Exercise 3-21 On January 1, 2018, the general ledger of Dynamite Fireworks inclu

Question

Exercise 3-21

On January 1, 2018, the general ledger of Dynamite Fireworks includes the following account balances:

  

During January 2018, the following transactions occur:
  

The following information is available on January 31, 2018.

Rent for the month of January has expired.

Supplies remaining at the end of January total $4,800.

By the end of January, $4,700 of services has been provided to customers who paid in advance on January 17.

Unpaid salaries at the end of January are $4,400.

  Accounts Debit Credit   Cash $ 25,800   Accounts Receivable 7,200   Supplies 5,100   Land 70,000   Accounts Payable 5,200   Common Stock 85,000   Retained Earnings 17,900        Totals $ 108,100 $ 108,100

Explanation / Answer

Since, the question has multiple sub-parts, I have answered the first four parts.

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Part a)

The journal entries are prepared as below:

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Part b)

The adjusting entries are given as follows:

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Part c)

The adjusted trial balance is prepared as below:

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Part d)

The income statement is prepared as follows:

Date General Journal Debit Credit Jan-02 Prepaid Rent $12,000 Cash $12,000 Jan-09 Supplies $5,500 Accounts Payable $5,500 Jan-13 Accounts Receivable $27,500 Service Revenue $27,500 Jan-17 Cash $5,700 Deferred Revenue $5,700 Jan-20 Salaries Expense $13,500 Cash $13,500 Jan-22 Cash $26,100 Accounts Receivable $26,100 Jan-29 Accounts Payable $6,000 Cash $6,000

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