The following events apply to Montgomery Company for Year 1, ts first year of op

Question

The following events apply to Montgomery Company for Year 1, ts first year of operation: 1. Received cash of $36,000 from the issue of common stock. 2. Performed $48,000 of services on account. 3. Incurred $6,500 of other operating expenses on account 4. Paid $21,000 cash for salaries expense. 5. Collected $34,500 of accounts receivable. 6. Paid a $3,000 dividend to the stockholders 7. Performed $9,500 of services for cash. 8. Paid $5,500 of the accounts payable. ces Required a. Record the preceding transactions in general journal form. b. Post the entries to T-accounts and determine the ending balance in each account c. & d. Determine the amount of total assets at the end of Year 1, and the amount of net income for Year 1 / 2 Complete this question by entering your answers in the tabs below. Req A Req BReq C and D

Explanation / Answer

a. Journal Entry S. No. Account tittle & Explanation Debit Credit 1 Cash $36,000     Common Stock $36,000 To Record Issuance of Common Stock 2 Accounts Receivable $48,000      Service Revenue $48,000 To Record Servce Revenue 3 Other operating expenses $6,500     Accounts Payable $6,500 To Record Operating Expense 4 Salaries expense $21,000      Cash $21,000 To Record Operating Expense 5 Cash $34,500      Accounts Receivable $34,500 To Record received AR 6 Dividends $3,000      Cash $3,000 To Record Dividend Paid 7 Cash $9,500      Service Revenue $9,500 To Record Service Revenue 8 Accounts Payable $5,500      Cash $5,500 To Record Payment made to AP b:- T's Account Cash Beg. Bal. 0 1 $36,000 $21,000 4 5 $34,500 $3,000 6 7 $9,500 $5,500 8 End. Bal. $50,500 Accounts Payable Beg. Bal. 0 8 $5,500 $6,500 3 End. Bal. $1,000 Dividends Beg. Bal. $0 6 $3,000 End. Bal. $3,000 Salaries expense Beg. Bal. $0 4 $21,000 End. Bal. $21,000 Accounts Receivable Beg. Bal. 0 2 $48,000 $34,500 5 End Bal $13,500 Common Stock Beg. Bal. $36,000 1 End. Bal. $36,000 Service Revenue Beg. Bal. $0 $48,000 2 $9,500 7 End. Bal. $57,500 Other operating expenses Beg. Bal. $0 3 $6,500 End. Bal. $6,500 Computation of Total Amount of Asset Cash $50,500 Account Receivable $13,500 Total Asset $64,000 Computation ofNet Income Service Revenue $57,500 Less: Salaries Expense $21,000 Other Operating expense $6,500 Net income $30,000

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