Question

Alison and Chuck Renny began operations of their furniture repair shop (Lazy Sofa Furniture, Inc.) on January 1, 2014. The annual reporting period ends December 31. The trial balance on January 1, 2015, appears below (amounts are rounded to thousands of dollars to simplify).

Account Titles	Debit			Credit
Cash	$	5
Accounts Receivable		4
Supplies		2
Equipment		6
Accumulated Depreciation				$	0
Software		12
Accumulated Amortization					3
Accounts Payable					7
Notes Payable (long-term)					0
Salaries and Wages Payable					0
Interest Payable					0
Income Tax Payable					0
Unearned Revenue					0
Common Stock					15
Retained Earnings					4
Service Revenue					0
Supplies Expense		0
Depreciation Expense		0
Salaries and Wages Expense		0
Amortization Expense		0
Interest Expense		0
Income Tax Expense		0
Totals	$	29		$	29

Transactions during 2015 (summarized in thousands of dollars) follow:
1.	Borrowed $21 cash on July 1, 2015, signing a six-month note payable.
2.	Purchased equipment for $18 cash on July 2.
3.	Issued additional shares of common stock on July 3 for $5.
4.	Purchased additional equipment on August 4, $3 cash.
5.	Purchased, on account, supplies on September 5 for future use, $10.
6.	On December 6, recorded revenues in the amount of $65, including $9 on credit and $56 received in cash.
7.	Recognized salaries and wages expenses on December 7, and paid $35.
8.	Collected accounts receivable on December 8, $8.
9.	Paid accounts payable on December 9, $11.
10.	Received a $3 deposit on December 10 for work to start January 15, 2016.
Data for adjusting journal entries on December 31:
11.	Amortization for 2015, $3.
12.	Supplies of $4 were counted on December 31, 2015.
13.	Depreciation for 2015, $2.
14.	Accrued interest on notes payable of $1.
15.	Wages earned not yet paid, $3.
	16. Income tax for 2015 was $4 and will be paid in 2016. (Enter all of your answers in thousands of dollars. (i.e., $100,000 should be entered as $100).) Create a general journal, income statement, Statement of retained earnings and balance sheet

Answer 1

Formula sheet

A	B	C	D	E	F	G
2
3		Journal entries will be as follows:
4		Transaction	Account	Debt	Credit
5		1	Cash	21
6			Notes Payable		=E5
7
8		2	Equipment	18
9			Cash		=E8
10
11		3	Cash	5
12			Common Stock		=E11
13
14		4	Equipment	3
15			Cash		=E14
16
17		5	Supplies	10
18			Cash		=E17
19
20		6	Cash	56
21			Accounts Receivables	9
22			Service Revenue		=E20+E21
23
24		7	Salaries and Wages Expense	35
25			Cash		=E24
26
27		8	Cash	8
28			Accounts Receivables		=E27
29
30		9	Accounts Payable	11
31			Cash		=E30
32
33		10	Cash	3
34			Unearned Revenue		=E33
35
36
37		Adjusting Journal Entries will be as follows:
38
39		Journal entries will be as follows:
40		Transaction	Account	Debt	Credit
41		11	Amortization Expense	3
42			Accumulated Amortization		=E41
43
44		12	Supplies Expense (Beginning + Purchased - Ending)	=E17+2-4
45			Supplies		=E44
46
47		13	Depreciation Expense	2
48			Accumulated Depreciation		=E47
49
50		14	Interest Expense	1
51			Interest Payable		=E50
52
53		15	Salaries and Wage Expense	3
54			Salaries and Wages Payable		=E53
55
56		16	Income Tax Expense	4
57			Income Tax Payable		=E56
58
59