Question

At the beginning of Year 2, Oak Consulting had the following normal balances in its accounts:

Account	Balance
Cash	$	33,000
Accounts receivable		20,800
Accounts payable		12,900
Common stock		27,900
Retained earnings		13,000

The following events apply to Oak Consulting for Year 2:

1. Provided $73,300 of services on account.
2. Incurred $3,000 of operating expenses on account.
3. Collected $49,100 of accounts receivable.
4. Paid $30,100 cash for salaries expense.
5. Paid $14,310 cash as a partial payment on accounts payable.
6. Paid a $8,500 cash dividend to the stockholders.

a. Record these events in a general journal.

b & d. Post the beginning balances and the transactions from Parts a&d to the appropriate accounts.

c. Show the beginning balances and the events in a horizontal statements model such as the following one: (In the Statement of Cash Flows column, use the initials "OA" for operating activities, "FA" for financing activities and "NC" for net change in cash. Select "NA" wherever required. Enter any decreases to account balance and cash outflows with a minus sign.)

d-1. Record the closing entries in the general journal.

e. What is the amount of change in retained earnings for the year?

f. Prepare a post-closing trial balance.

Answer 1

	Particulars	Debit	Credit
a)	Accounts receivable A/c	$        73,300.00
	To Sales A/c		$      73,300.00
b)	Expenses A/c	$          3,000.00
	To Accounts Payable A/c		$        3,000.00
c)	Cash A/c	$        49,100.00
	To Accounts receivable A/c		$      49,100.00
d)	Salaries expenses A/c	$        30,100.00
	To Cash A/c		$      30,100.00
e)	Accounts payable A/c	$        14,310.00
	To Cash A/c		$      14,310.00
f)	Retained earnings A/c	$          8,500.00
	To Dividend Payable A/c		$        8,500.00
	Dividend Payable A/c	$          8,500.00
	To Cash A/c		$        8,500.00

		Accounts receivable A/c
Date	Particulars	Amount	Date	Particulars	Amount
Beginning	To Balance b/d	$   20,800.00	During year	By Cash A/c	$   49,100.00
During year	To Sales A/c	$   73,300.00	Closing	By Balance c/d	$   45,000.00
		$   94,100.00			$   94,100.00
		Sales A/c
Date	Particulars	Amount	Date	Particulars	Amount
Closing	To P/L A/c	$   73,300.00	During year	By Accounts Recv.	$   73,300.00
		$   73,300.00			$   73,300.00
		Expenses A/c
Date	Particulars	Amount		Particulars	Amount
During year	To Accounts Payab.	$      3,000.00	Closing	By P/L A/c	$      3,000.00
		$      3,000.00			$      3,000.00
		Accounts payable A/c
Date	Particulars	Amount	Date	Particulars	Amount
During year	To Cash A/c	$   14,310.00	Beginning	By Balance B/d	$   12,900.00
Closing	To Balance c/d	$      1,590.00	During year	By Expenses A/c	$      3,000.00
		$   15,900.00			$   15,900.00
		Cash A/c
Date	Particulars	Amount	Date	Particulars	Amount
Beginning	To Balance b/d	$   33,000.00	During year	By Salaries	$   30,100.00
During year	To Accounts Recev.	$   49,100.00	During year	By Accounys Payab	$   14,310.00
			During year	By Dividend Payab	$      8,500.00
			Closing	By Balance c/d	$   29,190.00
		$   82,100.00			$   82,100.00
		Salaries expenses A/c
Date	Particulars	Amount	Date	Particulars	Amount
During year	To Cash A/c	$   30,100.00	Closing	By P/L A/c	$   30,100.00
		$   30,100.00			$   30,100.00
		Dividend Payable A/c
Date	Particulars	Amount	Date	Particulars	Amount
During year	To Cash	$      8,500.00	During year	By Retained Earning	$      8,500.00
		$      8,500.00			$      8,500.00
		Retained earnings A/c
Date	Particulars	Amount	Date	Particulars	Amount
During year	To Dividend Payable	$      8,500.00	Opening	By balance b/d	$   13,000.00
Closing	To Balance c/d	$      4,500.00
		$   13,000.00			$   13,000.00

c)	Particulars	Amount
	OA
	Salaries paid	$ (30,100.00)
	Cash recvd from debtors	$   49,100.00
	Cash paid to creditors	$ (14,310.00)
a)	Net OA	$      4,690.00
	FA
	Dividend paid	$   (8,500.00)
b)	Net FA	$   (8,500.00)
(a+b)	NC	$   (3,810.00)
Add:	Opening Cash balance	$   33,000.00
	Closing cash balance	$   29,190.00

f)	Trial Balance
	Particulars		Debit	Credit
	Accounts Receivable		$    45,000.00
	Sales			$       73,300.00
	Expenses		$      3,000.00
	Accounts Payable			$         1,590.00
	Cash		$    29,190.00
	Salaries		$    30,100.00
	Retained earnings			$         4,500.00
	Common stock			$       27,900.00
		Total	$ 107,290.00	$    107,290.00