Question

Prepare the following January financial statements:

a) Income Statement for month ended January 31

b) Statement of Stockholders Equity for month ended January 31

c) Balance Sheet as of January 31

d) Statement of Cash Flows for month ended January 31

e) Record January closing transactions in the General Journal and post to the General Ledger.

f) Prepare a post-closing trial balance as of January 31.

January Transactions
1-Jan	Performed car repair services and received cash at the time of sale, $4,990.
2-Jan	Paid for the car parts purchased on account last year, $1,170.
4-Jan	Paid wages and salaries for $3,190, part of which was accrued in December.
10-Jan	Paid the utility bill that was already accrued in December in utilities payable.
16-Jan	Collected cash from credit sales made last year, $3,050.
20-Jan	Purchased $4,000 of equipment, paid $2,000 cash and issued a note for $2,000.
22-Jan	Performed car repair services on account, $4,860.
27-Jan	Paid dividends to the company's owners, $400.
January Adjusting Entries
31-Jan	The estimated depreciation on building and equipment is $700.
31-Jan	One month of rent has expired, $1,000.
31-Jan	The annual interest rate is 4% on all notes and paid quarterly. It was last paid on Dec 31 of the prior year. Round to the nearest dollar.
31-Jan	The supplies remaining at the end of the month was $675.
31-Jan	Accrued wages and salaries worked in January that will be paid 2-4, $1,940.
31-Jan	The estimated income taxes for the month is $1,100.

	Thunderduck Car Repair
	Post-Closing Trial Balance
	December 31, 2XX1
	Debit	Credit
Cash	6,800
Accounts receivable	3,150
Supplies	990
Prepaid rent	1,000
Building	87,000
Equipment	105,000
Accumlated depreciation		41,200
Accounts payable		6,460
Utilities payable		750
Salaries and wages payable		2,820
income tax payable		8,240
Notes payable		28,500
Common stock		88,200
Retained Earnings		27,770
Total	203,940	203,940

Answer 1

SOLUTION:

Solution:

Journal entries:

Date	Description	Debit	Credit
31-Dec	Cash	$4,990
	Service Revenue		$4,990
01-Jan	Accounts Payable	$1,170
	Cash		$1,170
03-Jan	Salaries and Wages Expense	$370
	Salaries and Wages Payable	$2,820
	Cash		$3,190
09-Jan	Utilities Payable	$750
	Cash		$750
15-Jan	Cash	$3,050
	Accounts Receivable		$3,050
19-Jan	Equipment	$4,000
	Cash		$2,000
	Note Payable		$2,000
21-Jan	Accounts Receivable	$4,860
	Service Revenue		$4,860
26-Jan	Dividends	$400
	Cash		$400

Adjusting entries:

30-Jan	Depreciation Exp	$700
	Accumulated Depreciation		$700
30-Jan	Rent Exp	$1,000
	Prepaid Rent		$1,000
30-Jan	Interest Exp	$102
	Interest Payable		$102
	(((28500+2000)*0.04*(1/12))
30-Jan	Supplies Exp	$315
	Supplies		$315
30-Jan	Wages and Salaries Exp	$1,940
	Wages and Salaries Payable		$1,940
30-Jan	Income Tax Exp	$1,100
	Income Tax Payable		$1,100

Adjusted Trial Balance	Debit	Credit
Cash	$7,330
Accounts Receivable	$4,960
Supplies	$675
Prepaid Rent	$0
Building	$87,000
Equipment	$109,000
Accumulated Depreciation		$41,900
Wages and Salaries Payable		$1,940
Income Tax Payable		$9,340
Accounts Payable		$5,290
Utilities Payable		$0
Interest Payable		$102
Notes Payable		$30,500
Common Stock		$88,200
Retained Earnings		$27,770
Service Revenue		$9,850
Dividends	$400
Interest Expense	$102
Wages and Salaries Expense	$2,310
Depreciation Expense	$700
Rent Expense	$1,000
Income Tax Expense	$1,100
Supplies Expense	$315
TOTAL	$214,892	$214,892

Income Statement	Amount
Service Revenue	$9,850
Minus Expenses:
Rent Exp	$1,000
Interest Exp	$102
Wages and Salaries Exp	$2,310
Depreciation Exp	$700
Income Tax Exp	$1,100
Supplies Exp	$315
Net income or (loss)	$4,323

Statement of Stockholders Equity	Common Stock	Retained Earnings	Total SHE
Beginning balance, Dec 31	$88,200	$27,770	$115,970
Plus: Issue stock	-	-	$0
Plus: Net Income	$0	$4,323	$4,323
Minus: Dividends	$0	-$400	-$400
Ending balance, Jan 31	$88,200	$31,693	$119,893

BALANCE SHEET
Assets:		Liabilities:
Accounts Receivable	$4,960	Wages and Salaries Payable	$1,940
Cash	$7,330	Income Tax Payable	$9,340
Supplies	$675	Interest Payable	$102
Total current assets:	$12,965	Accounts Payable	$5,290
Building	$87,000	Utilities Payable	$0
Equipment	$109,000	Total current liabilities:	$16,672
Minus: Accumulated Depreciation	-$41,900	Notes Payable	$30,500
Total long term assets:	$154,100	Total Liabilities	$47,172
		Stockholders Equity:
		Retained Earnings	$31,693
		Common Stock	$88,200
		Total Stockholders' Equity	$119,893
TOTAL ASSETS	$167,065	TOTAL LIABILITIES & EQUITY	$167,065

Cash flow statements
Operating:
Net Income	$4,323
Plus: Depreciation Expense	$700
Plus: Increase in Interest Payable	$102
Plus: Increase in Income Tax Payable	$1,100
Plus: Decrease in Prepaid Rent	$1,000
Plus: Decrease in Supplies	$315
Minus: Increase in Accounts Receivable	-$1,810
Minus: Decrease in Utilities Payable	-$750
Minus: Decrease in Accounts Payable	-$1,170
Minus: Decrease in Wages and Salaries Payable	-$880
Net Cash flow from operatiing activities	$2,930
Investing:
Purchased equipment	-$2,000
Net cash flow from investing activities	-$2,000
Financing:
Plus: Issue stock	$0
Minus: Payment of Dividends	-$400
Net cash flow from financing activities	-$400
Cash beginning, Jan 1	$6,800
Cash ending, Jan 31	$7,330
Cash change	$530
Non-cash activities:
Purchased equipment by issuing a note	$2,000

Jan Closing Entries
30-Jan	Service Revenue	$9,850
	Retained Earnings		$9,850
30-Jan	Retained Earnings	$4,425
	Wages and Salaries Expense		$2,310
	Depreciation Expense		$700
	Supplies Expense		$315
	Income Tax Expense		$1,100
	Rent Expense		$1,000
	Interest Expense		$102
30-Jan	Retained Earnings	$400
	Dividends		$400

Post-Closing Trial Balance	Debit	Credit
Cash	$7,330
Accounts Receivable	$4,960
Supplies	$675
Prepaid Rent	$0
Building	$87,000
Equipment	$109,000
Wages and Salaries Payable		$1,940
Income Tax Payable		$9,340
Utilities Payable		$0
Accumulated Depreciation		$41,900
Accounts Payable		$5,290
Notes Payable		$30,500
Interest Payable		$102
Common Stock		$88,200
Retained Earnings		$31,693
TOTAL	$208,965	$208,965

?