Question

On January 1, 2021, Red Flash Photography had the following balances: Cash, $19,000; Supplies, $8,700; Land, $67,000; Deferred Revenue, $5,700; Common Stock $57,000; and Retained Earnings, $32,000. During 2021, the company had the following transactions: 1. February 15 Issue additional shares of common stock, $27,000. 2. May 20 Provide services to customers for cash, $42,000, and on account, $37,000. 3. August 31 Pay salaries to employees for work in 2021, $30,000. 4. October 1 Purchase rental space for one year, $19,000. 5. November 17 Purchase supplies on account, $29,000. 6. December 30 Pay dividends, $2,700. The following information is available on December 31, 2021: Employees are owed an additional $4,700 in salaries. Three months of the rental space has expired. Supplies of $5,700 remain on hand. All of the services associated with the beginning deferred revenue have been performed.

Answer 1

Answer:

Red Flash Photography  

Balance Sheet as at January 1, 2018,

    Assets

Cash,............... $26,000  

Supplies,........... $9,400

Land, ........ .......$74,000  

Total..................109, 400  

Capital and Liabilities

Deferred Revenue... $6,400

Common Stock..... ..$64,000  

Retained Earnings...$39,000.  

Total............................109,400

Red Flash Photography  

Balance Sheet as at 31st December 2018

Revised Balance Sheet on 31st December 2018  

Assets

Cash..........................................42,600

Account Receivable............ 44,000  

Supplies....................................15,800  

Land..........................................74,000  

Prepaid Rent............................19,500

Total........................................... 195,900  

Capital & Liabilities

Common Stock ......................98,000  

Retained Earnings.................56,500  

Accrued Wages........................5,400  

Accounts Payable...................36,000  

Total........................................... 195,900

Explanation:

1. February 15 Issue additional shares of common stock, $34,000.  

ADD 34,000 TO EQUITY, AND TO CASH

2. May 20 Provide services to customers for cash, $49,000, and on account, $44,000.  

LESS 49,000 FROM CASH AND ADD TO RETAINED EARNINGS AS INCOME, ADD 44,000 AS ACCOUNT RECEIVABLES AND ADD TO INCOME IN RETAINED EARNINGS  

3. August 31 Pay salaries to employees for work in 2018, $37,000.  

LESS 37,000 FROM CASH AND FROM RETAINED EARNINGS

4. October 1 Purchase rental space for one year, $26,000.  

LESS FROM CASH AND FROM RETAINED EARNINGS

5. November 17 Purchase supplies on account, $36,000.  

ADD TO STOCK, ADD TO ACCOUNTS PAYABLES

6. December 30 Pay dividends, $3,400.  

LESS FROM CASH AND FROM RETAINED EARNINGS

The following information is available on December 31, 2018:  

1. Employees are owed an additional $5,400 in salaries.  

ADD TO ACCRUED SALARIES,LESS FROM RETAINED EARNINGS AS EXPENSES INCURRED IN THE PERIOD

2. Three months of the rental space has expired.  

CREATE PREPAID RENT FOR 3/4 OF RENT (19,500) AND LESS 6500 FROM RETAINED EARNINGS AS EXPENSE FOR THE PERIOD

3. Supplies of $6,400 remain on hand.  

LESS 19600 (26,000-6400) FROM SUPPLIES AND FROM RETAINED EARNINGS AS EXPENSE FOR THE PERIOD

4. All of the services associated with the beginning deferred revenue have been performed.  

DELETE DEFERRED REVENUE OF 6,400 AND ADD SAME AMOUNT TO RETAINED EARNINGS AS INCOME EARNED