Question
Colton Enterprises experienced the following events for Year 1, the first year of operation: Acquired $38,000 cash from the issue of common stock. Paid $12,300
Colton Enterprises experienced the following events for Year 1, the first year of operation:
- Acquired $38,000 cash from the issue of common stock.
- Paid $12,300 cash in advance for rent. The payment was for the period April 1, Year 1, to March 31, Year 2.
- Performed services for customers on account for $78,000.
- Incurred operating expenses on account of $36,500.
- Collected $60,000 cash from accounts receivable.
- Paid $24,000 cash for salary expense.
- Paid $29,200 cash as a partial payment on accounts payable.
Adjusting Entries
- Made the adjusting entry for the expired rent. (See Event 2.)
- Recorded $3,000 of accrued salaries at the end of Year 1.
Events for Year 2
- Paid $3,000 cash for the salaries accrued at the end of the prior accounting period.
- Performed services for cash of $27,000.
- Purchased $3,100 of supplies on account.
- Paid $11,400 cash in advance for rent. The payment was for one year beginning April 1, Year 2.
- Performed services for customers on account for $94,000.
- Incurred operating expenses on account of $44,500.
- Collected $92,000 cash from accounts receivable.
- Paid $42,000 cash as a partial payment on accounts payable.
- Paid $31,800 cash for salary expense.
- Paid a $12,000 cash dividend to stockholders.
Adjusting Entries
- Made the adjusting entry for the expired rent. (Hint: Part of the rent was paid in Year 1.)
- Recorded supplies expense. A physical count showed that $600 of supplies were still on hand.
Required a. Record the events and adjusting entries for Year 2 in general journal form.
b. Post the Year 2 events to T-accounts.
c. Prepare a trial balance for Year 2.
d-1. Prepare an income statement for Year 2. d-2. Prepare a statement of changes in stockholders equity for Year 2. d-3. Prepare a balance sheet for Year 2. d-4. Prepare a statement of cash flows for Year 2.
e. Record the entries to close the Year 2 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 2.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started