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 NameDebitsCreditsCash$89,000 Accounts receivable10,000 Supplies5,000 Prepaid expense2,000 Equipment250,000 Accumulated depreciation (equipment) $24,000Accounts payable 4,000Income tax payable 6,000Deferred revenue 5,000Notes payable (long-term) 10,000Contributed capital 11,000Retained earnings (beginning – Jan 1) 40,000Dividends declared200,000 Revenue 900,000Depreciation expense44,000 Office expense120,000 Supplies expense70,000 Wages expense140,000 Income tax expense70,000 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 adjusting journal entries for the facts noted in G – J. 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)

The Adjusted Trial Balance as on 31st December 2021 is given. In the second question Journal Entries…

Answered: Johnstone & Gonari Ltd. (J&G) continued…

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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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 depreciation (equipment)		$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
Retained earnings (beginning – Jan 1)		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 adjusting journal entries for the facts noted in G – J.

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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