Question

Transactions and events during 2018 (summarized in thousands of dollars) follow:
a. Borrowed $12 cash on March 1 using a short-term note
b. Purchased land on March 2 for future building site; paid cash, $9.
c. Issued additional shares of common stock on April 3 for $23.
d Purchased software on July 4, $10 cash.
e. Purchased supplies on account on October 5 for future use, $18
f. Paid accounts payable on November 6, $13
g. Signed a $25 service contract on November 7 to start February 1, 2019
h. Recorded revenues of $160 on December 8, including $40 on credit and $120 collected
i. Recognized salaries and wages expense on December 9, $85 paid in cash.
j. Collected accounts receivable on December 10, $24
Data for adjusting journal entries as of December 31 ces
k. Unrecorded amortization for the year on software.$5
l. Supplies counted on December 31, 2018, $10
m. Depreciation for the year on the equipment, $6
n. Interest of $1 to accrue on notes payable.
o. Salaries and wages earned but not yet paid or recorded, $12
p. Income tax for the year was $8. It will be paid in 2019.
6-a. Prepare an income statement
6-b. Prepare the statement of retained earnings
6-c. Prepare the balance sheet

Answer 1

Answer:

a. Income Statement for the year ended December 31:

Revenue                             $160

Amortization exp.    $5

Salaries and

 wages expense   $85

Supplies expense    $8

Interest expense     $8       106

Net income                        $54

b. Statement of Retained Earnings for the year ended December 31:

Net Income     $54

c. Balance Sheet as of December 31:

Assets:

Cash                          $62

Accounts receivable $16

Supplies                    $10

Software                   $10

Acc. Amortization     ($5)

Land                           $9

Total assets           $102

Liabilities and Equity:

Note Payable           $12

Accounts payable    $5

Interest payable       $8

Total liabilities        $25

Common stock      $23

Retained earnings $54

Total liab.+ equity $102

Explanation:

1) Data and Calculations:

a. Cash $12  Short-term Note Payable $12

b. Land $9 Cash $9

c. Cash $23 Common stock $23

d. Software $10 Cash $10

e. Supplies $18 Accounts payable $18

f. Accounts payable $13 Cash $13

g. N/A

h. Cash $120 Accounts receivable $40 Revenue $160

i. Salaries and wages expense $85 Cash $85

j. Cash $24 Accounts receivable $24

k. Amortization Expense $5 Accumulated Amortization $5

l. Supplies Expense $8 Supplies $8

m. Depreciation Expense $6 Accumulated Depreciation $6

n. Interest Expense $1 Interest Payable $1

o. Salaries & wages expense $12 Salaries & wages payable $12

p. Income tax expense $8 Income tax payable $8

Unadjusted Trial Balance

Account Titles            Debit     Credit

Cash                          $62

Accounts receivable $16

Supplies                    $18

Software                   $10

Land                           $9

Common stock                            $23

Short-term Note Payable             $12

Accounts payable                         $5

Revenue                                    $160

Salaries and

 wages expense   $85

Totals                   $200         $200

Adjusted Trial Balance

Account Titles            Debit     Credit

Cash                          $62

Accounts receivable $16

Supplies                    $10

Software                   $10

Accumulated Amortization          $5

Land                           $9

Common stock                            $23

Short-term Note Payable             $12

Accounts payable                         $5

Interest payable                            $8

Revenue                                    $160

Amortization exp.    $5

Salaries and

 wages expense   $85

Supplies expense    $8

Interest expense     $8

Totals                   $213         $213

Cash $12  

Land ($9)

Common stock $23

Software ($10)

Accounts payable ($13)

Revenue $120

Salaries & wages ($85)

Accounts receivable $24

Cash balance =  $62