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	30,800
Accounts receivable	14,500
Equipment	24,000
Accumulated depreciation			7,200
Salaries payable			8,250
Common stock			45,500
Retained earnings			8,350
Total	69,300		69,300

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

Sales of services, $120,000, of which $36,000 was on credit.

Collected on accounts receivable, $24,700.

Issued shares of common stock in exchange for $12,500 in cash.

Paid salaries, $43,750 (of which $8,250 was for salaries payable).

Paid miscellaneous expenses, $23,600.

Purchased equipment for $14,500 in cash.

Paid $2,900 in cash dividends to shareholders.

Accrued salaries at year-end amounted to $875.

Depreciation for the year on the equipment is $2,400.

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 & 8 )

In the books of Karlin Company

Journal Entries

			(Amount in $)
Sl No	Particulars	L/F	Debit	Credit
1	Cash A/c	Dr	84,000
	Accounts Receivables A/c		36,000
	To Sales			1,20,000
	{Being cash sales and receivables accounted}
2	Cash A/c	Dr	24,700
	To Accounts Receivables A/c			24,700
	{Being account receivables collected accounted}
3	Cash A/c	Dr	12,500
	To Common Stock A/c			12,500
	{Being issue of common stock against cash accounted}
4	Salary Payable A/c	Dr	8,250
	Salary A/c	Dr	35,500
	To Cash			43,750
	{Being salary paid in cash accounted}
5	Miscellaneous Expenses A/c	Dr	23,600
	To Cash			23,600
	{Being miscellaneous expenses paid in cash accounted}
6	Equipment A/c	Dr	14,500
	To Cash			14,500
	{Being purchase of equipment for cash accounted}
7	Dividend A/c	Dr	2,900
	To Cash			2,900
	{Being dividend paid in cash accounted}
8	Salary A/c	Dr	875
	To Salary Payable A/c			875
	{Being accrued salary for the year accounted}
9	Depreciation A/c	Dr	2,400
	To Equipment A/c			2,400
	{Being depreciaiton for the year accounted}
	Total		2,45,225	2,45,225

3.)

			(Amount in $)
Cash Account
Debit		Credit
Particulars	Amount	Particulars	Amount
Salary Payable	8,250
Salary	35,500	To Balance b/d	30,800
Miscellaneous Expenses	23,600	To Sales	84,500
Equipment	14,500	To Accounts Receivables	24,700
Dividend A/c	2,900	To Common Stock	12,500
To Balance c/d	67,250
Total	1,52,000	Total	1,52,000

			(Amount in $)
Account Receivable Account
Debit		Credit
Particulars	Amount	Particulars	Amount
By Cash	24,700	To Balance b/d	14,500
		To Sales	36,000
To Balance c/d	25,800
Total	50,500	Total	50,500

			(Amount in $)
Equipment Account
Debit		Credit
Particulars	Amount	Particulars	Amount
By Accumulated Depreciation	2,400	To Balance b/d	24,000
		To Cash	14,500
To Balance c/d	36,100
Total	38,500	Total	38,500

			(Amount in $)
Salary Payable Account
Debit		Credit
Particulars	Amount	Particulars	Amount
By Balance b/d	8,250	To Cash	8,250
By Salary	875
		By Balance c/d	875
Total	9,125	Total	9,125

4)

Karlin Company

Unadjusted Trial Balance

January 01, 2018 (Amounts in $)

Account	Debit	Credit
Cash	30,800
Accounts Receivable	14,500
Equipment	24,000
Accumulated Depreciation		7,200
Salary Payable		8,250
Common Stock		45,500
Retained Earnings		8,350
Total	69,300	69,300

6.)

Karlin Company

Adjusted Trial Balance

December 31, 2018 (Amounts in $)

Particulars	Debit	Credit
Cash	67,250
Accounts Receivable	25,800
Equipment	36,100
Salary Payable		875
Accumulated Depreciaiton		7,200
Common Stock		58,000
Retained Earnings		8,350
Sales		1,20,000
Salary	36,375
Miscellaneous Expenses	23,600
Dividend	2,900
Depreciation	2400
Total	1,94,425	1,94,425

7-a.)

Karlin Company
Income Statement
For the year ended December 31, 2018		(Amount in $)
Revenue:
Sales		1,20,000
Total Revenue from Operation		1,20,000
Expense:
Salary		36,375
Miscellaenous Expenses		23,600
Dividend paid		2,900
Depreciation		2,400
Total Expenses		65,275
Profit transferred to Balance Sheet		54,725
7-b.) Karlin Company Balance Sheet as at December 31, 2018 (Amount in $) Equity and Liabilities Common Stock 58,000 Retained Earnings 63,075 Salary Payable 875 Total Equity and Liabilities 1,21,950 Assets Equipment 28,900 Cash 67,250 Accounts receivable 25,800 Total Assets 1,21,950 8.) Karlin Company Post-Closing Trial Balance December 31, 2018 (Amount in $) Particulars Debit Credit Cash 67,250 Accounts Receivable 25,800 Equipment 36,100 Accumulated Depreciation 7,200 Salary Payable 875 Common Stock 58,000 Retained Earnings 63,075 Total 1,21,950 1,21,950