Answer:
1)
Service revenue, $104,000, of which $31,200 was on account and the balance was received in cash.
Dr Cash 72,800
Dr Accounts receivable 31,200
Cr Service revenue 104,000
Collected on accounts receivable, $22,300.
Dr Cash 22,300
Cr Accounts receivable 22,300
Issued shares of common stock in exchange for $8,000 in cash.
Dr Cash 8,000
Cr Common stock 8,000
Paid salaries, $37,750 (of which $6,250 was for salaries payable at the end of the prior year).
Dr Wages expense 31,500
Dr Wages payable 6,250
Cr Cash 37,750
Paid miscellaneous expense for various items, $20,400.
Dr Miscellaneous expenses 20,400
Cr Cash 20,400
Purchased equipment for $10,500 in cash.
Dr Equipment 10,500
Cr Cash 10,500
Paid $2,475 in cash dividends to shareholders.
Dr Dividends 2,475
Cr Cash 2,475
Accrued salaries at year-end amounted to $755.
Dr Wages expense 755
Cr Wages payable 755
Depreciation for the year on the equipment is $1,600.
Dr Depreciation expense 1,600
Cr Accumulated depreciation 1,600
Dr Service revenue 104,000
Cr Income summary 104,000
Dr Income summary 54,255
Cr Wages expense 32,255
Cr Miscellaneous expenses 20,400
Cr Depreciation expense 1,600
Dr Income summary 49,745
Cr Retained earnings 49,745
Dr Retained earnings 2,475
Cr Dividends 2,475
2)
Cash Accounts receivable
debit credit debit credit
33,200 10,500
72,800 31,200
22,300 <u> 22,300</u>
8,000 19,400
37,750
20,400
10,500
<u> 2,475 </u>
65,175
Equipment Wages payable
debit credit debit credit
11,200 6,250
10,500 6,250
<u> 1,600 </u> <u> 755 </u>
20,100 755
Common stock Retained earnings
debit credit debit credit
41,500 7,150
<u> 8,000 </u> 49,745
49,500 <u>2,475 </u>
54,420
Service revenue Wages expense
debit credit debit credit
104,000 31,500
<u>104,000 </u> 755
0 0 <u> 32,255</u>
0 0
Miscellaneous expense Dividends
debit credit debit credit
20,400 2,475
<u> 20,400</u> <u> 2,475</u>
0 0 0 0
Depreciation expense Income summary
debit credit debit credit
1,600 104,000
<u> 1,600</u> 54,255
0 0 <u>49,745 </u>
0 0
3 and 4) Karlin Company
Trial Balance Sheet
For the year ended December 31, 2021
Debit Credit
Cash $65,175
Accounts receivable $19,400
Equipment $20,100
Wages payable $755
Common stock $49,500
Retained earnings $7,150
Service revenue $104,000
Wages expense $32,255
Miscellaneous expense $20,400
Depreciation expense $1,600
Dividends <u> $2,475</u> <u> </u>
Totals $161,405 $161,405
5.a. Karlin Company
Income Statement
For the year ended December 31, 2021
Service revenue $104,000
Expenses:
- Wages expense $32,255
- Miscellaneous expense $20,400
- Depreciation expense $1,600 <u> ($54,255)</u>
Net income $49,745
5.b. Karlin Company
Balance Sheet
For the year ended December 31, 2021
Assets:
Cash $65,175
Accounts receivable $19,400
Equipment $20,100
Total assets $104,675
Liabilities:
Wages payable $755
Total liabilities $755
Stockholders' equity
Common stock $49,500
Retained earnings $54,420
Total stockholders' equity $103,920
Total liabilities + equity $104,675
6) Karlin Company
post-closing Trial Balance Sheet
For the year ended December 31, 2021
Debit Credit
Cash $65,175
Accounts receivable $19,400
Equipment $20,100
Wages payable $755
Common stock $49,500
Retained earnings <u> </u> <u> $54,420</u>
Totals $104,675 $104,675
