Question

Talbot Riding Stables provides stables, care for animals, and grounds for riding and showing horses. The account balances at the beginning of 2018 were:

Problem Set B Enlarge Image During 2018, the following transactions occurred: Talbot provided animal care services, all on credit, for $210,300. Talbot rented stables to customers for $20,500 cash. Talbot rented its grounds to individual riders, groups, and show organizations for $41,800 cash.

There remains $15,600 of accounts receivable to be collected at December 31, 2018.

Feed in the amount of $62,900 was purchased on credit and debited to the supplies account.

Straw was purchased for $7,400 cash and debited to the supplies account.

Wages payable at the beginning of 2018 were paid early in 2018. Wages were earned and paid during 2018 in the amount of $112,000.

The income tax payable at the beginning of 2018 was paid early in 2018. Payments of $73,000 were made to creditors for supplies previously purchased on credit. One year's interest at 9% was paid on the notes payable on July 1, 2018. During 2018, Jon Talbot, a principal shareholder, purchased a horse for his wife, Jennifer, to ride. The horse cost $7,000, and Talbot used his personal credit to purchase it. Property taxes were paid on the land and buildings in the amount of $17,000. Dividends were declared and paid in the amount of $7,200. The following data are available for adjusting entries: Supplies (feed and straw) in the amount of $30,400 remained unused at year-end. Annual depreciation on the buildings is $6,000. Annual depreciation on the equipment is $5,500. Wages of $4,000 were unrecorded and unpaid at year-end. Interest for six months at 9% per year on the note is unpaid and unrecorded at year-end. Income taxes of $16,500 were unpaid and unrecorded at year-end.

Answer 1

1&2	Account Title	Debit	Credit
a.	Accounts receivables	210300
	Animal care services revenue		210300
	Cash	20500
	Stable Rent revenue		20500
	Cash	41800
	Ground Rent revenue		41800
b.	Cash	199100
	Accounts receivables		199100
	(4400+210300-15600)
c.	Supplies	62900
	Accounts payable		62900
	(feed)
d.	Supplies	7400
	Cash		7400
	(straw)
e.	Wages payble	14200
	Wages expense	112000
	Cash		126200
f.	Income tax payable	15100
	Cash		15100
g.	Accounts payable	73000
	Cash		73000
h.	Interest payable	2700
	Interest expense	2700
	Cash		5400
j.	Property taxes	17000
	Cash		17000
k.	Dividend expense	7200
	Cash		7200
	Adjusting Entries:
1	Supplies Expense	67700
	Supplies		67700
	(27800+62900+7400-30400)
2&3	Depreciation expense-Buildings	6000
	Depreciation expense-Equipment	5500
	Accumulated Depreciation expense-Buildings		6000
	Accumulated Depreciation expense-Equipment		5500
4	Wage expense	4000
	Wages payable		4000
5	Interest expense	2700
	Interest payable		2700
	(60000*9%/2)
6	Income tax expense	16500
	Income tax payable		16500
		888300	888300

1&2   LEDGER ACCOUNTS			Net ledger Balances
Account Title	Debit	Credit	Debit	Credit
Op.balance		23700
Accounts payable		62900
Accounts payable	73000			13600
Op.balance	4400
Accounts receivables	210300
Accounts receivables		199100	15600
Op. bal.		36000
Accumulated Depreciation expense-Buildings		6000		42000
op.bal		16500
Accumulated Depreciation expense-Equipment		5500		22000
Animal care services revenue		210300		210300
Buildings	115000		115000
Op. bal	2200
Cash	20500
Cash	41800
Cash	199100
Cash		7400
Cash		126200
Cash		15100
Cash		73000
Cash		5400
Cash		17000
Cash		7200
			12300
Common shares		150000		150000
Depreciation expense-Buildings	6000		6000
Depreciation expense-Equipment	5500		5500
Dividend expense	7200		7200
Equipment	57000		57000
Ground Rent revenue		41800		41800
Income tax expense	16500		16500
Op.bal		15100
Income tax payable	15100
Income tax payable		16500		16500
Interest expense	2700
Interest expense	2700		5400
Op.bal.		2700
Interest payable	2700
Interest payable		2700		2700
Land	167000		167000
Notes payable		60000		60000
Property taxes	17000		17000
Stable Rent revenue		20500		20500
Op.Balance	27800
Supplies		67700
Supplies	62900
Supplies	7400		30400
Supplies Expense	67700		67700
Retained earnings		55200		55200
Wage expense	4000
Wages expense	112000		116000
Op. Balance		14200
Wages payable	14200
Wages payable		4000		4000
	1261700	1261700	638600	638600

