Answer:
Transactions during 2014 (summarized in thousands of dollars) follow:
a) Borrowed $21 cash on July 1, 2014, signing a six-month note payable.
b) Purchased equipment for $18 cash on July 2.
c) Issued additional shares of common stock on July 3 for $5.
d) Purchased additional equipment on August 4, $3 cash.
e) Purchased, on account, supplies on September 5 for future use, $10.
f) On December 6, recorded revenues in the amount of $65, including $9 on credit and $56 received in cash.
g) Paid salaries and wages expenses on December 7, $35.
h) Collected accounts receivable on December 8, $8.
i) Paid accounts payable on December 9, $11.
j) Received a $3 deposit on December 10 for work to start January 15, 2015.
Data for adjusting journal entries on December 31:
k) Amortization for 2014, $3.
l) Supplies of $4 were counted on December 31, 2014.
m) Depreciation for 2014, $2.
n) Accrued interest on notes payable of $1.
o) Wages earned but not yet paid, $3.
p) Income tax for 2014 was $4 and will be paid in 2015.
Required:
Set up T-accounts for the accounts on the trial balance.
Enter beginning balances and post the transactions (a-j), adjusting entries (k-p), and closing entry.
(Enter your answers in thousands of dollars.)
Solution: See attachment for the T-accounts.
Explanation:
T-accounts is an accounting tool used to show the effect of transactions and to extract an ending balance of each account in the General Ledger. It has two identical sides depicting debit and credit sides.
Generally, it has been replaced by system generated ledger accounts that have running balances for each transaction. The basic debit and credit sides are still being maintained, but no longer in the shape of a T.
