Question

Required information [The following information applies to the questions displayed below.] Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $12. At the start of January 2018, VGC’s income statement accounts had zero balances and its balance sheet account balances were as follows: Cash $ 1,590,000 Accounts Receivable 245,000 Supplies 17,800 Equipment 922,000 Buildings 435,000 Land 1,250,000 Accounts Payable 137,000 Deferred Revenue 140,000 Notes Payable (due 2025) 81,000 Common Stock 2,800,000 Retained Earnings 1,301,800 In addition to the above accounts, VGC’s chart of accounts includes the following: Service Revenue, Salaries, and Wages Expense, Advertising Expense, and Utilities Expense. The following transactions occurred during the January month: Received $65,250 cash from customers on 1/1 for subscriptions that had already been earned in 2017. Purchased 10 new computer servers for $34,600 on 1/2; paid $14,400 cash and signed a three-year note for the remainder owed. Paid $12,600 for an Internet advertisement run on 1/3. On January 4, purchased and received $3,300 of supplies on account. Received $215,000 cash on 1/5 from customers for service revenue earned in January. Paid $3,300 cash to a supplier on January 6. On January 7, sold 19,200 subscriptions at $12 each for services provided during January. Half was collected in cash and half was sold on account. Paid $420,000 in wages to employees on 1/30 for work done in January. On January 31, received an electric and gas utility bill for $5,250 for January utility services. The bill will be paid in February. Enter the beginning balances shown above in the following T-accounts and post the journal entries.

Answer 1

Vanishing Games Corporation Journal Enteries Trans. Particulars 1 Cash a/c Dr. To Accounts Receivable (Cash from debtors) Debit in $ Credit in $ 65250 65250 2 Dr. 34600 Equipment a/c To Cash To Note Payable (Computers purchased) 14400 20200 3 12600 Advertisement a/c Dr. To Cash (Advertisement expense paid) 12600 | 4 3300 Supplies a/c Dr. To Accounts Payable (Supplies on account) 3300 215000 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 215000 6 Dr. 3300 Accounts Payable a/c To Cash (Creditors paid) 3300 7 115200 115200 Cash a/c Dr. Accounts Receivable a/c Dr. To Sale (Subscriptions sold) 230400 Dr. 420000 Wages Expense a/c To Cash (Wages paid) 420000 9 Dr. 5250 Utility Expense a/c To Utility Payable (Utility accrued) 5250