TRIAL BALANCE
Cash	12300
Accounts receivables	15600
Supplies	30400
Land	167000
Buildings	115000
Accumulated Depreciation expense-Buildings		42000
Equipment	57000
Accumulated Depreciation expense-Equipment		22000
Accounts payable		13600
Wages payable		4000
Income tax payable		16500
Interest payable		2700
Notes payable		60000
Common shares		150000
Retained Earnings		55200
Animal care services revenue		210300
Stable Rent revenue		20500
Ground Rent revenue		41800
Depreciation expense-Buildings	6000
Depreciation expense-Equipment	5500
Supplies Expense	67700
Wages expense	116000
Property taxes	17000
Interest expense	5400
Income tax expense	16500
Dividend expense	7200
Totals	638600	638600
3. Statement of Earnings
Animal care services revenue		210300
Stable Rent revenue		20500
Ground Rent revenue		41800
Total revenues		272600
Less: expenses:
Depreciation expense-Buildings	6000
Depreciation expense-Equipment	5500
Supplies Expense	67700
Wages expense	116000
Property taxes	17000
Interest expense	5400
Total expenses		217600
EBT		55000
Less:Income tax expense		16500
Net Income		38500
4..Statement of Retained Earnings
Beginning balance	55200
Add;Current yr.Net Income	38500
less: Dividends	7200
Ending balance	86500
5. Classified statement of Financial Position
Current assets
Cash	12300
Accounts receivables	15600
Supplies	30400
Total current assets		58300
Fixed assets
Land	167000
Buildings	115000
Less:Accumulated Depreciation expense-Buildings	-42000
Equipment	57000
Less:Accumulated Depreciation expense-Equipment	-22000
Total Fixed assets		275000
Total assets		333300
Liabilities & Equity
Current liabilities
Accounts payable	13600
Wages payable	4000
Income tax payable	16500
Interest payable	2700
Total current liabilities		36800
Long-term liabilities
Notes payable		60000
Total Liabilities		96800
Equity
Common shares	150000
Retained Earnings	86500
Total equity		236500
Total Liabilities & Equity		333300
6. Closing Entries:
Animal care services revenue	210300
Stable Rent revenue	20500
Ground Rent revenue	41800
Income Summary		272600
Income Summary	234100
Depreciation expense-Buildings		6000
Depreciation expense-Equipment		5500
Supplies Expense		67700
Wages expense		116000
Property taxes		17000
Interest expense		5400
Income tax expense		16500
Income Summary	38500
Retained earnings		38500
Retained earnings	7200
Dividend expense		7200
Post-closing Trial Balance
Cash	12300
Accounts receivables	15600
Supplies	30400
Land	167000
Buildings	115000
Accumulated Depreciation expense-Buildings		42000
Equipment	57000
Accumulated Depreciation expense-Equipment		22000
Accounts payable		13600
Wages payable		4000
Income tax payable		16500
Interest payable		2700
Notes payable		60000
Common shares		150000
Retained Earnings		86500
Total	397300	397300
7. NO.    Transaction I, ie.
The horse cost $7,000, and Talbot used his personal credit to purchase it.
Need not be included in preparing Journal entries.
He has not used any money belonging to the business. He has only used his personal credit.
Business is a distinct entity ,different from the owner.