The general ledger of the Karlin Company, a consulting company, at January 1, 20
ID: 2429623 • Letter: T
Question
The general ledger of the Karlin Company, a consulting company, at January 1, 2018, contained the following account balances:
Account Title Debits Credits
Cash 31,100
Accounts receivable 14,000
Equipment 23,000
Accumulated depreciation 6,900
Salaries payable 8,000
Common stock 45,000
Retained earnings 8,200
Total 68,100 68,100
The following is a summary of the transactions for the year:
a. Sales of services, $118,000, of which $35,400 was on credit.
b. Collected on accounts receivable, $24,400.
c. Issued shares of common stock in exchange for $12,000 in cash.
d. Paid salaries, $43,000 (of which $8,000 was for salaries payable).
e. Paid miscellaneous expenses, $23,200.
f. Purchased equipment for $14,000 in cash.
g. Paid $2,850 in cash dividends to shareholders.
1. Accrued salaries at year-end amounted to $860.
2. Depreciation for the year on the equipment is $2,300.
R equired:
2., 5, & 8. Prepare the summary, adjusting and closing entries for each of the transactions listed.
3. Post the transactions, adjusting and closing entries into the appropriate t-accounts.
4. Prepare an unadjusted trial balance.
6. Prepare an adjusted trial balance.
7-a. Prepare an income statement fo r 2018.
7-b. Prepare a balance sheet as of Dec
Post the transactions, adjusting and closing entries into the appropriate t-accounts. (Enter the letter of the transaction in the
column next to the amount.)
what is income summary?
Explanation / Answer
Solution 2
Solution 3
Journal Entries
Cash
Accounts Receivable
Event
General Journal
Debit
Credit
To balance b/d
31100
By Salaries Expense
35000
To balance b/d
14000
By Cash
24400
a
Cash
$82,600
To Service Revenue
82600
By Salaries Payable
8000
To Service Revenue
35400
Accounts Receivable
$35,400
To Accounts Receivable
24400
By Mise.Expenses
23200
Service Revenue
$118,000
To Common stock
12000
By Equipment
14000
By balance c/f
25000
By Dividend
2850
49400
49400
b
Cash
$24,400
Accounts Receivable
$24,400
By balance c/f
67050
Accumulated Depreciation
150100
150100
By balance b/d
6900
c
Cash
$12,000
By Depreciation Expense
2300
Common stock
$12,000
Equipment
To balance b/d
23000
To balance c/f
9200
d
Salaries Expense
$35,000
To Cash
14000
9200
Salaries Payable
$8,000
Cash
$43,000
By balance c/f
37000
Common stock
37000
37000
By balance b/d
45000
e
Miscellaneous Expenses
$23,200
By Cash
12000
Cash
$23,200
Salaries Payable
To Cash
8000
By balance b/d
8000
To balance c/f
57000
f
Equipment
$14,000
By Salaries Expense
860
57000
57000
Cash
$14,000
To balance c/f
860
Service Revenue
g
Dividend
$2,850
8860
8860
By Cash
82600
Cash
$2,850
By Accounts Receivable
35400
Retained Earnings
1
Salaries Expense
$860
By balance b/d
8200
To balance c/f
118000
Salaries Payable
$860
To Dividend
2850
By Net Income
56640
118000
118000
2
Depreciation Expense
$2,300
To balance c/f
61990
Depreciation Expense
Accumulated Depreciation
$2,300
64840
64840
To Accumulated Depreciation
2300
Miscellaneous Expenses
Answer 4
To Cash
23200
By balance c/f
2300
KARLIN COMPANY
2300
2300
Unadjusted Trial Balance
Account Title
Debit
Credit
By balance c/f
23200
Income Summary
Cash
$67,050
23200
23200
Accounts Receivable
$25,000
Equipment
$37,000
Salaries Expense
Accumulated Depreciation
$6,900
To Cash
35000
Salaries Payable
$0
To Salaries Payable
860
Common stock
$57,000
Retained Earnings
$5,350
By balance c/f
35860
Service Revenue
$118,000
35860
35860
Salaries Expense
$35,000
Mise.Expenses
$23,200
Totals
$187,250
$187,250
Answer 6
KARLIN COMPANY
Adjusted Trial Balance
Account Title
Debit
Credit
Cash
$67,050
Accounts Receivable
$25,000
Equipment
$37,000
Accumulated Depreciation
$9,200
Salaries Payable
$860
Common stock
$57,000
Retained Earnings
