The general ledger of the Karlin Company, a consulting company, at January 1, 2011, contained the following

Question:

The general ledger of the Karlin Company, a consulting company, at January 1, 2011, contained the following account balances:

The following is a summary of the transactions for the year:

a. Sales of services, $100,000, of which $30,000 was on credit.

b. Collected on accounts receivable, $27,300.

c. Issued shares of common stock in exchange for $10,000 in cash.

d. Paid salaries, $50,000 (of which $9,000 was for salaries payable).

e. Paid miscellaneous expenses, $24,000.

f. Purchased equipment for $15,000 in cash.

g. Paid $2,500 in cash dividends to shareholders.

Required:

1. Prepare a general journal entry for each of the summary transactions listed above.

2. Post the journal entries to the accounts.

3. Prepare and post adjusting journal entries. Accrued salaries at year-end amounted to $1,000. Depreciation for the year on the equipment is $2,000. The allowance for uncollectible accounts is estimated to be $1,500.

4. Prepare an adjusted trial balance.

5. Prepare an income statement for 2011 and a balance sheet as of December 31, 2011.

6. Prepare and post closing entries.

7. Prepare a post-closing trial balance.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...