in the 'General Journal' tab (these are shown as items 1 - 7). Review the 'General Ledger' and the 'Trial Balance' tabs to see the effect of the transactions on the account balances.

2. Record the adjusting entries in the 'General Journal' tab (these are shown as items 8-11).

3. Review the adjusted 'Trial Balance' as of January 31, 2021.

4. Prepare an income statement for the period ended January 31, 2021, in the 'Income Statement' tab.

5. Prepare a classified balance sheet as of January 31, 2021 in the 'Balance Sheet' tab.

6. Record the closing entries in the 'General Journal' tab (these are shown as items 12 and 13).

7. Using the information from the requirements above, complete the 'Analysis' tab.

Answer 1

Date	Journal Entries	Dr.($)	Cr.($)
Jan 2, 2021	prepaid rent	8100
	cash		8100
	(rent paid in advance)
Jan 9, 2021	supplies	4200
	accounts payable		4200
	(supplies purchased on account)
Jan 13, 2021	accounts receivable	26200
	services		26200
	(services performed on account)
Jan 17, 2021	cash	4400
	unearned revenue		4400
	(cash received in advance)
Jan 20, 2021	salaries expenses	12200
	cash		12200
	(salaries paid in cash)
Jan 22, 2021	cash	24800
	accounts receivable		24800
	(cash received from customers)
Jan 29, 2021	accounts payable	4700
	cash		4700
	(accounts payable paid off)
Ref.	adjusting journal entries	Dr.($)	Cr.($)
a	rent expenses	675
	prepaid rent		675
	(rent expired for the month)
b	supplies expenses	4500
	supplies		4500
	(supplies expensed)(3800+4200-3500)
c	unearned service revenue	3725
	services revenue		3725
	(services reconized)
d	salaries expenses	5310
	accrued salaries		5310
	(salaries outstanding)

Trial Balance	Unadjusted	Adjustments	Adjusted
Accounts	Dr.($)	Cr.($)	Dr.($)	Cr.($)	Dr.($)	Cr.($)
cash	28700				28700
accounts receivable	7300				7300
supplies	8000			4500	3500
prepaid rent	8100			675	7425
land	57000				57000
accounts payable		3400				3400
accrued salaries				5310		5310
unearned service revenue		4400	3725			675
common stock		72000				72000
retained earnings		15300				15300
service revenue		26200		3725		29925
salaries expenses	12200		5310		17510
rent expenses			675		675
supplies expenses			4500		4500
totals	121300	121300	14210	14210	126610	126610

Dynamite Fireworks
Income Statement (amounts in $)
For the period Jan 31, 2021
service revenue		29925
less expenses
salaries expenses	17510
supplies expenses	4500
rent expenses	675
total expenses		22685
net income		7240
Dynamite Fireworks
Balance Sheet (amounts in $)
As of Jan 31, 2021
assets
current assets
cash	28700
accounts receivable	7300
supplies	3500
prepaid rent	7425
total current assets		46925
non current assets
land		57000
total assets		103925
liabilities
current liabilities
accounts payable	3400
accrued salaries	5310
unearned service revenue	675
total current liabilities		9385
Equity
common stock	72000
retained earnings	15300
net income	7240
total equity		94540
total liabilities and equity		103925

Closing Journal Entries	Dr.($)	Cr.($)
service revenue	29925
income summary		29925
(closing of revenue account)
income summary	22685
salaries expenses		17510
supplies expenses		4500
rent expenses		675
(closing of expenses account)
income summary	7240
retained earnings		7240
(closing of income summary to retained earnings)