2 Use Redlands’ 2020 balance sheet from Exhibit 2-1 in your Bergevin and MacQueen textbook as the starting point for this problem. Assume that Redlands had the following transactions in 2021:Borrowed $80 in cash from a bank at the beginning of 2021.Received $50 cash from the 2020 consulting engagement.Paid $30 cash for the 2020 operating expenses.Earned $60 in consulting revenue for 2021—collected one-half of the revenue in cash.Incurred $35 of operating expenses in 2021—paid $20 of the operating expenses in cash.Recorded 2021 depreciation expense of $15 on the equipment purchased in 2020.Paid $8 of interest for the $80 cash borrowed at the beginning of 2021.Now, use the Session 2 Comprehensive Problem Excel File from above to complete the tables for2021:Record the transactions in the general journal.Post the entries to the ledger (Note that the 2021 beginning balances in each account have already been entered for you, where appropriate).Construct a trial balance.Present the financial statements in good form.Close the temporary accounts.General Journal Trans.Accounts DebitCredit 1Cash80 Note payable 80 2Cash50 Accounts Receivable 50 3Accounts Payable30 Cash 30 4Cash30 Accounts receivable30 Sales revenue 60 5Operating expenses35 Cash 20 Accounts payable 15 6Depreciation15 Accumulated Depreciation 15 7Intrest expense8 Cash 8 General Journal - Closing Entries DateAccountsDebitCredit 8 9 Ledgers AssetsAccountTrans.DebitCreditBalanceCash430 $30 db. 180 $80 db. 250 $50 db. 3 30$30 db. 5 20$20 db. 7 8$8 db. AccountTrans. DebitCreditBalanceAccounts receivable2 50$50 db. 430 $30db. AccountTrans.DebitCreditBalanceEquipment4 60$60 db. AccountTrans.DebitCreditBalanceAccum depreciation6 15$15 cr. LiabilitiesAccountTrans.DebitCreditBalanceAccounts payable330 $ 30 cr. 5 15$15 cr. AccountTrans.DebitCreditBalanceNote payable1 80$80 cr. Shareholders’ EquityAccountTrans.DebitCreditBalanceCommon stock $90 cr. AccountTrans.DebitCreditBalanceRetained earnings $5 cr. RevenuesAccountTrans.DebitCreditBalanceConsulting revenues ExpensesAccountTrans.DebitCreditBalanceOperating expense AccountTrans.DebitCreditBalanceDepreciation exp. AccountTrans.DebitCreditBalanceInterest exp. Trial Balance 12/31/2021 AccountsDebitCredit Cash Accounts receivable Equipment Accumulated depreciation Accounts payable Note payable Common stock Retained earnings (before close) Sales revenues Depreciation expense Operating expenses Interest expense Total Financial Statements Redlands, Inc. Income Statement For the Year Ended December 31, 2021 Sales revenue Operating expenses Depreciation expense Interest expense Net income Redlands, Inc. Statement of Shareholders’ Equity For the Year Ended December 31, 2021 Beginning contributed capital Capital contributed in 2018 Ending contributed capital Beginning retained earnings Net income in 2018 Ending retained earnings Total shareholders' equity Redlands, Inc. Balance Sheet 12/31/2021 Assets Cash Accounts receivable Equipment Less: accumulated depreciation Total Assets Liabilities Accounts payable Note payable Total Liabilities Shareholders' Equity (S/E) Common stock Retained earnings Total Shareholders' Equity Total Liabilities and S/E Redlands, Inc. Statement of Cash Flows For the Year Ended December 31, 2021 Cash flows from operating activities: Net Income Depreciation expense, equipment Change in accounts receivable Change in accounts payable Net cash provided by operating activities Cash flows from investing activities: Purchase of equipment Net cash used for investment activities Cash flows from financing activities: Issue note payable Net cash provided by financing activities Net change in cash Cash, beginning of the year Net change in cash Cash, end of the year

Answered: 2 Use Redlands’ 2020 balance sheet from…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

2 Use Redlands’ 2020 balance sheet from Exhibit 2-1 in your Bergevin and MacQueen textbook as the starting point for this problem. Assume that Redlands had the following transactions in 2021:

Borrowed $80 in cash from a bank at the beginning of 2021.
Received $50 cash from the 2020 consulting engagement.
Paid $30 cash for the 2020 operating expenses.
Earned $60 in consulting revenue for 2021—collected one-half of the revenue in cash.
Incurred $35 of operating expenses in 2021—paid $20 of the operating expenses in cash.
Recorded 2021 depreciation expense of $15 on the equipment purchased in 2020.
Paid $8 of interest for the $80 cash borrowed at the beginning of 2021.

