The company had the following transactions during January. Jan. 1 The Company so
ID: 2421384 • Letter: T
Question
The company had the following transactions during January.
Jan. 1 The Company sold shares of common stock for $30,000 cash.
Jan. 1 The Company purchased a one-year insurance policy for $300 in cash.
Jan. 1 The Company purchased office equipment costing $8,000 by signing a 6% note due in two years. The Equipment has a 5 year life.
Jan. 10 The Company purchased $735 of office supplies for cash.
Jan. 15 The Company purchased a trademark for 4,000 cash.
Jan. 29 The Company billed customers $5,500 for consulting services performed.
Jan. 31 The Company paid $1,450 for employees salary.
Jan. 31 Since the company had a good month Palmer declared a $1,000 dividend to be paid on February 10th.
Additional Information:
On January 31st, the company took an inventory of the supplies and found that they had $500 of supplies on hand.
Buildings and Equipment purchased before the 15th of the month are depreciated for a whole month using the straight-line method.
On February 3rd received the January utilities bill for $188.
REQUIRED:
a. Journalize the transactions
b. Prepare the adjusting entries
c. Post all entries to the accounts
d. Prepare a single-step income statement, retained earnings statement and a Classified Balance Sheet for the first month of operations
e. Prepare closing entries
HINTS:
Total assets = $41,657
Net Income = $3,429
Explanation / Answer
Journal entries
b)Adjusting entries
To Prepaid insurance
(300*1/12)
To interest payable
8000*6%*1/12
Income statment
Revenues $5,500
less:expenses
Office supplies 235
Depreication 133
Utiltity expense 188
Salary expense 1450
Insurance expense 25
interest 40 2071
Net income $3429
Assets
Cash 23,515 notes paayble 8,000
Prepaid insuracne 275 Dividend payable 1,000
Office supplies 500 A/c payable 188
A/c receivable 5,500 interest payable 40
Equipment 8000
less:Dep 133 7857 Common stock 8000
Trademark 4000 Retained earnings 2429
total 41,657 total 41,657
Closing entry
Date Description Debit Credit JAn1 Cash $30,000 To Common Stock $30,000 Prepaid insurance $300 to Cash $300 Equipment $8,000 to Notes payable $8,000 Jan10 Office Supplies $735 To cash $735 Jan 15 Trademark $4,000 To Cash $4,000 Jan 29 Account receivable $5,500 To Service fee $5,500 Jan 31 Salary $1,450 To Cash $1,450 Jan 31 Dividend $1,000 To Dividend payable $1,000