Question
Denises Cleaning Services has been operating for 5 years. At December 31 of last year, the accounting records reflected the following: Assets Amount Liabilities &
Denises Cleaning Services has been operating for 5 years. At December 31 of last year, the accounting records reflected the following:
| Assets | Amount | Liabilities & Equity | Amount |
| Cash | $ 23,000 | Accounts Payable | $ 20,000 |
| Marketable Securities | 2,000 | Notes Payable (Short-Term) | 8,000 |
| Accounts Receivable | 5,000 | Long Term Notes Payable | 47,000 |
| Equipment | 50,000 | Common Stock | 10,000 |
| Factory | 90,000 | Additional Paid in Capital | 60,000 |
| Intangibles | 5,000 | Retained Earnings | 30,000 |
|
|
|
|
|
| Total Assets | $175,000 | Total Liabilities & Equity | $175,000 |
During the current year, the company had the following summarized activities:
- Purchased furniture for $13,000 cash.
- Purchase supplies on account for $3,000.
- Purchased equipment that cost a total of $29,000; paid $5,000 cash and signed a one-year note for the balance.
- Hired a new president at the end of the year. The contract was for $60,000 per year plus options to purchase company stock at a set price based on company performance.
- Issued additional shares of common stock for $5,000 cash and $15,000 in equipment.
- Borrowed $48,000 cash as a two-year note payable from a local bank.
- Purchased Land for $40,000 cash.
- Performed Services for a customer and received $15,000 cash.
- Built an addition to the factory for a total cost of $45,000; paid $9,000 in cash and signed a three-year note for the balance.
- Performed services for a customer on account for $12,600.
- Paid $5,200 on account.
- Received $3,100 from a customer on account.
- Paid expenses: Rent-$1,500 and Salaries-$4,000
- Paid dividends $2,000.
Required
- Create a journal entry for each transaction.
- Prepare a trial balance as of December 31 of the current year.
- Prepare an Income Statement of December 31 of the current year.
- Prepare a Statement of Retained Earnings as of December 31, of the current year.
| Assets | Amount | Liabilities & Equity | Amount |
| Cash | $ 23,000 | Accounts Payable | $ 20,000 |
| Marketable Securities | 2,000 | Notes Payable (Short-Term) | 8,000 |
| Accounts Receivable | 5,000 | Long Term Notes Payable | 47,000 |
| Equipment | 50,000 | Common Stock | 10,000 |
| Factory | 90,000 | Additional Paid in Capital | 60,000 |
| Intangibles | 5,000 | Retained Earnings | 30,000 |
|
|
|
|
|
| Total Assets | $175,000 | Total Liabilities & Equity | $175,000 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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
Mathematical Applications for the Management Life and Social Sciences
Authors: Ronald J. Harshbarger, James J. Reynolds
11th edition
978-1305108042
