Question

Problem 1

Kat’s Cat Klinic had the following balance sheet as of December 31, 2016:

Assets:                                                                 Liabilities and Stockholders’ Equity

Cash                                        $    211,000     Accounts Payable                   $      37,000

Accounts Receivable $95,000                        Salaries Payable                             19,300

Less Allowance           (6,300)       88,700     Utilities Payable                                3,200

Prepaid Insurance                          27,000     Interest Payable                                4,100

Supplies                                          31,000     Unearned Revenue                        16,800    

Building                    $530,000                        Notes Payable                                64,000

Accum Depr – Build (205,000)     325,000     Common Stock                             238,000

Equipment                $407,000                       APIC                                             396,900

Accum Depr – Equip(119,000)    288,000     Retained Earnings                        191,400

                                                $    970,700                                                     $    970,700

                                                =========                                                    =========

The following economic events occurred during 2017:

Performed services for $ 211,000, all on account.

Paid $ 169,000 for salaries that were due. (THINK!)

Collected $ 126,000 from customers on account.

Received $ 41,000 for services to be performed.

Paid $ 8,900 due for utilities. (THINK!)

Performed services totaling $ 236,000 of which $ 91,000 was received in cash.

Purchased $ 44,000 worth of supplies and paid cash.

Paid $ 7,300 for interest due on note. (THINK!)

Wrote off uncollectible bad debt of $ 11,600. (See 2012/2030 text or page 363.)

Paid $ 167,000 for salaries.

Collected $ 234,000 on account.

Paid $ 22,000 on account.

Issued 75,000 shares of $ 1 par value common stock and received $ 310,000. (See 2012/2030 text or page 1047.)

Performed services totaling $ 284,200 of which $ 79,000 was received in cash.

Declared and paid a cash dividend of $ 85,000. (Use a dividend account.) (See page 91.)

Collected $ 191,000 on account.

The following information pertains to 2017 year-end adjusting entries:

Estimated $ 12,100 for bad debts expense.

$ 9,400 of insurance remains unexpired at year-end.

There are $ 38,200 worth of supplies on hand.

Allocated $ 29,000 for depreciation of buildings and $ 33,000 for depreciation of equipment.

Accrued the following expenses: salaries, $ 10,700; utilities, $ 2,200; interest, $ 5,800.

Earned $ 32,300 of prepaid services.

Using the information above, complete the following:

Open T-accounts and enter the beginning balances from the 2016 balance sheet.

Record 2017 transactions 1 thru 16 in general journal form.

Post transactions 1 thru 16 to the T-accounts.

Prepare a 2017 unadjusted trial balance in good form. (Balance should be 2,328,300)

Record 2017 adjusting entries a thru f in general journal form.

Post adjusting entries a thru f to the T-accounts.

Prepare a 2017 adjusted trial balance in good form. (Balance should be 2,415,800)

Prepare a 2017 year-end income statement, statement of stockholders’ equity and a balance sheet, all in good form. (Total assets should be 1,465,200)

Record closing entries in general journal form. (Use an Income Summary account.)

Post closing entries to the T-accounts.

Prepare a 2017 post-closing trial balance. (Balance should be 1,858,000)  

Answer 1

Kat's Cat Clinic
General Journal for the year ended December 31, 2017
Ref	Account Title	Debit	Credit
1	Accounts Receivable	211000
	Service Revenue		211000
2	Salaries payable	19300
	Salaries Expense	149700
	Cash		169000
3	Cash	126000
	Accounts Receivable		126000
4	Cash	41000
	Unearned Service Revenue		41000
5	Utilities Payable	3200
	Utilities Expense	5700
	Cash		8900
6	Cash	91000
	Accounts Receivable	145000
	Service Revenue		236000
7	Supplies	44000
	Cash		44000
8	Interest Payable	4100
	Interest Expense	3200
	Cash		7300
9	Allowance for doubtful accounts	11600
	Accounts Receivable		11600
10	Salaries Expense	167000
	Cash		167000
11	Cash	234000
	Accounts Receivable		234000
12	Accounts Payable	22000
	Cash		22000
13	Cash	310000
	Common Stock		75000
	APIC		235000
14	Cash	79000
	Accounts Receivable	205200
	Service Revenue		284200
15	Dividend	85000
	Cash		85000
16	Cash	191000
	Accounts Receivable		191000

