[The following information applies to the questions displayed below.] The genera

Question

[The following information applies to the questions displayed below.] The general ledger of the Karlin Company, a consulting company, at January 1, 2016, contained the following account balances: Account Title Cash Accounts receivable Equipment Accumulated depreciation Salaries payable Common stock Retained earnings Debits Credits 32,900 11,000 17,000 5,100 6,500 42,000 7,300 Total 60,900 60,900 The following is a summary of the transactions for the year: a. Sales of services, $106,000, of which $31,800 was on credit. b. Collected on accounts receivable, $22,600. C. Issued shares of common stock in exchange for $8,500 in cash. d. Paid salaries, $38,500 (of which $6,500 was for salaries payable). e. Paid miscellaneous expenses, $20,800. f. Purchased equipment for $11,000 in cash. g. Paid $2,525 in cash dividends to shareholders. 1. Accrued salaries at year-end amounted to $770. 2. Depreciation for the year on the equipment is $1,700.

Explanation / Answer

Particulars Amount Amount a Cash Account $            74,200 Account Receivable $            31,800     To Sales $                                                106,000 (Being Cash and Credit Sales) b Cash Account Dr $            22,600     To Account Receivable $                                                  22,600 (Being Cash received from Account Receivable) c Cash Account Dr $              8,500    To Common Stock Account $                                                    8,500 (Being Issue shares for Cash ) d Salaries Payable Account $              6,500 Salaries Account $            32,000     To Cash $                                                  38,500 (Being Cash paid to Salaries) e Misecellances Expenses Account Dr $            20,800     To Cash Account $                                                  20,800 (Being Miscellances Expenses paid) f Equipment Account Dr $            11,000 To Cash Account $                                                  11,000 (Being cash purchase of equipement ) g Dividend Account Dr $              2,525    To Cash Account $                                                    2,525 (Being Dividend Paid for Cash ) 2 Depreciation Account Dr $              1,700    To Accumulated Depreciation Acccount $                                                    1,700 (Being Depreciation charged for this year) Cash Ans) Particulars Amount Particulars Amount To Balances b/d $            32,900 By Salaries Payable Account   $                    6,500 To Service Revenue $            74,200 By Saleries Account s $                  32,000 To Account Receivable $            22,600 By Miscellances Expenses Account   $                  20,800 To Common Stock Account $              8,500 By Equipement Account   $                  11,000 By Dividend Account   $                    2,525 By Balances c/d $                  65,375 $         138,200 $                138,200 Accounts Receivable Particulars Amount Particulars Amount To Balances b/d $            11,000 To Cash Account $                  22,600 To Service Revenue $            31,800 To Balances c/d $                  20,200 $            42,800 $                  42,800 Equipment Particulars Amount Particulars Amount To Balances b/d $            17,000 To Cash Account $            11,000 By Balances C/d $                  28,000 $            28,000 $                  28,000 Accumulated Depreciation Particulars Amount Particulars Amount By Balances b/d $                    5,100 By Deperciation Account $                    1,700 To Balances C/d $              6,800 $              6,800 $                    6,800 Salaries Payable Particulars Amount Particulars Amount To Cash Account $            38,500 By Balances b/d $                    6,500 By Salaries Account   $                  32,770 To Balances c/d $                  770 $            39,270 $                  39,270 Common Stock Particulars Amount Particulars Amount To Balances b/d $                  42,000 To Cash Account $                    8,500 To Balances c/d $            50,500 $            50,500 $                  50,500 Retain Earnings Particulars Amount Particulars Amount To Balances b/d $                    7,300 To Balances c/d $              7,300 $              7,300 $                    7,300 Service Revenue Particulars Amount Particulars Amount By Cash $                  74,200 To P&L Account c/d $         106,000 By Account Receivable $                  31,800 $         106,000 $                106,000 Misecellaneous Expenses Particulars Amount Particulars Amount To Cash Account $            20,800 By P&L Account c/d $                  20,800 $            20,800 $                  20,800 Salaries Expenses Particulars Amount Particulars Amount To Salaries payable $            32,770 By P&L Account c/d $                  32,770 $            32,770 $                  32,770 Dividend Account Particulars Amount Particulars Amount To Cash Account $              2,525 To P&L Account   $                    2,525 $              2,525 $                    2,525 Deperciation Account Particulars Amount Particulars Amount To Accumulated Deperciation Account $              1,700 To P&L Account $                    1,700 $              1,700 $                    1,700 Income Summary Particulars Amount Particulars Amount To Depreciation $              1,700 By Service Revenue $                106,000 To Dividend $              2,525 To Salaries Account $            32,770 To Misecellaneous $            20,800 To Profit Account $            48,205 $         106,000 $                106,000

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