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 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. 4. August i 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 account balances. 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

Red Storm Cleaners Journal Enteries Date Particulars 12.3.2021 Cash a/c Dr. Accounts Receivable a/c Dr. To Service Revenue (Service on account) Debit in $ Credit in $ 39000 21000 60000 2.5.2021 18000 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 18000 6000 30.6.2021 Cash a/c Dr. To Common Stock (Common Stock issued) 6000 1.8.2021 7500 Dr. Dr. Salaries Payable a/c Salaries Expense a/c To Cash (Salary paid) 7500 13000 25.9.2021 Repairs & Maintenance expense a/c Dr. To Cash (Expense paid) 13000 8000 19.10.2021 Equipment a/c Dr. To Cash (Equipment purchased) 8000 Dr. 1100 30.12.2021 Dividends a/c To Cash (Dividend paid) 1100

Adjusting Enteries Date Particulars 31.12.2021 Salaries and Wages Expense a/c Dr. To Salaries and Wages Payable (Wages accrued) Debit in $ Credit in $ 19600 19600 5000 31.12.2021 Depreciation Expense a/c Dr. To Accum. Depreciation - Equip. (To record depreciation) 5000 2800 31.12.2021 Supplies Expense a/c Dr. To Supplies (Supplies expensed) 4000 - 1200 2800 Closing Enteries Date Particulars Debit in $ Credit in $ 31.12.2021 Income Summary a/c Dr. 40400 To Salaries and Wages Expense 19600 To Repairs & Maintenance expense 13000 To Depreciation Expense 5000 To Supplies Expense 2800 (Expense accounts closed) Dr. 60000 31.12.2021 Service Revenue a/c To Income Summary (Revenue accounts closed) 60000 Dr. 19600 31.12.2021 Income Summary a/c To Retained Earnings (Profits transferred) 19600 Dr. 1100 31.12.2021 Retained Earnings a/c To Dividends (Dividends charged) 1100

Worksheet For the period ending 31.3.2019 Adjustments Debit in $ Credit in $ Unadjusted Debit in $ Credit in $ 53400 11000 4000 23000 5000 2800 5000 Post Closing Debit in $ Credit in $ 53400 11000 1200 23000 10000 19600 31000 28000 Particulars Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Salaries and Wages Payable Common Stock Retained Earnings Dividends Service Revenue Salaries and Wages Expense Repairs & Maintenance expense Depreciation Expense Supplies Expense Totals 19600 Adjusted Debit in $ Credit in $ 53400 11000 1200 23000 10000 19600 31000 9500 1100 60000 19600 13000 5000 2800 130100 1 30100 31000 9500 1100 60000 19600 13000 5000 2800 27400 105500 105500 27400 88600 88600 60000 Statement of Income For the period ending 31.3.2019 Service Revenue Less: Salaries and Wages Expense Repairs & Maintenance expense Depreciation Expense Supplies Expense Net Income 19600 13000 5000 2800 40400 19600 Statement of Retained Earnings For the period ending 31.3.2019 Beginning Net Income 9500 19600 29100 -1100 28000 Dividends

Amounts in $ Amounts in $ Balance sheet As at 31.12.2017 Assets Current Assets Cash Accounts Receivable Supplies Amounts in $ Amounts in $ Liabilities Current Liabilities 53400 Salaries and Wages Payable 11000 1200 65600 19600 Non Current Assets Equipment Accumulated Deprecia Total Assets 23000 -10000 Shareholders Equity Common Stock 13000 Retained Earnings 78600 Total Liabilities & Equity 31000 28000 59000 78600