The following transaction occurred during January 2016 1. Provided services for

Question

The following transaction occurred during January 2016

1. Provided services for $15,000 on account.

2. Purchased $2,000 of supplies on account.

3. Paid January salaries $5,000

4. Collected $15,000 on account from Customers re- (#1)

5. Declared and paid $4,000 cash dividends.

The following additional information is also available:

a. The prepaid insurance represents a two-year policy commencing January 1, 2016.
b. The supplies on hand at the end of January amounted to $500.

c. The equipment has a 5-year expected life and no residual value.

d. The Notes is subjected to a 9% annual interest and the interest is paid quarterly.

Required: 1. Prepare necessary journal entries to record transactions (#’s1- 5) occurred in January’16.

2. Open necessary ledger T-accounts and fill in the balances as of December 31, 2015. Post journal entries from Part (1) to the ledger.

3. Prepare an Unadjusted Trial Balance at Jan 31, 2016.

4. Prepare necessary Adjusting Entries based on the additional information (a) – (d).

5. Post all Adjusting Entries to the ledger. (Note, use the same ledger T-accounts you created in Part (2), add more if needed)

6. Prepare an Adjusted Trial Balance.

7. Prepare the Income Statement and Statement of Retained Earnings for the month ended January 31, 2016 and the Balance Sheet as at January 31, 2016.

uestion #3 Kauffman Services Inc.'s Balance Sheet of December 31, 2015 is shown below: Kauffman Services Inc Balance Sheet As of December 31,2015 Liabilities and Shareholders' Equity Assets Cash Prepaid Insurance s 6,300 Notes payable S 10,000 2,400 8,000 2,700 10,700 Total current assets 8,700Capital Stock Retained Earnings 15,000 Accumulated Depreciation3,000) 12,000 S 20,700 Equipment Total Shareholders' Equity Net Total Assets Total Liabilities &Equity; S 20,700

Explanation / Answer

(1) A/c Receivable ....dr. 15000
To           
Sale of Service 15000

(2) Purchase a/c Dr... 2000

                  To A/c payable 2000

(3) Salary a/c dr.. 5000

to Cash 5000

(4) Cash a/c Dr... 15000

          To A/c Receivable 15000

(5) Dividend dr... 4000

to cash 4000

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