Question

Karla Tanner opened a web consulting business called Linkworks and recorded the following transactions in its first month of operations.
Apr. 1	Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company.
Apr. 2	The company prepaid $9,000 cash for twelve months’ rent for office space. The company's policy is record prepaid expenses in balance sheet accounts.
Apr. 3	The company made credit purchases for $8,000 in office equipment and $3,600 in office supplies. Payment is due within 10 days.
Apr. 6	The company completed services for a client and immediately received $4,000 cash.
Apr. 9	The company completed a $6,000 project for a client, who must pay within 30 days.
Apr. 13	The company paid $11,600 cash to settle the account payable created on April 3.
Apr. 19	The company paid $2,400 cash for the premium on a 12-month insurance policy. The company's policy is record prepaid expenses in balance sheet accounts.
Apr. 22	The company received $4,400 cash as partial payment for the work completed on April 9.
Apr. 25	The company completed work for another client for $2,890 on credit.
Apr. 28	Tanner withdrew $5,500 cash from the company for personal use.
Apr. 29	The company purchased $600 of additional office supplies on credit.
Apr. 30	The company paid $435 cash for this month’s utility bill.
Descriptions of items that require adjusting entries on April 30, 2015, follow.
a)	On April 2, the company prepaid $9,000 cash for twelve months' rent for office space.
b)	The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy; the policy's coverage began on April 1.
c)	Office supplies on hand as of April 30 total $1,200.
d)	Straight-line depreciation of office equipment, based on a 5-year life and a $4,000 salvage value, is $500 per month.
e)	The company has completed work for a client, but has not yet billed the $1,800 fee.
f)	Wages due to employees, but not yet paid, as of April 30 total $2,600.

Requirement

General Journal

General Ledger

Trial Balance

Income Statement

St Owners Equity

Balance Sheet

Impact on Income

General Journal tab -For each transaction, review the unadjusted balance and prepare the adjusting entry necessary to correctly report the revenue earned or the expense incurred. After adjusting the accounts, review the general ledger and trial balance for accuracy.

General Ledger tab - Each journal entry is posted automatically to the general ledger. Use the drop-down button to view the unadjusted or adjusted balances.

Trial Balance tab - You may view either the unadjusted or adjusted trial balance by choosing from the dropdown box below. Your choice will determine the reported values on the financial statement tabs.

Income Statement tab - Use the drop-downs to select the accounts properly included on the income statement. The unadjusted or adjusted balances will appear for each account, based on your selection.

Statement of Owner's Equity tab - The unadjusted or adjusted balances will appear for each account, based on your selection.

Balance Sheet tab - Use the drop-downs to select the accounts properly included on the balance sheet. The unadjusted or adjusted balances will appear for each account, based on your selection.

Impact on Income tab -For each adjustment, indicate the income statement and balance sheet account affected, and the impact on net income. If an adjustment caused net income to decrease, enter the amount as a negative value. Net income before adjustments can be found on the income statement tab. (Hint: Select unadjusted on the dropdown.)

Answer 1

Answer 1.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1-Apr	Cash	80,000.00
	Office Equipment	26,000.00
	Karla Tanner, Capital		106,000.00
	(Record the issue of Common Stock)
2-Apr	Prepaid Rent	9,000.00
	Cash		9,000.00
	(record the rent paid for 12 months)
3-Apr	Office Equipment	8,000.00
	Supplies	3,600.00
	Accounts Payable		11,600.00
	(Record the equipment & Supplies purch.)
6-Apr	Cash	4,000.00
	Service Revenue		4,000.00
	(record the service revenue)
9-Apr	Accounts Receivable	6,000.00
	Service Revenue		6,000.00
	(record the service revenue)
13-Apr	Accounts Payable	11,600.00
	Cash		11,600.00
	(record the accounts payable paid)
19-Apr	Prepaid Insurance	2,400.00
	Cash		2,400.00
	(Record the insurance paid)
22-Apr	Cash	4,400.00
	Accounts Receivable		4,400.00
	(record the cash received)
25-Apr	Accounts Receivable	2,890.00
	Service Revenue		2,890.00
	(record the service revenue)
28-Apr	Karla Tanner, Withdrawl	5,500.00
	Cash		5,500.00
	(record the dividends paid)
29-Apr	Supplies	600.00
	Accounts Payable		600.00
	(Record the Supplies purch.)
30-Apr	Utilities Expenses	435.00
	Cash		435.00
	(record the utilities paid)
Adjusting Entries
a.	Rent Expense	750.00
	Prepaid Rent		750.00
	(record the rent expense)
b.	Insurance Expense	200.00
	Prepaid Insurance		200.00
	(record the insurance expense)
c.	Supplies Expense	3,000.00
	Supplies		3,000.00
	(record the supplies expense)
d.	Depreciation Expense	500.00
	Accumulated Depreciation - equip.		500.00
	(record the depreciation expense)
e.	Accounts Receivable	1,800.00
	Service Revenue		1,800.00
	(record the service revenue)
f.	Salaries & Wages Expense	2,600.00
	Salaries & Wages Payable		2,600.00
	(record the salaries expense)

