Question

Problem 3-8A Complete the full accounting cycle (LO3-3, 3-4,3-5, 3-6, 3-7) (GL) The general ledger of Red Storm Cleaners at January 1, 2021, includes the following account balances: Credits Debits $20,000 8,000 4,000 15,000 Accounts Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Salaries Payable Common Stock Retained Earnings Totals $ 5,000 7,500 25,000 9,500 $ 47,000 $ 47,000 The following is a summary of the transactions for the year: 1. March 12 Provide services to customers, $60,000, of which $21,000 is on account. 2. May 2 Collect on accounts receivable, $18,000. 3. June 30 Issue shares of common stock in exchange for $6,000 cash. agust 1 Pay salaries of $7,500 from 2020 (prior year). 5. September 25 Pay repairs and maintenance expenses, $13,000. 6. October 19 Purchase equipment for $8,000 cash. 7. December 30 Pay $1,100 cash dividends to stockholders. The following information is available for the adjusting entries. Accrued salaries at year-end amounted to $19,600. Depreciation for the year on the equipment is $5,000. Office supplies remaining on hand at the end of the year equal $1,200. Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet 1. Record each of the transactions listed above in the 'General Journal' tab (these are shown as items 1 - 7). Review the 'General Ledger' and the 'Trial Balance' tabs to see the effect of the transactions on the 2. Record the adjusting entries in the 'General Journal' tab (these are shown as items 8-10). 3. Review the adjusted 'Trial Balance' as of December 31, 2021. 4. Prepare an income statement for the period ended December 31, 2021, in the 'Income Statement' tab. 5. Prepare a classified balance sheet as of December 31, 2021 in the 'Balance Sheet' tab. 6. Record the closing entries in the 'General Journal' tab (these are shown as items 11-13). Requirement General Journal >

Answer 1

Credit Red Storm Cleaners Journal entries No. Date Account 1 12-Mar Cash Accounts Receivable Service Revenue Debit $ 39,000 $ 21,000 Calculation =60,000-21,000 $ 60,000 2 $ 18,000 2-May Cash Accounts Receivable $ 18,000 3 $ 6,000 30-Jun Cash Common Stock $ 6,000 4 $ 7,500 1-Aug Salaries Payable Cash $ 7,500 5 25-Sep Repairs and maintenance expenses $ 13,000 Cash $ 13,000 6 $ 8,000 19-Oct Equipment Cash $ 8,000 $ 1,100 $ 1,100 7 30-Dec Dividends Cash Adjusting entries 8 31-Dec Salaries expense Salaries Payable $ 19,600 $ 19,600 9 $ 5,000 31-Dec Depreciation expense Accumulated Depreciation $ 5,000 2,800 -4,000-1,200 $ 2,800 10 31-Dec Supplies expense Supplies Closing entries 11 31-Dec Service Revenue Retained Earnings $ 60,000 $ 60,000 12 $ 40,400 31-Dec Retained Earnings Repairs and maintenance expenses Salaries expense Depreciation expense Supplies expense $ 13,000 $ 19,600 $ 5,000 $ 2,800 13 $ 1,100 31-Dec Retained Earnings Dividends $ 1,100

Date Credit Red Storm Cleaners T Accounts Date Debit Date Credit Cash Op bal $20,000 1-Aug $ 7,500 12-Mar $ 39,000 25-Sep $ 13,000 2-May $ 18,000 19-Oct $ 8,000 30-Jun $ 6,000 30-Dec $ 1,100 Date Debit Date Credit Accounts Receivable Op bal $ 8,000 12-Mar $ 21,000 2-May $ 18,000 Debit Date Credit Supplies $ 4,000 31-Dec $ 2,800 Date Debit Date Equipment Op bal $ 15,000 19-Oct $ 8,000 Op bal Bal. Bal. $ 53,400 Accum. Depr.- Equipment Op bal $ 5,000 31-Dec $ 5,000 Bal. $ 11,000 Salaries payable 1-Aug $ 7,500 Op bal $ 7,500 31-Dec $ 19,600 $ 1,200 Common Stock Op bal $25,000 30-Jun $ 6,000 Bal. $ 23,000 Retained Earnings 31-Dec $ 40,400 Op bal $ 9,500 31-Dec $ 1,100 31-Dec $ 60,000 Bal. $ 31,000 Bal. $ 28,000 Bal. $ 10,000 Dividends 30-Dec $ 1,100 31-Dec $ 1,100 Bal. $19,600 Service Revenue 12-Mar $ 60,000 31-Dec $ 60,000 Bal. $ Repairs and maintenance expenses 25-Sep $ 13,000 31-Dec $ 13,000 Bal. $ Salary expense 31-Dec $ 19,600 31-Dec $ 19,600 Depreciation expense 31-Dec $ 5,000 31-Dec $ 5,000 Supplies expense 31-Dec $ 2,800 31-Dec $ 2,800 Bal. $ Bal. S - Bal. $ Bal. $ -

Unadjusted TB Debit Credit 53,400 11,000 4,000 23,000 5,000 Red Storm Cleaners Account Names Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Salaries Payable Common Stock Retained Earnings Dividends Service Revenue Repairs and maintenance expenses Salaries expense Depreciation expense Supplies expense Totals Adjusted TB Debit Credit 53,400 11,000 1,200 23,000 10,000 19,600 31,000 9,500 1,100 60,000 13,000 19,600 5,000 2,800 130,100 130,100 Post Closing TB Debit Credit 53,400 11,000 1,200 23,000 10,000 19,600 31,000 28,000 31,000 9,500 1,100 60,000 13,000 105,500 105,500 88,600 88,600

60,000 Red Storm Cleaners Income Statement For period ended December 31, 2021 Service Revenue Expenses Repairs and maintenance expenses Salaries expense Depreciation expense Supplies expense Total Expenses Net Income 13,000 19,600 5,000 2,800 40,400 19,600 Statement of Retained Earnings For period ended December 31, 2021 Beginning balance Net Income 9,500 19,600 Less Dividends Ending Balance 29,100 (1,100) 28,000

Red Storm Cleaners Balance Sheet As of December 31, 2021 Assets Current Assets Cash Accounts Receivable Supplies Total Current Assets 19,600 Liabilities & Stockholders Equity Current Liabilities 53,400 Salaries Payable 11,000 1,200 65,600 Total Current Liabilities 19,600 31,000 Property, Plant & Equipment Equipment Accumulated Depreciation Total Property, Plant & Equipment Stockholders Equity 23,000 Common Stock (10,000) Retained earnings 13,000 Total Stockholders Equity 28,000 59,000 Total Assets 78,600 Total Liabilities & Stockholders Equity 78,600