Question

The general ledger of the Karlin Company, a consulting company, at January 1, 2021, contained the following account balances:

Account Title	Debits		Credits
Cash	30,000
Accounts receivable	15,000
Equipment	20,000
Accumulated depreciation			6,000
Salaries payable			9,000
Common stock			40,500
Retained earnings			9,500
Total	65,000		65,000

The following is a summary of the transactions for the year:

1. Service revenue, $100,000, of which $30,000 was on account and the balance was received in cash.
2. Collected on accounts receivable, $27,300.
3. Issued shares of common stock in exchange for $10,000 in cash.
4. Paid salaries, $50,000 (of which $9,000 was for salaries payable at the end of the prior year).
5. Paid miscellaneous expense for various items, $24,000.
6. Purchased equipment for $15,000 in cash.
7. Paid $2,500 in cash dividends to shareholders.

1. Accrued salaries at year-end amounted to $1,000.
2. Depreciation for the year on the equipment is $2,000.

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 2021.
7-b. Prepare a balance sheet as of December 31, 2021.
9. Prepare a post-closing trial balance.

Answer 1

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