Answer 2.
Cash					Accounts Receivable					Supplies
1-Apr	80,000.00	9,000.00	2-Apr		9-Apr	6,000.00	4,400.00	22-Apr		3-Apr	3,600.00
6-Apr	4,000.00	11,600.00	13-Apr		25-Apr	2,890.00				29-Apr	600.00
22-Apr	4,400.00	2,400.00	19-Apr
		5,500.00	28-Apr
		435.00	30-Apr
Unadj. Bal.	59,465.00				Unadj. Bal.	4,490.00				Unadj. Bal.	4,200.00
					e.	1,800.00						3,000.00	c.
Adj. Bal.	59,465.00				Adj. Bal.	6,290.00				Adj. Bal.	1,200.00
Prepaid Insurance					Prepaid Rent					Office Equipment
19-Apr	2,400.00				2-Apr	9,000.00				1-Apr	26,000.00
										3-Apr	8,000.00
Unadj. Bal.	2,400.00				Unadj. Bal.	9,000.00				Unadj. Bal.	34,000.00
		200.00	b.				750.00	a.
Adj. Bal.	2,200.00				Adj. Bal.	8,250.00				Adj. Bal.	34,000.00
Accounts Payable					Karla Tanner, Capital					Karla Tanner, Withdrawl
13-Apr	11,600.00	11,600.00	3-Apr				106,000.00	1-Apr		28-Apr	5,500.00
		600.00	29-Apr
Unadj. Bal.		600.00			Unadj. Bal.		106,000.00			Unadj. Bal.	5,500.00
Adj. Bal.		600.00			Adj. Bal.		106,000.00			Adj. Bal.	5,500.00
Service Revenue					Utilities Expenses					Rent Expense
		4,000.00	6-Apr		30-Apr	435.00				Unadj. Bal.	-
		6,000.00	9-Apr							a.	750.00
		2,890.00	25-Apr
Unadj. Bal.		12,890.00			Unadj. Bal.	435.00				Adj. Bal.	750.00
		1,800.00	e.
Adj. Bal.		14,690.00			Adj. Bal.	435.00				Adj. Bal.	750.00
Insurance Expense					Supplies Expense					Depreciation Expense
Uaadj. Bal.	-				Uaadj. Bal.	-				Uaadj. Bal.	-
b.	200.00				c.	3,000.00				d.	500.00
Adj. Bal.	200.00				Adj. Bal.	3,000.00				Adj. Bal.	500.00
Accumulated Depreciation - Equip.					Salaries & Wages Expense					Salaries & Wages Payable
Uaadj. Bal.		-			Uaadj. Bal.	-				Uaadj. Bal.		-
		500.00	d.		f.	2,600.00						2,600.00	f.
Adj. Bal.		500.00			Adj. Bal.	2,600.00				Adj. Bal.		2,600.00

Answer 3.
Unadjusted Trial Balance
As of April 30
	Dr. Amt.	Cr. Amt.
Cash	59,465.00
Accounts Receivable	4,490.00
Supplies	4,200.00
Prepaid Insurance	2,400.00
Prepaid Rent	9,000.00
Office Equipment	34,000.00
Accounts Payable		600.00
Karla Tanner, Capital		106,000.00
Karla Tanner, Withdrawl	5,500.00
Service Revenue		12,890.00
Utilities Expenses	435.00
Total	119,490.00	119,490.00

Answer 4.
Adjusted Trial Balance
As of April 30
	Dr. Amt.	Cr. Amt.
Cash	59,465.00
Accounts Receivable	6,290.00
Supplies	1,200.00
Prepaid Insurance	2,200.00
Prepaid Rent	8,250.00
Office Equipment	34,000.00
Accounts Payable		600.00
Karla Tanner, Capital		106,000.00
Karla Tanner, Withdrawl	5,500.00
Service Revenue		14,690.00
Utilities Expenses	435.00
Rent Expense	750.00
Insurance Expense	200.00
Supplies Expense	3,000.00
Depreciation Expense	500.00	-
Accumulated Depreciation - Equip.		500.00
Salaries & Wages Expense	2,600.00
Salaries & Wages Payable		2,600.00
Total	124,390.00	124,390.00

Answer 4.
Income Statement
For the Month ended April 30
Revenue
Service Revenue		14,690.00
Expense
Utilities Expenses	435.00
Rent Expense	750.00
Insurance Expense	200.00
Supplies Expense	3,000.00
Depreciation Expense	500.00
Salaries & Wages Expense	2,600.00	7,485.00
Net Income		7,205.00