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Colton Enterprises experienced the following events for Year 1, the first year of operation: Acquired $50,000 cash from the issue of common stock. Paid $13,500

Colton Enterprises experienced the following events for Year 1, the first year of operation:

  1. Acquired $50,000 cash from the issue of common stock.
  2. Paid $13,500 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 $102,000.
  4. Incurred operating expenses on account of $42,500.
  5. Collected $78,000 cash from accounts receivable.
  6. Paid $36,000 cash for salary expense.
  7. Paid $34,000 cash as a partial payment on accounts payable.

Adjusting Entries

  1. Made the adjusting entry for the expired rent. (See Event 2.)
  2. Recorded $5,400 of accrued salaries at the end of Year 1.

Events for Year 2

  1. Paid $5,400 cash for the salaries accrued at the end of the prior accounting period.
  2. Performed services for cash of $51,000.
  3. Purchased $4,300 of supplies on account.
  4. Paid $15,000 cash in advance for rent. The payment was for one year beginning April 1, Year 2.
  5. Performed services for customers on account for $118,000.
  6. Incurred operating expenses on account of $56,500.
  7. Collected $104,000 cash from accounts receivable.
  8. Paid $54,000 cash as a partial payment on accounts payable.
  9. Paid $33,000 cash for salary expense.
  10. Paid a $12,000 cash dividend to stockholders.

Adjusting Entries

  1. Made the adjusting entry for the expired rent. (Hint: Part of the rent was paid in Year 1.)
  2. Recorded supplies expense. A physical count showed that $650 of supplies were still on hand.

f. Prepare a post-closing trial balance for December 31, Year 1.

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