Chapter 4, Problem 4SP

To determine

2.

To prepare: General ledger of the journal entries in part (1).

Explanation of Solution

Cash				Acct. No. Cash
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Jan1	Common Stock		25,000		25,000
Jan1	Wages		145		24,855
Jan7	Purchase		5,800		19,055
Jan7	Accounts payable			5,800	24,855
Jan9	Accounts Receivable		2,668		22,187
Jan11	Service Revenue			5,500	27,687
Jan13	Loss on sale		1,640		26,047
Jan13	Sales			5,200	31,427
Jan15	Freight		600		30,647
Jan16	Service Revenue			4,000	34,647
Jan26	Sales			5,800	40,447
Jan31	Wages		5,800		34,647
Jan17	Accounts receivable		500		34,147
Feb.1	Advance rent paid		2,475		31,672
Feb.3	Cash memorandum		496		31,176
Feb.5	Advertisement expenses		600		30,576
Feb.11	Bills Receivable			5,000	35,576
Feb.15	Dividends		4,800		30,776
Feb.26	Wages		1,000		29,776
Feb.27	Reimbursement expenses		192		29,584
March8	Computer Supplies		2,370		27,214
March11	Minor repairs		960		26,254
March16	Service revenue earned			5,260	31,514
March17	Accounts payable		1,100		30,414
March25	Sales			2,800	33,214
March30	Sales			2,200	35,414
March31	Reimbursement expenses		128		35,286

Table (31)

Purchases				Acct. No. Purchases
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Jan7	Cash			5,800	5,800

Table (32)

Wages				Acct. No.
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Jan1	Cash		145
Jan31	Cash		1,250
Feb.26	Cash		1,000		2,395

Table (33)

Common Stock				Acct. No. Common Stock
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Jan7	Cash			25,000	25,000

Table (34)

Accounts Receivable				Acct. No.
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Jan9	Cash		2,668
Feb 11	Cash		5,000
March 9	Cash		3,220		10,888

Table (35)

Service Revenue Earned				Acct. No.
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Jan11	Cash			5,500
Jan16	Cash			4,000
March 16	Cash			5,260	10,888

Table (36)

Sales				Acct. No.
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Jan13	Cash			5,200
Jan7	Cash			5,800
Feb 23	Cash			3,220
March 25	Cash			2,800
March 30	Cash			2,200	19,220

Table (37)

Cash Memorandum
Date	Account Title	Debit ($)	Date	Account Title	Credit ($)
Feb 3	Balance b/d	496	Feb 3	Cash	496
		496			496

Table (38)

Loss on Sale				Acct. No.
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Jan13	Cash		1,640

Table (39)

Freight				Acct. No.
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Jan15	Cash		600		600

Table (40)

Advance Rent				Acct. No.
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Feb 1	Cash		2,475		2,475

Table (41)

Accounts Payable				Acct. No.
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Jan7	Cash		5,800
March 17	Cash		1,100		6,900

Table (42)

Advertisement Expenses				Acct. No.
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Feb 5	Cash		600		600

Table (43)

Dividends				Acct. No.
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Feb 15	Cash		4,800		4,800

Table (44)

Reimbursement Expenses				Acct. No.
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
Feb 27	Cash		128		128

Table (45)

Computer supplies				Acct. No.
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
March8	Cash		2,370		2,370

Table (46)

Minor Repairs				Acct. No.
Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)	Balance ($)
March11	Cash		960		960

Table (47)

To determine

3.

To prepare: A partial worksheet of 6 columns

Explanation of Solution

Accounts	Unadjusted Trial balance		Adjustments		Adjusted Trial balance		Income Statement		Balance Sheet and statement of enquiry
	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.
Cash	8,200				8,200				8,200
Accounts Receivable	11,250				11,250				11,250
Allowance for sales discounts				50		50				50
Inventory	21,250			250	21,000				21,000
Inventory Returns estimated	200		300		500				500
Supplies	3,800			3,000	800				800
Prepaid insurance	900			600	300				300
Equipment	34,200				34,200				34,200
Accumulated depreciatin.-Equipment		3,700		3,700		7,400				7,400
Accounts payable		16,000				16,000				16,000
Salaries payable				800		800				800
Sales refund payable		300		900		1,200				1,200
Capital Investments		41,900				41,900				41,900
Withdrawals	4,000				4,000				4,000
Sales		321,000				321,000		321,000
Sales returns and allowances	1,100		900		2,000		2,000
Sales discounts	4,250		50		4,300		4,300
Cost of goods sold	230,450		250	300	230,400		230,400
Depreciation expense-Equipment			3,700		3,700		3,700
Salaries expense	43,000		800		43,800		43,800
Insurance expense			600		600		600
Rent expense	9,000				9,000		9,000
Supplies expense			3,000		3,000		3,000
Advertising expense	11,300				11,300		11,300
Totals	382,900	382,900	9,600	9,600	388,350	388,350	308,100		80,250	67,350
Net income							12,900			12,900
Totals							321,000	321,000	80,250	80,250

Table (48)

To determine

4.

To prepare: Income statement.

Explanation of Solution

S Company
Income Statement
For the Month of March 31, 2016
Particulars	Amount ($)	Amount ($)
Services Revenue		25,307
Net sales		18,693
Total Revenue		44,000
:Cost of goods sold	14,052
Depreciation expense office equipment	400
Depreciation expense computer equipment	1,250
Wages	3,250
Insurance expense	555
Rent expense	2,475
Computer Supplies expense	1,305
Advertising expense	600
Reimbursement expense	320
Repairs expense	960
Total expenses		25,167
Net Income		18,833

Table (49)

To determine

5.

To prepare: Statement of retained earnings.

Explanation of Solution

Prepare statement of retained earnings as follow:

S Company
Statement of Retained Earnings
For the Month of March 31, 2016
Particulars	Amount ($)
Opening balance of retained earnings	7,860
Net income	18,333
	26,193
Dividends	(4,800)
Ending balance of retained earnings	21,393

Hence, the retained earnings of the company are $21,393.

To determine

6.

To prepare: Classified balance sheet from unadjusted balance sheet.

Explanation of Solution

Prepare classified balance sheet as follow:

S Company
Balance Sheet
As on December 31, 2016
Particulars	Amount ($)	Amount ($)
Assets
Cash	68,057
Accounts Receivable	22,867
Inventory	704
Computer Supplies	2,005
Prepaid Insurance	1,110
Prepaid Rent	825
Office Equipment:	8000
Less: Accumulated Depreciation	(800)
Computer Equipment	20,000
: Less: Accumulated Depreciation	(2500)
Total Assets		120,268
Liabilities and Owners' Equity
Accounts Payable	0
Wages Payable	875
Unearned computer service revenue	0
Common Stock	98,000
Retained Earnings	21,393
Total Liabilities and Owners' Equity		120,268

Table (50)

Hence, the total of balance sheet is $120,268.