Question

The general ledger of the Karlin Company, a consulting company, at January 1, 2018, contained the following account balances: Account Title Debits Credits Cash 30,200 Accounts receivable 15,500 Equipment 26,000 Accumulated depreciation 7,800 Salaries payable 8,750 Common stock 46,500 Retained earnings 8,650 Total 71,700 71,700 The following is a summary of the transactions for the year: Sales of services, $124,000, of which $37,200 was on credit. Collected on accounts receivable, $25,300. Issued shares of common stock in exchange for $13,500 in cash. Paid salaries, $45,250 (of which $8,750 was for salaries payable). Paid miscellaneous expenses, $24,400. Purchased equipment for $16,000 in cash. Paid $3,000 in cash dividends to shareholders. Accrued salaries at year-end amounted to $905. Depreciation for the year on the equipment is $2,600. 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 2018. 7-b. Prepare a balance sheet as of December 31, 2018. 9. Prepare a post-closing trial balance.

Answer 1

2., 5., and 8.

No.	General Journal	Debit	Credit
1	Cash	86800
	Accounts receivable	37200
	Service revenue		124000
	(To record service revenue earned)
2	Cash	25300
	Accounts receivable		25300
	(To record collections on account)
3	Cash	13500
	Common stock		13500
	(To record shares issued for cash)
4	Salaries payable	8750
	Salaries expense	36500
	Cash		45250
	(To record salaries paid)
5	Miscellaneous expenses	24400
	Cash		24400
	(To record miscellaneous expense paid)
6	Equipment	16000
	Cash		16000
	(To record purchase of equipment)
7	Dividends	3000
	Cash		3000
	(To record dividends paid)
8	Salaries expense	905
	Salaries payable		905
	(To record salaries accrued)
9	Depreciation expense	2600
	Accumulated depreciation-equipment		2600
	(To record depreciation expense)
10	Service revenue	124000
	Income summary		124000
	(To close revenue account)
11	Income summary	64405
	Salaries expense		37405
	Miscellaneous expenses		24400
	Depreciation expense		2600
12	Income summary	59595
	Retained earnings		59595
	(To close income summary)
13	Retained earnings	3000
	Dividends		3000
	(To close dividends)

3.

Cash					Accounts Receivable
Beg. Bal.	30200	45250	4		Beg. Bal.	15500	25300	2
1	86800	24400	5		1	37200
2	25300	16000	6
3	13500	3000	7
End. Bal.	67150				End. Bal.	27400
Equipment					Accumulated Depreciation
Beg. Bal.	26000				Beg. Bal.		7800
6	16000						2600	9
End. Bal.	42000				End. Bal.		10400
Salaries Payable					Common Stock
Beg. Bal.		8750			Beg. Bal.		46500
4	8750	905	8				13500	3
End. Bal.		905			End. Bal.		60000
Retained Earnings					Dividends
Beg. Bal.		8650			7	3000	3000	13
13	3000	59595	12
End. Bal.		65245			End. Bal.	0
Service Revenue					Salaries Expense
10	124000	124000	1		4	36500	37405	11
					8	905
End. Bal.		0			End. Bal.	0
Depreciation Expense					Miscellaneous Expense
9	2600	2600	11		5	24400	24400	11
End. Bal.	0				End. Bal.	0
Income Summary
11	64405	124000	10
12	59595
End. Bal.		0

4.

Karlin Company
Unadjusted Trial Balance
December 31, 2018
Account	Debit	Credit
Cash	67150
Accounts Receivable	27400
Equipment	42000
Accumulated depreciation		7800
Salaries payable		0
Common stock		60000
Retained earnings		8650
Dividends	3000
Service revenue		124000
Salaries expense	36500
Depreciation expense	0
Miscellaneous expense	24400
Total $	200450	200450

6.

Karlin Company
Adjusted Trial Balance
December 31, 2018
Account	Debit	Credit
Cash	67150
Accounts Receivable	27400
Equipment	42000
Accumulated depreciation		10400
Salaries payable		905
Common stock		60000
Retained earnings		8650
Dividends	3000
Service revenue		124000
Salaries expense	37405
Depreciation expense	2600
Miscellaneous expense	24400
Total $	203955	203955

7-a.	Karlin Company
	Income Statement
	For the Year Ended December 31, 2018
	Revenues:
	Service revenue		124000
	Expenses:
	Salaries expense	37405
	Depreciation expense	2600
	Miscellaneous expense	24400
	Total expenses		64405
	Net income		59595
7-b.	Karlin Company
	Balance Sheet
	December 31, 2018
	Assets
	Cash		67150
	Accounts Receivable		27400
	Equipment	42000
	Accumulated depreciation	-10400	31600
	Total assets		126150
	Liabilities and Stockholders' Equity
	Salaries payable		905
	Common stock		60000
	Retained earnings		65245
	Total liabilities and stockholders' equity		126150

7-a.	Karlin Company
	Income Statement
	For the Year Ended December 31, 2018
	Revenues:
	Service revenue		124000
	Expenses:
	Salaries expense	37405
	Depreciation expense	2600
	Miscellaneous expense	24400
	Total expenses		64405
	Net income		59595
7-b.	Karlin Company
	Balance Sheet
	December 31, 2018
	Assets
	Cash		67150
	Accounts Receivable		27400
	Equipment	42000
	Accumulated depreciation	-10400	31600
	Total assets		126150
	Liabilities and Stockholders' Equity
	Salaries payable		905
	Common stock		60000
	Retained earnings		65245
	Total liabilities and stockholders' equity		126150

9.

Karlin Company
Post-Closing Trial Balance
December 31, 2018
Account	Debit	Credit
Cash	67150
Accounts Receivable	27400
Equipment	42000
Accumulated depreciation		10400
Salaries payable		905
Common stock		60000
Retained earnings		65245
Totals $	136550	136550