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Colton Enterprises experienced the following events for Year 1, the first year of operation: Acquired $37,000 cash from the issue of common stock. Paid $12,200

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

  1. Acquired $37,000 cash from the issue of common stock.
  2. Paid $12,200 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 $76,000.
  4. Incurred operating expenses on account of $36,000.
  5. Collected $58,500 cash from accounts receivable.
  6. Paid $23,000 cash for salary expense.
  7. Paid $28,800 cash as a partial payment on accounts payable.

Adjusting Entries

  1. Made the adjusting entry for the expired rent. (See Event 2.)
  2. Recorded $2,800 of accrued salaries at the end of Year 1.

Events for Year 2

  1. Paid $2,800 cash for the salaries accrued at the end of the prior accounting period.
  2. Performed services for cash of $25,000.
  3. Purchased $3,000 of supplies on account.
  4. Paid $11,100 cash in advance for rent. The payment was for one year beginning April 1, Year 2.
  5. Performed services for customers on account for $92,000.
  6. Incurred operating expenses on account of $43,500.
  7. Collected $91,000 cash from accounts receivable.
  8. Paid $41,000 cash as a partial payment on accounts payable.
  9. Paid $31,700 cash for salary expense.
  10. Paid a $11,000 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 $550 of supplies were still on hand.

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.

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