The general ledger of jackrabbit Rentals at January 1, 2018, includes the following account balances:
The following is a summary of the transactions for the year:
a. January 12 Provide services to customers on account, $62,400.
b. February 25 Provide services to customers for cash, $75,300.
c. March 19 Collect on accounts receivable, $45,700.
d. April 30 Issue shares of common stock in exchange for $30,000 cash.
e. June 16 Purchase supplies on account, $12,100.
f. July 7 Pay on accounts payable, $11,300.
g- September 30 Pay salaries for employee work in the current year, $64,200.
h. November 22 Pay advertising for the current year, $22,500.
i. December 30 Pay $2,900 cash dividends to stockholders.
Required:
1. Set up the necessary T-accounts and enter the beginning balances from the trial balance. In addition to the accounts shown, the company also has accounts for Supplies, Salaries Payable, Interest Payable, Dividends, Service Revenue, Salaries Expense, Advertising Expense, Interest Expense, and Supplies Expense.
2. Record each of the summary transactions listed above.
3. Post the transactions to the accounts.
4. Prepare an unadjusted trial balance.
5. Record adjusting entries. Accrued interest on the notes payable at year-end amounted to $2,500. Accrued salaries at year-end amounted to $1,500. Supplies remaining on hand at the end of the year equal $2,300.
6. Post adjusting entries.
7. Prepare an adjusted trial balance.
8. Prepare an income statement for 2018 and a classified balance sheet as of December 31, 2018.
9. Record closing entries.
10. Post closing entries.
11. Prepare a post-closing trial balance.
SOLUTION
Requirement 1
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Cash
Cash
Accounts Receivable
Accounts Receivable
Supplies
Supplies
41,500
25,700
0
41,500
25,700
0
Land
Land
Accounts Payable
Accounts Payable
Salaries Payable
Salaries Payable
110,800
15,300
0
110,800
15,300
0
Interest Payable
Interest Payable
Notes Payable
Notes Payable
Common Stock
Common Stock
0
30,000
100,000
0
30,000
100,000
Retained Earnings
Retained Earnings
Dividends
Dividends
Service Revenue
Service Revenue
32,700
0
0
32,700
0
0
Salaries Expense
Salaries Expense
Advertising Expense
Advertising Expense
Interest Expense
Interest Expense
0
0
0
0
0
0
Supplies Expense
Supplies Expense
0
0
Requirement 2
(a) January 12
Debit
Credit
Accounts Receivable
Accounts Receivable
62,400
Service Revenue
Service Revenue
62,400
(Provide services on account)
(Provide services on account)
(Provide services on account)
(b) February 25
Debit
Credit
Cash
Cash
75,300
Service Revenue
Service Revenue
75,300
(Provide services for cash)
(Provide services for cash)
(Provide services for cash)
(c) March 19
Debit
Credit
Cash
Cash
45,700
Accounts Receivable
Accounts Receivable
45,700
(Receive cash on account)
(Receive cash on account)
(Receive cash on account)
(d) April 30
Debit
Credit
Cash
Cash
30,000
Common Stock
Common Stock
30,000
(Issue common stock)
(Issue common stock)
(Issue common stock)
(e) June 16
Debit
Credit
Supplies
Supplies
12,100
Accounts Payable
Accounts Payable
12,100
(Purchase supplies on account)
(Purchase supplies on account)
(Purchase supplies on account)
(f) July 7
Debit
Credit
Accounts Payable
Accounts Payable
11,300
Cash
Cash
11,300
(Pay cash on account)
(Pay cash on account)
(Pay cash on account)
(g) September 30
Debit
Credit
Salaries Expense
Salaries Expense
64,200
Cash
Cash
64,200
(Pay salaries for work in the current period)
(Pay salaries for work in the current period)
