Question

On the right track?

Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $13. At the start of January 2018, VGC’s income statement accounts had zero balances and its balance sheet account balances were as follows:

Cash	$	2,340,000
Accounts Receivable		238,000
Supplies		17,000
Equipment		899,000
Buildings		467,000
Land		2,170,000
Accounts Payable		121,000
Deferred Revenue		121,000
Notes Payable (due 2025)		76,000
Common Stock		2,800,000
Retained Earnings		3,013,000

In addition to the above accounts, VGC’s chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense.

The January transactions are shown below:

1. Received $57,500 cash from customers on 1/1 for subscriptions that had already been earned in 2017.
2. Purchased 10 new computer servers for $42,800 on 1/2; paid $16,400 cash and signed a three-year note for the remainder owed.
3. Paid $15,300 for an Internet advertisement run on 1/3.
4. On January 4, purchased and received $3,250 of supplies on account.
5. Received $205,000 cash on 1/5 from customers for service revenue earned in January.
6. Paid $3,250 cash to a supplier on January 6.
7. On January 7, sold 17,300 subscriptions at $13 each for services provided during January. Half was collected in cash and half was sold on account.
8. Paid $400,000 in wages to employees on 1/30 for work done in January.
9. On January 31, received an electric and gas utility bill for $6,300 for January utility services. The bill will be paid in February.

Requirement General Journal General Ledger Trial Balance Income Statement Stmt of Retained Earnings Balance Sheet Analysis Prepare the journal entries to record the transactions (a) through (i). (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list View journal entry worksheet Credit No 1 Date Jan 01 General Journal Cash Accounts Receivable Debit 57,500 57,500 2 Jan 02 42,800 Equipment Cash Notes Payable long-term) 16,400 26,400 3 Jan 03 15,300 Advertising Expense Cash 15,300 Jan 04 3,250 Supplies Accounts Payable 3,250 5 Jan 05 205,000 Cash Service Revenue 205,000 6 Jan 06 3,250 Accounts Payable Cash 3,250 Jan 07 Cash Service Revenue Delivery Expense 224,900 224,900 449,800 Jan 30 400,000 Salaries and Wages Expense Cash 400,000 9 Jan 31 6,300 Utilities Expense Accounts Payable 6,300

Answer 1

No	Date	General Journal	Debit	Credit
7	Jan 07	Cash	112450
		Accounts receivable	112450
		Service Revenue (17300 x $13)		224900
		(To record subscription revenue earned)

VANISHING GAMES CORPORATION
Income Statement
For the Month Ended January 31, 2018
Revenues
Service revenue	429900
Expenses
Salaries and wages expense	400000
Advertising expense	15300
Utilities expense	6300
Total expenses	421600
Net income	8300
VANISHING GAMES CORPORATION
Statement of Retained Earnings
For the Month Ended January 31, 2018
Retained earnings, January 1, 2018	3013000
Add: Net income	8300
Retained earnings, January 31, 2018	3021300

VANISHING GAMES CORPORATION
Balance Sheet
At January 31, 2018
Assets
Current assets:
Cash	2280000
Accounts receivable	292950
Supplies	20250
Total current assets	2593200
Land	2170000
Building	467000
Equipment	941800
Total assets	6172000
Liabilities
Current liabilities
Accounts payable	127300
Deferred revenue	121000
Total current liabilities	248300
Long-term notes payable	102400
Total liabilities	350700
Stockholders' Equity
Common stock	2800000
Retained earnings	3021300
Total stockholders' equity	5821300
Total liabilities and stockholders' equity	6172000

Net profit margin = Net income/Service revenue = $8300/$429900 = 1.9%