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 31,700 Accounts receivable 13,000 Equipment 21,000 Accumulated depreciation 6,300 Salaries payable 7,500 Common stock 44,000 Retained earnings 7,900 Total 65,700 65,700 The following is a summary of the transactions for the year: Sales of services, $114,000, of which $34,200 was on credit. Collected on accounts receivable, $23,800. Issued shares of common stock in exchange for $11,000 in cash. Paid salaries, $41,500 (of which $7,500 was for salaries payable). Paid miscellaneous expenses, $22,400. Purchased equipment for $13,000 in cash. Paid $2,750 in cash dividends to shareholders. Accrued salaries at year-end amounted to $830. Depreciation for the year on the equipment is $2,100. 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

Cash					Accounts receivable					Equipment
Beg. Balance	31700				Beg. Balance	13000				Beg. Balance	21000
Sales Revenue	79800		a		Sales revenue	34200		a		Cash	13000
Accounts Receivable	23800		b		Cash		23800	b
Common Stock	11000		c							Closing balance	34000
Salaries payable		7500	d		Closing balance	23400
Salaries expense		34000	d
Miscellaneous expenses		22400	e
Equipment		13000	f
Dividends		2750	g
	146300	79650
Closing balance	66650
Accumulated Depreciation					Salaries payable					Common stock
Beg. Balance		6300			Beg. Balance		7500			Beg. Balance		44000
Depreciation expense		2100	2		Cash	7500		d		Cash		11000	c
					Salaries expense		830	1
Closing balance		8400								Closing balance		55000
					Closing balance		830
Retained Earnings					Service Revenue					Miscellaneous Expenses
Beg. Balance		7900			Cash		79800	a		Cash	22400
Undistributed profits		51920			Accounts receivable		34200	a
										Closing balance	22400
Closing balance		59820			Closing balance		114000
Depreciation expenses					Salaries expense					Income Summary
Accumulated depreciation	2100		2		Cash	34000		d		Service Revenue		114000
					Salaries payable	830				Miscellaneous Expenses	22400
Closing balance	2100									Depreciation expenses	2100
					Closing balance	34830				Salaries expense	34830
										Net Income		54670
										Dividends		2750
										Retained Earnings		51920