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Wewaii [24]
2 years ago
7

On January 1, 2021, Red Flash Photography had the following balances: Cash, $20,000; Supplies, $8,800; Land, $68,000; Deferred R

evenue, $5,800; Common Stock $58,000; and Retained Earnings, $33,000. During 2021, the company had the following transactions: 1. February 15 Issue additional shares of common stock, $28,000. 2. May 20 Provide services to customers for cash, $43,000, and on account, $38,000. 3. August 31 Pay salaries to employees for work in 2021, $31,000. 4. October 1 Paid for one year's rent in advance, $20,000. 5. November 17 Purchase supplies on account, $30,000. 6. December 30 Pay dividends, $2,800.
The following information is available on December 31, 2021:
1. Employees are owed an additional $4,800 in salaries.
2. Three months of the rental space has expired.
3. Supplies of $5,800 remain on hand.
4. All of the services associated with the beginning deferred revenue have been performed.
Business
1 answer:
Vilka [71]2 years ago
4 0

Answer:

A. 15-Feb

Dr Cash $ 28,000.00

Cr Common Stock $ 28,000.00

20-May

Dr Cash $ 43,000.00

CrAccounts Receivable $ 38,000.00

Cr To Service Revenue $ 81,000.00

31-Aug

Dr Salaries Expense $ 31,000.00

Cr To Cash $ 31,000.00

1-Oct

Dr Prepaid Rent $ 20,000.00

Cr To Cash $ 20,000.00

17-Nov Dr Supplies $ 30,000.00

Cr Accounts Payable $ 30,000.00

30-Dec

Dr Dividends $ 2,800.00

Cr Cash $ 2,800.00

31-Dec

Dr Salaries Expense $ 4,800.00

Cr Salaries Payable $ 4,800.00

31-Dec

Dr Rent Expense $ 5,000.00

Cr Prepaid Rent $ 5,000.00

31-Dec

Dr Supplies Expense $ 33,000.00

Cr Supplies $ 33,000.00

31-Dec

Dr Deferred Revenue $ 5,800.00

Cr Service Revenue $ 5,800.00

B. $ 13,000.00

C. $ 43,200.00

D.TOTAL ASSETS $ 164,000.00

TOTAL LIABILITIES and EQUITY $ 164,000.00

Explanation:

Preparation of General Journal, Income Statement, Statement of SE, Balance Sheet

15-Feb

Dr Cash $ 28,000.00

Cr Common Stock $ 28,000.00

20-May

Dr Cash $ 43,000.00

CrAccounts Receivable $ 38,000.00

Cr To Service Revenue $ 81,000.00

31-Aug

Dr Salaries Expense $ 31,000.00

Cr To Cash $ 31,000.00

1-Oct

Dr Prepaid Rent $ 20,000.00

Cr To Cash $ 20,000.00

17-Nov Dr Supplies $ 30,000.00

Cr Accounts Payable $ 30,000.00

30-Dec

Dr Dividends $ 2,800.00

Cr Cash $ 2,800.00

31-Dec

Dr Salaries Expense $ 4,800.00

Cr Salaries Payable $ 4,800.00

31-Dec

Dr Rent Expense $ 5,000.00

Cr Prepaid Rent $ 5,000.00

($ 20000 x 3/12)

31-Dec

Dr Supplies Expense $ 33,000.00

Cr Supplies $ 33,000.00

($ 8800 + $ 30000 - $ 5800)

31-Dec

Dr Deferred Revenue $ 5,800.00

Cr Service Revenue $ 5,800.00

B. Preparation of INCOME STATEMENT

Service REVENUE $ 86,800.00

Less: EXPENSES

Salaries Expense $ 35,800.00

Rent Expense $ 5,000.00

Supplies Expense $ 33,000.00

Net Income $ 13,000.00

($ 86,800.00-$ 73,800.00)

Therefore the income statement will be $ 13,000.00

Calculation for the STATEMENT OF RETAINED EARNINGS

Beginning Balance $ 33,000.00

Add: Net Income $ 13,000.00

Less: Dividends $ (2,800.00)

Ending Balance $ 43,200.00

Therefore retained earnings will be $ 43,200.00

D. Preparation of BALANCE SHEET

ASSETS

Cash $ 37,200.00

Accounts Receivable $ 38,000.00

Prepaid Rent $ 15,000.00

Supplies $ 5,800.00

Land $ 68,000.00

TOTAL ASSETS $ 164,000.00

LIABILITIES and EQUITY

Liabilities

Accounts Payable $ 30,000.00

Salaries Payable $ 4,800.00

Total Liabilities $ 34,800.00

Equity

Common stock $ 86,000.00

Retained Earnings $ 43,200.00

Total Equity $ 129,200.00

TOTAL LIABILITIES and EQUITY $ 164,000.00

Therefore the balance sheet will be

ASSETS $ 164,000.00

TOTAL LIABILITIES and EQUITY $ 164,000.00

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