(Pay salaries for work in the current period)
(h) November 22
Debit
Credit
Advertising Expense
Advertising Expense
22,500
Cash
Cash
22,500
(Pay advertising for the current period)
(Pay advertising for the current period)
(Pay advertising for the current period)
(h) December 30
Debit
Credit
Dividends
Dividends
2,900
Cash
Cash
2,900
(Pay dividends)
(Pay dividends)
(Pay dividends)
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Requirement 3 (entries posted in red)
Cash
Cash
Accounts Receivable
Accounts Receivable
Supplies
Supplies
41,500 75,300 45,700 30,000
11,300 64,200 22,500 2,900
25,700 62,400
45,700
0 12,100
91,600
42,400
12,100
Land
Land
Accounts Payable
Accounts Payable
Salaries Payable
Salaries Payable
110,800
11,300
15,300 12,100
0
110,800
16,100
0
Interest Payable
Interest Payable
Notes Payable
Notes Payable
Common Stock
Common Stock
0
30,000
100,000 30,000
0
30,000
130,000
Retained Earnings
Retained Earnings
Dividends
Dividends
Service Revenue
Service Revenue
32,700
0 2,900
0 62,400 75,300
32,700
2,900
137,700
Salaries Expense
Salaries Expense
Advertising Expense
Advertising Expense
Interest Expense
Interest Expense
0 64,200
0 22,500
0
64,200
22,500
0
Supplies Expense
Supplies Expense
0
0
Requirement 4
Jackrabbit Rentals Unadjusted Trial Balance December 31, 2018
Accounts
Debit
Credit
Cash
$ 91,600
Accounts Receivable
42,400
Supplies
12,100
Land
110,800
Accounts Payable
$ 16,100
Salaries Payable
0
Interest Payable
0
Notes Payable
30,000
Common Stock
130,000
Retained Earnings
32,700
Dividends
2,900
Service Revenue
137,700
Salaries Expense
64,200
Advertising Expense
22,500
Interest Expense
0
Supplies Expense
0
Total
$346,500
$346,500
Requirement 5
December 31
Debit
Credit
Interest Expense
Interest Expense
2,500
Interest Payable
Interest Payable
2,500
(Accrue interest on notes payable)
(Accrue interest on notes payable)
(Accrue interest on notes payable)
Salaries Expense
Salaries Expense
1,500
Salaries Payable
Salaries Payable
1,500
(Owe for salaries for the current year)
Supplies Expense
Supplies Expense
9,800
Supplies
Supplies
9,800
(Consume supplies during the year) ($0 + $12,100 − $2,300)
(Consume supplies during the year) ($0 + $12,100 − $2,300)
(Consume supplies during the year) ($0 + $12,100 − $2,300)
Requirement 6 (adjusted entries posted in red)
Continue Next Page
Cash
Cash
Accounts Receivable
Accounts Receivable
Supplies
Supplies
41,500 75,300 45,700 30,000
11,300 64,200 22,500 2,900
25,700 62,400
45,700
0 12,100
9,800
91,600
42,400
2,300
Land
Land
Accounts Payable
Accounts Payable
Salaries Payable
Salaries Payable
110,800
11,300
15,300 12,100
0 1,500
110,800
16,100
1,500
Interest Payable
Interest Payable
Notes Payable
Notes Payable
Common Stock
Common Stock
0 2,500
30,000
100,000 30,000
2,500
30,000
130,000
Retained Earnings
Retained Earnings
Dividends
Dividends
Service Revenue
Service Revenue
32,700
0 2,900
0 62,400 75,300
32,700
2,900
137,700
Salaries Expense
Salaries Expense
Advertising Expense
Advertising Expense
Interest Expense
Interest Expense
0 64,200 1,500
0 22,500
0 2,500
65,700
22,500
2,500
Supplies Expense
Supplies Expense
0 9,800
9,800
Requirement 7
Jackrabbit Rentals Unadjusted Trial Balance December 31, 2018
Accounts
Debit
Credit
Cash
$ 91,600
Accounts Receivable
42,400
Supplies
2,300
Land
110,800
Accounts Payable
$ 16,100
Salaries Payable
1,500
Interest Payable
2,500
Notes Payable
30,000
Common Stock
130,000
Retained Earnings
32,700
Dividends
2,900
Service Revenue
137,700
Salaries Expense
