Question

Problem 2-6 (Algo) Accounting cycle [LO2-3, 2-4,2-5, 2-6, 2-7, 2-8] The general ledger of the Karlin Company, a consulting company, at January 1, 2021, contained the following account balances: Credits Debits 32,900 11,000 17,000 Account Title Cash Accounts receivable Equipment Accumulated depreciation Salaries payable Common stock Retained earnings Total 5,100 6,500 42,000 7,300 60,900 60,900 The following is a summary of the transactions for the year: a. Service revenue, $106,000, of which $31,800 was on account and the balance was received in cash. b. Collected on accounts receivable, $22,600. c. Issued shares of common stock in exchange for $8,500 in cash. d. Paid salaries, $38,500 (of which $6,500 was for salaries payable at the end of the prior year). e. Paid miscellaneous expense for various items, $20,800. f. Purchased equipment for $11,000 in cash. g. Paid $2,525 in cash dividends to shareholders. 1. Accrued salaries at year-end amounted to $770. 2. Depreciation for the year on the equipment is $1,700 Required: 2., 5, & 8. Prepare the summary, adjusting and closing entries for each of the transactions listed. 3. Post the transactions, adjusting and closing entries into the appropriate t-accounts. 4. Prepare an unadjusted trial balance. 6. Prepare an adjusted trial balance. 7-a. Prepare an income statement for 2021. 7-b. Prepare a balance sheet as of December 31, 2021. 9. Prepare a post-closing trial balance. Complete this question by entering your answers in the tabs below. Req 2 5 and 8 Req3 Reg4 Rego Req ZA Req 7B Reg9

Answer 1

Credit Karlin Company Journal entries Date Account Accounts Receivable Cash Service Revenue Debit $ 31,800 $ 74,200 $ 106,000 b $ 22,600 Cash Accounts Receivable $ 22,600 $ 8,500 Cash Common Stock $ 8,500 Salaries Payable Salaries expense Cash $ 6,500 $ 32,000 $ 38,500 $ 20,800 Miscellaneous expenses Cash $ 20,800 $ 11,000 Equipment Cash $ 11,000 $ 2,525 $ 2,525 g Dividends Cash Adjusting entries Salaries expense Salaries Payable $ 770 $ 770 $ 1,700 $ 1,700 Depreciation expense Accumulated Depreciation Closing entries Service Revenue Retained Earnings $ 106,000 $ 106,000 $ 55,270 Retained Earnings Salaries expense Miscellaneous expenses Depreciation expense $ 32,770 $ 20,800 $ 1,700 $ 2,525 Retained Earnings Dividends $ 2,525

Credit Date Date Credit Date Karlin Company T Accounts Date Debit Date Cash Op bal $ 32,900 d а $ 74,200 e b $ 22,600 C $ 8,500 Debit Date Credit Accounts Receivable $11,000 $ 31,800 b $ 22,600 Debit Date Equipment $ 17,000 $ 11,000 Debit Date Credit Accumulated Depreciation Op bal $ 5,100 $ 1,700 Op bal f. $ 38,500 Op bal $ 20,800 $ 11,000 $ 2,525 а Bal. Bal. Bal. $ 6,800 $ 65,375 Salaries Payable $ 6,500 Op bal h $ 20,200 Common Stock Op bal Bal. Dividends $ 2,525 d $ 28,000 Retained Earnings $ 55,270 Op bal $ 2,525 j $ $ 6,500 770 $ 2,525 g $ 42,000 Пk $ 8,500 $ 7,300 $ 106,000 $ 770 Bal. $ 50,500 Bal. Bal. Service Revenue $ 55,505 Miscellaneous expenses $ 20,800 $ 20,800 Salaries expense $ 32,000 $ 770 k $ 106,000 Depreciation expense $ 1,700 k $ 1,700 $ 106,000 h $ 32,770 Bal. $ - Bal. $ Bal. $ - Bal. $ -

Unadjusted TB Debit Credit 65,375 20,200 28,000 5,100 Karlin Company Account Names Cash Accounts Receivable Equipment Accumulated Depreciation Salaries Payable Common Stock Retained Earnings Dividends Service Revenue Salaries expense Miscellaneous expenses Depreciation expense Totals Adjusted TB Debit Credit 65,375 20,200 28,000 6,800 770 50,500 7,300 2,525 106,000 32,770 20,800 1,700 171,370 171,370 Post Closing TB Debit Credit 65,375 20,200 28,000 6,800 770 50,500 55,505 50,500 7,300 2,525 106,000 32,000 20,800 168,900 168,900 113,575 113,575

106,000 Karlin Company Income Statement For the Year Ended Dec 31, 2021 Service Revenue Expenses Salaries expense Miscellaneous expenses Depreciation expense Total Operating expenses Net Income 32,770 20,800 1,700 55,270 50,730 Statement of Retained Earnings For the Year Ended Dec 31, 2021 Beginning balance Net Income Less Dividends Ending Balance 7,300 50,730 (2,525) 55,505

Karlin Company Balance Sheet As of Dec 31, 2021 Assets Current Assets Cash Accounts Receivable Total Current Assets Liabilities & Stockholders Equity Current Liabilities 65,375 Salaries Payable 20,200 85,575 Total Current Liabilities 770 770 Fixed Assets Equipment Accumulated Depreciation Total Fixed Assets Stockholders Equity 28,000 Common Stock (6,800) Retained earnings 21,200 Total Stockholders Equity 50,500 55,505 106,005 Total Assets 106,775 Total Liabilities & Stockholders Equity 106,775