$5,350
Service Revenue
$118,000
Salaries Expense
$35,860
Mise.Expenses
$23,200
Depreciation Expense
$2,300
Totals
$190,410
$190,410
Answer 7-a
KARLIN COMPANY
Income statement
For the year ended December 31,2016
Service Revenue
$118,000
Less : Expenses
Prepaid Insurance
$0
Salaries Expense
$35,860
Mise.Expenses
$23,200
Depreciation Expense
$2,300
Bad debt
$0
Total Expenses
$61,360
Net Income
$56,640
Answer 9
KARLIN COMPANY
Post closing Trial Balance
Account Title
Debit
Credit
Cash
$67,050
Accounts Receivable
$25,000
Equipment
$37,000
Accumulated Depreciation
$9,200
Salaries Payable
$860
Common stock
$57,000
Retained Earnings
$61,990
Service Revenue
$0
Salaries Expense
$0
Mise.Expenses
$0
Depreciation Expense
$0
Totals
$129,050
$129,050
Solution 2
Solution 3
Journal Entries
Cash
Accounts Receivable
Event
General Journal
Debit
Credit
To balance b/d
31100
By Salaries Expense
35000
To balance b/d
14000
By Cash
24400
a
Cash
$82,600
To Service Revenue
82600
By Salaries Payable
8000
To Service Revenue
35400
Accounts Receivable
$35,400
To Accounts Receivable
24400
By Mise.Expenses
23200
Service Revenue
$118,000
To Common stock
12000
By Equipment
14000
By balance c/f
25000
By Dividend
2850
49400
49400
b
Cash
$24,400
Accounts Receivable
$24,400
By balance c/f
67050
Accumulated Depreciation
150100
150100
By balance b/d
6900
c
Cash
$12,000
By Depreciation Expense
2300
Common stock
$12,000
Equipment
To balance b/d
23000
To balance c/f
9200
d
Salaries Expense
$35,000
To Cash
14000
9200
Salaries Payable
$8,000
Cash
$43,000
By balance c/f
37000
Common stock
37000
37000
By balance b/d
45000
e
Miscellaneous Expenses
$23,200
By Cash
12000
Cash
$23,200
Salaries Payable
To Cash
8000
By balance b/d
8000
To balance c/f
57000
f
Equipment
$14,000
By Salaries Expense
860
57000
57000
Cash
$14,000
To balance c/f
860
Service Revenue
g
Dividend
$2,850
8860
8860
By Cash
82600
Cash
$2,850
By Accounts Receivable
35400
Retained Earnings
1
Salaries Expense
$860
By balance b/d
8200
To balance c/f
118000
Salaries Payable
$860
To Dividend
2850
By Net Income
56640
118000
118000
2
Depreciation Expense
$2,300
To balance c/f
61990
Depreciation Expense
Accumulated Depreciation
$2,300
64840
64840
To Accumulated Depreciation
2300
Miscellaneous Expenses
Answer 4
To Cash
23200
By balance c/f
2300
KARLIN COMPANY
2300
2300
Unadjusted Trial Balance
Account Title
Debit
Credit
By balance c/f
23200
Income Summary
Cash
$67,050
23200
23200
Accounts Receivable
$25,000
Equipment
$37,000
Salaries Expense
Accumulated Depreciation
$6,900
To Cash
35000
Salaries Payable
$0
To Salaries Payable
860
Common stock
$57,000
Retained Earnings
$5,350
By balance c/f
35860
Service Revenue
$118,000
35860
35860
Salaries Expense
$35,000
Mise.Expenses
$23,200
Totals
$187,250
$187,250
Answer 6
KARLIN COMPANY
Adjusted Trial Balance
Account Title
Debit
Credit
Cash
$67,050
Accounts Receivable
$25,000
Equipment
$37,000
Accumulated Depreciation
$9,200
Salaries Payable
$860
Common stock
$57,000
Retained Earnings
$5,350
Service Revenue
$118,000
Salaries Expense
$35,860
Mise.Expenses
$23,200
Depreciation Expense
$2,300
Totals
$190,410
$190,410
Answer 7-a
KARLIN COMPANY
Income statement
For the year ended December 31,2016
Service Revenue
$118,000
Less : Expenses
Prepaid Insurance
$0
Salaries Expense
$35,860
Mise.Expenses
$23,200
Depreciation Expense
$2,300
Bad debt
$0
Total Expenses
$61,360
Net Income
$56,640
Answer 9
KARLIN COMPANY
Post closing Trial Balance
Account Title
Debit
Credit
Cash
$67,050
Accounts Receivable
$25,000
Equipment
$37,000
Accumulated Depreciation
$9,200
Salaries Payable
$860
Common stock
$57,000
Retained Earnings
$61,990
Service Revenue
$0
Salaries Expense
$0
Mise.Expenses
$0
Depreciation Expense
$0
Totals
$129,050
$129,050
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