Question

The general ledger of Red Storm Cleaners at January 1, 2021, includes the following account balances: Credits Debits $18,500 7,700 3,700 13,500 Accounts Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Salaries Payable Common Stock Retained Earnings Totals $ 4,400 6,400 23,500 9,100 $ 43,400 $ 43,400 The following is a summary of the transactions for the year: 1. March 12 Provide services to customers, $57,000, of which $20,700 is on account. 2. May 2 Collect on accounts receivable, $17,700. 3. June 30 Issue shares of common stock in exchange for $6,000 cash. 4. August 1 Pay salaries of $6,400 from 2020 (prior year). 5. September 25 Pay repairs and maintenance expenses, $12,700. 6. October 19 Purchase equipment for $7,700 cash. 7. December 30 Pay $1,100 cash dividends to stockholders.

Answer 1

Accounting Equation
Event	Assets											Liabilities	+	stockholders’ Equity			Account Titles for Retained Earnings
	Cash	+	Account Receivable	+	Supplies	+	Equipment	-	Acc. Depreciation		=	Salaries Payable	+	Common stock	+	Retained Earnings
Beg. bal.	18500	+	7700	+	3700	+	13500	-	4400		=	6400	+	23500	+	9100
1	$36,300		$20,700													$57,000
2	$17,700		-$17,700
3	$6,000													$6,000
4	-$6,400											-$6,400
5	-$12,700															-$12,700
6	-$7,700						$7,700
7	-$1,100															-$1,100
tals	$50,600		$10,700		$3,700		$21,200		$4,400					$29,500		$52,300

Post Closing Trial Balanc
Account	Debit	Credit
Cash	$50,600.00
Accoutn Receivable	$10,700.00
Supplies	$3,700.00
Equipment	$21,200.00
Acc. Depreciation		$4,400.00
Salaries Payable
Common Stock		$29,500.00
Retained Earning		$52,300.00
Total	$86,200.00	$86,200.00