Colton Enterprises experienced the following events for Year 1, the first year of operation: 1. Acquired $35,000

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Colton Enterprises experienced the following events for Year 1, the first year of operation:
1. Acquired $35,000 cash from the issue of common stock.
2. Paid $12,000 cash in advance for rent. The payment was for the period April 1, Year 1, to March 31, Year 2.
3. Performed services for customers on account for $72,000.
4. Incurred operating expenses on account of $35,000.
5. Collected $55,500 cash from accounts receivable.
6. Paid $21,000 cash for salary expense.
7. Paid $28,000 cash as a partial payment on accounts payable. 

Adjusting Entries
8. Made the adjusting entry for the expired rent. (See Event 2.)
9. Recorded $2,400 of accrued salaries at the end of Year 1.
Events for Year 2
1. Paid $2,400 cash for the salaries accrued at the end of the prior accounting period.
2. Performed services for cash of $21,000.
3. Purchased $2,800 of supplies on account.
4. Paid $13,200 cash in advance for rent. The payment was for one year beginning April 1, Year 2.
5. Performed services for customers on account for $88,000.
6. Incurred operating expenses on account of $41,500.
7. Collected $89,000 cash from accounts receivable.
8. Paid $39,000 cash as a partial payment on accounts payable.
9. Paid $31,500 cash for salary expense.
10. Paid a $10,000 cash dividend to stockholders.
Adjusting Entries
11. Made the adjusting entry for the expired rent. (Hint: Part of the rent was paid in Year 1.)
12. Recorded supplies expense. A physical count showed that $450 of supplies were still on hand.


Required
a. Record the events and adjusting entries for Year 1 in general journal form.
b. Post the Year 1 events to T-accounts.
c. Prepare a trial balance for Year 1.
d. Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Year 1.
e. Record the entries to close the Year 1 temporary accounts to Retained Earnings in the general journal and post to the T-accounts.
f. Prepare a post-closing trial balance for December 31, Year 1.
g. Repeat Requirements a through f for Year 2.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Related Book For  book-img-for-question

Introductory Financial Accounting for Business

ISBN: 978-1260299441

1st edition

Authors: Thomas Edmonds, Christopher Edmonds

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