Johnstone & Gonari Ltd. (J&G) continued operating through 2021 and is now preparing for its accounting work for the annual fiscal period (January 1, 2021 – December 31, 2021). The adjusted trial balance for J&G at December 31, 2021 is presented below: Account Name Debits Credits Cash $89,000 Accounts receivable 10,000 Supplies 5,000 Prepaid expense 2,000 Equipment 250,000 Accumulated
Johnstone & Gonari Ltd. (J&G) continued operating through 2021 and is now preparing for its accounting work for the annual fiscal period (January 1, 2021 – December 31, 2021). The adjusted
|
Account Name |
Debits |
Credits |
|
Cash |
$89,000 |
|
|
|
10,000 |
|
|
Supplies |
5,000 |
|
|
Prepaid expense |
2,000 |
|
|
Equipment |
250,000 |
|
|
|
|
$24,000 |
|
Accounts payable |
|
4,000 |
|
Income tax payable |
|
6,000 |
|
Deferred revenue |
|
5,000 |
|
Notes payable (long-term) |
|
10,000 |
|
Contributed capital |
|
11,000 |
|
|
|
40,000 |
|
Dividends declared |
200,000 |
|
|
Revenue |
|
900,000 |
|
Depreciation expense |
44,000 |
|
|
Office expense |
120,000 |
|
|
Supplies expense |
70,000 |
|
|
Wages expense |
140,000 |
|
|
Income tax expense |
70,000 |
|
|
Totals |
$1,000,000 |
$1,000,000 |
Required: Prepare the statement of retained earnings for the year ended December 31, 2021 and prepare the two closing journal entries that would be recorded at the end of 2021.
Johnstone & Gonari Ltd. (J&G) is a local consulting business in Saskatoon, SK. During January 2021, the following transactions took place for the period:
- Jan 2 - Purchased equipment for $70,000 on account by signing a note payable due in 5 years.
- Jan 5 - Provided consulting services to clients during January worth $90,000. $20,000 was received in cash and the remaining balance was on account and will be collected next month.
- Jan 10 - Received an advance cash deposit of $9,000 from a client for consulting work that is scheduled to be completed in February.
- Jan 15 - Received supplies for the office costing $11,000. J&G paid $2,000 cash and the remaining balance was on account.
. - Jan 31 - Declared and paid a cash dividend of $200,000.
- Jan 31 - Paid cash wages of $7,000 to staff for January wages.
In addition to the transactions above, you have been informed by the owners that adjustments are needed on January 31, 2021 due to the following facts:
- The administrative department determined that $3,000 of supplies were on-hand at January 31, 2021. Note that there were no supplies on the books at the beginning of the period and only the supplies that were received on January 15 (D) are relevant in calculating this adjustment.
- The consulting work contract from
journal entry C) above was cancelled by the client. As a result, J&G gets to keep the deposit since it was non-refundable and no longer has any future obligation to complete the work (i.e., the deposit is now “earned” as of January 31, 2021).
- Depreciation on the equipment during January was calculated to be $12,000.
- The company owes income taxes to the Government as a result of the January activities noted above. Consider any relevant entries from A – I and assume that the tax rate is 25%.
Required: Prepare the journal entries for events A – F and the
January 2 (A)
January 5 (B)
January 10 (C)
January 15 (D)
January 31 (E)
January 31 (F)
January 31 (G)
January 31 (H)
January 31 (I)
January 31 (J)
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