65,700
Advertising Expense
22,500
Interest Expense
2,500
Supplies Expense
9,800
Total
$350,500
$350,500
Requirement 8
Jackrabbit Rentals Income Statement For the year ended December 31, 2018
Service revenue
$137,700
Expenses:
Salaries
65,700
Advertising
22,500
Interest
2,500
Supplies
9,800
Total expenses
100,500
Net income
$ 37,200
Jackrabbit Rentals Balance Sheet December 31, 2018
Assets
Assets
Assets
Assets
Liabilities
Liabilities
Current assets:
Current assets:
Current liabilities:
Cash
Cash
$ 91,600
$ 91,600
Accounts Payable
$ 16,100
Accounts Receivable
Accounts Receivable
Accounts Receivable
42,400
Salaries Payable
1,500
Supplies
Supplies
2,300
2,300
Interest Payable
2,500
Total current assets
Total current assets
Total current assets
136,300
Total current liabilities
20,100
Notes Payable
30,000
Total liabilities
50,100
Long-term assets:
Long-term assets:
Stockholders’ Equity
Stockholders’ Equity
Land
Land
110,800
110,800
Common stock
130,000
Retained earnings
67,000
*
Total stockholders’ equity
197,000
Total assets
Total assets
$247,100
$247,100
Total liabilities and stockholders’ equity
$247,100
*
Retained earnings = Beginning retained earnings + Net income − Dividends = $32,700 + $37,200 − $2,900 = $67,000
Retained earnings = Beginning retained earnings + Net income − Dividends = $32,700 + $37,200 − $2,900 = $67,000
Retained earnings = Beginning retained earnings + Net income − Dividends = $32,700 + $37,200 − $2,900 = $67,000
Retained earnings = Beginning retained earnings + Net income − Dividends = $32,700 + $37,200 − $2,900 = $67,000
Retained earnings = Beginning retained earnings + Net income − Dividends = $32,700 + $37,200 − $2,900 = $67,000
Retained earnings = Beginning retained earnings + Net income − Dividends = $32,700 + $37,200 − $2,900 = $67,000
Retained earnings = Beginning retained earnings + Net income − Dividends = $32,700 + $37,200 − $2,900 = $67,000
Requirement 9
December 31
Debit
Credit
Service Revenue
Service Revenue
137,700
Retained Earnings
Retained Earnings
137,700
(Close revenue accounts)
(Close revenue accounts)
(Close revenue accounts)
Retained Earnings
Retained Earnings
100,500
Salaries Expense
Salaries Expense
65,700
Advertising Expense
Advertising Expense
22,500
Interest Expense
Interest Expense
2,500
Supplies Expense
Supplies Expense
9,800
(Close expense accounts)
(Close expense accounts)
(Close expense accounts)
Retained Earnings
Retained Earnings
2,900
Dividends
Dividends
2,900
(Close dividends account)
(Close dividends account)
(Close dividends account)
Requirement 10 (closing entries posted in red)
Cash
Cash
Accounts Receivable
Accounts Receivable
Supplies
Supplies
41,500 75,300 45,700 30,000
11,300 64,200 22,500 2,900
25,700 62,400
45,700
0 12,100
9,800
91,600
42,400
2,300
Land
Land
Accounts Payable
Accounts Payable
Salaries Payable
Salaries Payable
110,800
11,300
15,300 12,100
0 1,500
110,800
16,100
1,500
Interest Payable
Interest Payable
Notes Payable
Notes Payable
Common Stock
Common Stock
0 2,500
30,000
100,000 30,000
2,500
30,000
130,000
Retained Earnings
Retained Earnings
Dividends
Dividends
Service Revenue
Service Revenue
100,500 2,900
32,700 137,700
0 2,900
2,900
137,700
0 62,400 75,300
67,000
0
0
Salaries Expense
Salaries Expense
Advertising Expense
Advertising Expense
Interest Expense
Interest Expense
0 64,200 1,500
65,700
0 22,500
22,500
0 2,500
2,500
0
0
0
Supplies Expense
Supplies Expense
0 9,800
9,800
0
Requirement 11
Jackrabbit Rentals Unadjusted Trial Balance December 31, 2018