Question
AC201: The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: Received $42,000 cash from the issue of a short-term
AC201: The following transactions apply to Walnut Enterprises for Year 1, its first year of operations:
- Received $42,000 cash from the issue of a short-term note with a 4 percent interest rate and a one-year maturity. The note was made on April 1, Year 1.
- Received $120,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 5 percent.
- Paid $70,500 cash for other operating expenses during the year.
- Paid the sales tax due on $100,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2.
- Recognized the accrued interest at December 31, Year 1.
The following transactions apply to Walnut Enterprises for Year 2:
- Paid the balance of the sales tax due for Year 1.
- Received $145,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 5 percent.
- Repaid the principal of the note and applicable interest on April 1, Year 2.
- Paid $83,500 of other operating expenses during the year.
- Paid the sales tax due on $120,000 of the service revenue. The sales tax on the balance of the revenue is not due until Year 3.
f-1. Record the Year 2 transactions in general journal form. f-2. Post the Year 2 transactions to T-accounts. f-3. Prepare an income statement for Year 2. f-4. Prepare a statement of changes in stockholders equity for Year 2. f-5. Prepare a balance sheet for Year 2. f-6. Prepare a statement of cash flows for Year 2. f-7. Prepare closing entries for Year 2. f-8. Post the Year 2 closing entries to T-accounts. f-9. Prepare a post-closing trial balance for Year 2.
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