Kat's Cat Clinic
Adjusting Journal entries for the year ended December 31, 2017
Ref	Account Title	Debit	Credit
a	Bad Debt Expense	12100
	Allowance for doubtful accounts		12100
b	Insurance Expense	17600
	Prepaid Insurance Expense		17600
c	Supplies Expense	36800
	Supplies		36800
d	Depreciation expense - building	29000
	Depreciation expense -equipment	33000
	Accumulated Depreciation - building		29000
	Accumulated Depreciation -equipment		33000
e	Salaries Expense	10700
	Utilities Expense	2200
	Interest Expense	5800
	Salaries Payable		10700
	Utilities Payable		2200
	Interest Payable		5800
f	Unearned Revenue	32300
	Service Revenue		32300

Kat's Cat Clinic
Worksheet for the year ended December 31, 2017
Account	Unadjusted		Adjustments		Adjusted
	Debit	Credit	Debit	Credit	Debit	Credit
Cash	779800				779800
Accounts Receivable	93600				93600
Allowance for doubtful accounts		-5300		12100		6800
Prepaid Insurance	27000			17600	9400
Supplies	75000			36800	38200
Building	530000				530000
Accumulated Depreciation - building		205000		29000		234000
Equipment	407000				407000
Accumulated Depreciation - equipment		119000		33000		152000
Accounts Payable		15000				15000
Salaries Payable		0		10700		10700
Utilities Payable				2200		2200
Interest Payable				5800		5800
Unearned Revenue		57800	32300			25500
Notes Payable		64000				64000
Common Stock		313000				313000
APIC		631900				631900
Retained Earnings		191400				191400
Dividend	85000				85000
Service Revenue		731200		32300		763500
Salaries Expense	316700		10700		327400
Depreciation Expense - Building			29000		29000
Depreciation Expense - Equipment			33000		33000
Supplies Expense			36800		36800
Utilities Expense	5700		2200		7900
Interest Expense	3200		5800		9000
Bad Debt Expense			12100		12100
Insurance Expense			17600		17600
	2323000	2323000	179500	179500	2415800	2415800

Income Statement
For the year ended December 31, 2017
Service Revenue	763500
Expenses:
Salaries Expense	327400
Depreciation Expense - Building	29000
Depreciation Expense - Equipment	33000
Supplies Expense	36800
Utilities Expense	7900
Interest Expense	9000
Bad Debt Expense	12100
Insurance Expense	17600
Total Expenses	472800
Net Income	290700
Kat's Cat Clinic
Statement of Stockholders' equity
For the year ended December 31, 2017
Common Stock		313000
APIC		631900
Retained earnings:
Balace as at January 1, 2017	191400
Net income for the year	290700
Dividends	-85000
Balance as at December 31, 2017		397100
Stockholders' equity as at December 31, 2017		1342000
Kat's Cat Clinic
Balance Sheet
For the year ended December 31, 2017
Assets
Cash		779800
Accounts Receivable	93600
Allowance for doubtful accounts	6800	86800
Prepaid Insurance		9400
Supplies		38200
Building	530000
Accumulated Depreciation - building	234000	296000
Equipment	407000
Accumulated Depreciation - equipment	152000	255000
Total Assets		1465200
Liabilities and stockholders' equity
Accounts Payable		15000
Salaries Payable		10700
Utilities Payable		2200
Interest Payable		5800
Unearned Revenue		25500
Notes Payable		64000
Total Liabilities		123200
Common Stock		313000
APIC		631900
Retained Earnings		397100
Total Stockholders' Equity		1342000
Liabilities and Stockholders' equity		1465200