Karen Noonan opened Skysong Inc. on February 1, 2017. During February, the follo
ID: 2585897 • Letter: K
Question
Karen Noonan opened Skysong Inc. on February 1, 2017. During February, the following transactions were completed:
Declared and paid a cash dividend of $0.30 per share.
Journalize the following adjustments. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 1,527.)
Feb. 1 Issued 4,600 shares of Skysong common stock for $13,520. Each share has a $1.50 par. 1 Borrowed $8,000 on a 2-year, 6% note payable. 1 Paid $9,380 to purchase used floor and window cleaning equipment from a company going out of business ($3,680 was for the floor equipment and $5,700 for the window equipment). 1 Paid $230 for February Internet and phone services. 3 Purchased cleaning supplies for $1,020 on account. 4 Hired 4 employees. Each will be paid $500 per 5-day work week (Monday– Friday). Employees will begin working Monday, February 9. 5 Obtained insurance coverage for $9,840 per year. Coverage runs from February 1, 2017, through January 31, 2018. Karen paid $2,460 cash for the first quarter of coverage. 5 Discussions with the insurance agent indicated that providing outside window cleaning services would cost too much to insure. Karen sold the window cleaning equipment for $4,110 cash. 16 Billed customers $4,060 for cleaning services performed through February 13, 2017. 17 Received $504 from a customer for 4 weeks of cleaning services to begin February 21, 2017. 18 Paid $310 on amount owed on cleaning supplies. 20 Paid $3 per share to buy 300 shares of Skysong common stock from a shareholder who disagreed with management goals. The shares will be held as treasury shares. 23 Billed customers $4,470 for cleaning services performed through February 20. 24 Paid cash for employees’ wages for 2 weeks (February 9–13 and 16–20). 25 Collected $2,600 cash from customers billed on February 16. 27 Paid $230 for Internet and phone services for March. 28Declared and paid a cash dividend of $0.30 per share.
Explanation / Answer
Skysong Inc. General journal for the month of February 2017 Date Account title Debit Credit Feb.1 Cash 13520 Common stock 6900 Additional paid in capital - common stock 6620 (To record issue of 4,600 shares of common stock) Feb.1 Cash 8000 6% Note payable 8000 (To record borriwng on note payable) Feb.1 Cleaning equipment 9380 Cash 9380 (To record purchase for cleaning equipment) Feb.1 Telephone and internet expenses 230 Cash 230 (To record payment for Telephone and internet ) Feb.3 Cleaning supplies 1020 Accounts payable 1020 (To record purchase of cleaning supplies on account) Feb.4 No entry required. Feb.5 Prepaid insurance 2460 Cash 2460 (To record purchase of insurance policy for the quarter) Feb.5 Cash 4110 Loss on sale of equipment 1590 Equipment 5700 (To record sale of window cleaning equipment) Feb.16 Accounts receivable 4060 Service revenue 4060 (To record service rendered on account upto Feb.13) Feb.17 Cash 504 Unearned service revenue 504 (To record advance received from customer for 4 weeks service) Feb.18 Accounts payable 310 Cash 310 (To record payment on account for cleaning supplies) Feb.20 Treasury stock 900 Cash 900 (To record purchase of 300 shares from a shareholder) Feb.23 Accounts receivable 4470 Service revenue 4470 (To record service rendered on account upto Feb.20) Feb.24 Salaries expense 4000 Cash 4000 (To record payment of salaries to 4 workers for 2 weeks) Feb.25 Cash 2600 Accounts receivable 2600 (To record cash collected from customers on account) Feb.27 Prepaid telephoe expense 230 Cash 230 (To record payment of telephone & internet charges for March) Feb.28 Dividend 1290 Cash 1290 (To record payment of cash dividend @0.30 per share on 4,300 shares) Skysong Inc. Adjustment journal for the month of February 2017 Date Account title Debit Credit Feb.28 Accounts receivable 3950 Service revenue 3950 (To record unbliied service revenue for February) Feb.28 Bad debt expense 280 Accounts receivable 280 (To record uncollctible balance of a customer) Feb.28 Bad debt expense 288 Allowance for doubtfu accounts 288 (To record allowance for doubtful accounts @3% of receivables) Feb.28 Depreciation expense 60 Accumulated depreciation - Equipment 60 (To record depreciation expense on floor cleaning equipment) Depreciable value = $3,680 - $800 = $2,880, Life = 4 years Feb.28 Insurance expense 820 Prepaid insurance 820 (To record insurance expense for February) Feb.28 Cleaning supplies expense 600 Cleaning supplies 600 (To record cleaning supplies used during the month) Feb.28 Unearned service revenue 126 Service revenue 126 (To record service rendered for one week against avance recived) Feb.28 Salaries expense 2000 Salaries payable 2000 (To record salary expense accrued for one week ) Feb.28 Interest expense 40 Interest payable 40 (To record interest expense on note payable) Skysong Inc. Worksheet Account Transactions Unadsjuted Adjustments Adjusted Income statement Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Cash 28734 18800 9934 9934 Accounts Receivables 8530 2600 5930 3950 280 9600 Allowance for doubtful accounts 0 288 288 Cleaning supplies 1020 1020 600 420 Prepaid insurance 2460 2460 820 1640 Prepaid telephone expense 230 230 230 Equipment 9380 5700 3680 3680 Acumulated depreciation - Equipment 0 60 60 Accounts Payable 310 1020 710 710 Unearned service revenue 504 504 126 378 Salaries payable 2000 2000 Interest payable 40 40 Note payable 8000 8000 8000 Common Stock 6900 6900 6900 Additional paid in capital - common stock 6620 6620 6620 Treasury stock 900 900 900 Retained earnings 0 0 Dividend 1290 1290 1290 0 Service Revenue 8530 8530 4076 12606 12606 Depreciation expense 0 60 60 60 Insurance expense 0 820 820 820 Cleaning supplies expense 0 600 600 600 Salary expense 4000 4000 2000 6000 6000 Rent expense 0 0 0 Telephone and internet expense 230 230 230 230 Interest expense 0 40 40 40 Loss on sale of equipment 1590 1590 1590 1590 Bad debt expense 568 568 568 Income tax expense 540 Net income 2158 58674 58674 31264 31264 8164 8164 37602 37602 12606 12606 Skysong Inc. Income statement for the month of February 2017 Service revenue 12606 Expenses Salary expense 6000 Insurance expense 820 Cleaning supplies expense 600 Bad debt expense 568 Telephone and internet expense 230 Depreciation expense 60 Interest expense 40 Loss on sale of equipment 1590 Total expenses 9908 Income before taxes 2698 Income tax expense 540 Net income 2158
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