Now, use the Session 2 Comprehensive Problem Excel File from above to complete the tables for2021:

Record the transactions in the general journal.
Post the entries to the ledger (Note that the 2021 beginning balances in each account have already been entered for you, where appropriate).
Construct a trial balance.
Present the financial statements in good form.
Close the temporary accounts.

General Journal
Trans.	Accounts	Debit	Credit
1	Cash	80
	Note payable		80

2	Cash	50
	Accounts Receivable		50

3	Accounts Payable	30
	Cash		30

4	Cash	30
	Accounts receivable	30
	Sales revenue		60

5	Operating expenses	35
	Cash		20
	Accounts payable		15

6	Depreciation	15
	Accumulated Depreciation		15

7	Intrest expense	8
	Cash		8


General Journal - Closing Entries
Date	Accounts	Debit	Credit
8


9





Ledgers

Assets
Account	Trans.	Debit	Credit	Balance
Cash	4	30		$30 db.
	1	80		$80 db.
	2	50		$50 db.
	3		30	$30 db.
	5		20	$20 db.
	7		8	$8 db.


Account	Trans.	Debit	Credit	Balance
Accounts receivable	2		50	$50 db.
	4	30		$30db.


Account	Trans.	Debit	Credit	Balance
Equipment	4		60	$60 db.

Account	Trans.	Debit	Credit	Balance
Accum depreciation	6		15	$15 cr.


Liabilities
Account	Trans.	Debit	Credit	Balance
Accounts payable	3	30		$ 30 cr.
	5		15	$15 cr.


Account	Trans.	Debit	Credit	Balance
Note payable	1		80	$80 cr.

Shareholders’ Equity
Account	Trans.	Debit	Credit	Balance
Common stock				$90 cr.

Account	Trans.	Debit	Credit	Balance
Retained earnings				$5 cr.



Revenues
Account	Trans.	Debit	Credit	Balance
Consulting revenues


Expenses
Account	Trans.	Debit	Credit	Balance
Operating expense


Account	Trans.	Debit	Credit	Balance
Depreciation exp.

Account	Trans.	Debit	Credit	Balance
Interest exp.





Trial Balance
12/31/2021
Accounts	Debit	Credit
Cash
Accounts receivable
Equipment
Accumulated depreciation
Accounts payable
Note payable
Common stock
Retained earnings (before close)
Sales revenues
Depreciation expense
Operating expenses
Interest expense
Total


Financial Statements

Redlands, Inc.
Income Statement
For the Year Ended December 31, 2021
Sales revenue
Operating expenses
Depreciation expense
Interest expense
Net income


Redlands, Inc.
Statement of Shareholders’ Equity
For the Year Ended December 31, 2021
Beginning contributed capital
Capital contributed in 2018
Ending contributed capital

Beginning retained earnings
Net income in 2018
Ending retained earnings

Total shareholders' equity


Redlands, Inc.
Balance Sheet
12/31/2021
Assets
Cash
Accounts receivable
Equipment
Less: accumulated depreciation
Total Assets


Liabilities
Accounts payable
Note payable
Total Liabilities
Shareholders' Equity (S/E)
Common stock
Retained earnings
Total Shareholders' Equity
Total Liabilities and S/E

Redlands, Inc.
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash flows from operating activities:
Net Income
Depreciation expense, equipment
Change in accounts receivable
Change in accounts payable
Net cash provided by operating activities

Cash flows from investing activities:
Purchase of equipment
Net cash used for investment activities

Cash flows from financing activities:
Issue note payable
Net cash provided by financing activities
Net change in cash

Cash, beginning of the year
Net change in cash
Cash, end of the year

Expert Solution

Step 1

INTRODUCTION

General Journal

The transactions of a firm are documented in a general journal. A commercial transaction is noted in the general journal as soon as it occurs. The ordinary journal or a special journal must include the transaction; they cannot both.

Ledger

A balance-sheet and income-statement transaction's bookkeeping entries are kept in an account ledger, which is an asset or document. Accounts like as cash, accounts receivable, investments, inventory, current liabilities, deferred costs, and consumer deposits can all be included in accounting ledger journal entries.

Trial balance

An accounting document known as a "trial balance" lists the current closing balances of all the accounts in the general ledger. The first stage in closing the books at the conclusion of an accounting month is to create a trial balance.

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