Talbot Riding Stables provides stables, care for animals, and grounds for riding

Question

Talbot Riding Stables provides stables, care for animals, and grounds for riding and showing horses. The account balances at the beginning of 2018 were:

Problem Set B Enlarge Image During 2018, the following transactions occurred: Talbot provided animal care services, all on credit, for $210,300. Talbot rented stables to customers for $20,500 cash. Talbot rented its grounds to individual riders, groups, and show organizations for $41,800 cash.

There remains $15,600 of accounts receivable to be collected at December 31, 2018.

Feed in the amount of $62,900 was purchased on credit and debited to the supplies account.

Straw was purchased for $7,400 cash and debited to the supplies account.

Wages payable at the beginning of 2018 were paid early in 2018. Wages were earned and paid during 2018 in the amount of $112,000.

The income tax payable at the beginning of 2018 was paid early in 2018. Payments of $73,000 were made to creditors for supplies previously purchased on credit. One year's interest at 9% was paid on the notes payable on July 1, 2018. During 2018, Jon Talbot, a principal shareholder, purchased a horse for his wife, Jennifer, to ride. The horse cost $7,000, and Talbot used his personal credit to purchase it. Property taxes were paid on the land and buildings in the amount of $17,000. Dividends were declared and paid in the amount of $7,200. The following data are available for adjusting entries: Supplies (feed and straw) in the amount of $30,400 remained unused at year-end. Annual depreciation on the buildings is $6,000. Annual depreciation on the equipment is $5,500. Wages of $4,000 were unrecorded and unpaid at year-end. Interest for six months at 9% per year on the note is unpaid and unrecorded at year-end. Income taxes of $16,500 were unpaid and unrecorded at year-end.

Explanation / Answer

Account Title Debit Credit Accounts receivables 210300 Animal care services revenue 210300 Cash 20500 Stable Rent revenue 20500 Cash 41800 Ground Rent revenue 41800 Cash 194700 Accounts receivables 194700 Supplies 62900 Accounts payable 62900 (feed) Supplies 7400 Cash 7400 (straw) Wages expense 112000 Cash 112000 Accounts payable 73000 Cash 73000 Property taxes 17000 Cash 17000 Dividend expense 7200 Cash 7200 Supplies Expense 39900 Supplies 39900 (62900+7400-30400) Depreciation expense-Buildings 6000 Depreciation expense-Equipment 5500 Accumulated Depreciation expense-Buildings 6000 Accumulated Depreciation expense-Equipment 5500 Wage expense 4000 Wages payable 4000 Income tax expense 16500 Income tax payable 16500 818700 818700 LEDGER ACCOUNTS Net ledger Balances Account Title Debit Credit Debit Credit Op.balance Accounts payable 62900 Accounts payable 73000 10100 Accounts receivables 210300 Accounts receivables 194700 15600 Accumulated Depreciation expense-Buildings 6000 6000 Accumulated Depreciation expense-Equipment 5500 5500 Animal care services revenue 210300 210300 Cash 20500 Cash 41800 Cash 194700 Cash 7400 Cash 112000 Cash 73000 Cash 17000 Cash 7200 40400 Depreciation expense-Buildings 6000 6000 Depreciation expense-Equipment 5500 5500 Dividend expense 7200 7200 Ground Rent revenue 41800 41800 Income tax expense 16500 16500 Income tax payable 16500 16500 Property taxes 17000 17000 Stable Rent revenue 20500 20500 Supplies 39900 Supplies 62900 Supplies 7400 30400 Supplies Expense 39900 39900 Wage expense 4000 Wages expense 112000 116000 Wages payable 4000 4000 818700 818700 304600 304600 TRIAL BALANCE Cash 40400 Accounts receivables 15600 Supplies 30400 Accumulated Depreciation expense-Buildings 6000 Accumulated Depreciation expense-Equipment 5500 Accounts payable 10100 Wages payable 4000 Income tax payable 16500 Animal care services revenue 210300 Stable Rent revenue 20500 Ground Rent revenue 41800 Depreciation expense-Buildings 6000 Depreciation expense-Equipment 5500 Supplies Expense 39900 Wages expense 116000 Property taxes 17000 Income tax expense 16500 Dividend expense 7200 Totals 304600 304600 Income Statement Animal care services revenue 210300 Stable Rent revenue 20500 Ground Rent revenue 41800 Total revenues 272600 Less: Expenses: Depreciation expense-Buildings 6000 Depreciation expense-Equipment 5500 Supplies Expense 39900 Wages expense 116000 Property taxes 17000 Total operating expenses 184400 Net operating Income before tax 88200 Less:Income tax expense 16500 Net Income after tax 71700 Dividend expense 7200 Retained earnings 64500

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