Reference no: EM132482966
Malakai Company had the following unadjusted account balances at the end of 2018. Note: The given Retained Earnings balance does not include the affects of income for the period. )
Cash $20,800
Accounts Receivable 7,400
Prepaid Rent 5,000
Equipment 21,000
Accumulated Depreciation -
Equipment 1,000
Accounts Payable 1,000
Income Tax Payable 0
Common Stock 35,000
Retained Earnings 2,100
Sales Revenue 52,600
Salaries and Wages Expense 25,000
Utilities Expense 12,500
Rent Expense 0
Depreciation Expense 0
Income Tax Expense 0
Malakai had the following transactions occur throughout the year. These were not yet recorded in the accounts above.
a. Depreciation expense for the year was $1,000. Depreciation is a contra-asset
Depreciation Expense $1,000
Accumulated Depreciation $1,000
b. Malakai used up one-half of its prepaid rent throughout the year. Rent was $5,000/2=$2,500.
Unearned Rent Revenue $2,500
Rent Revenue $2,500
c. The company used $9,000 of utilities that remained unpaid by the end of the year. (This amount was NOT included in the $12,500 of utilities expense that was already recorded). Increase in Utilities, decreases cash
Utilities Liability $12,500
Utilities Expense $12,500
d. Income tax expense was $450. This amount will be remitted to the government in January.
Income Tax Liability $450.00
Income Tax Expense $450.00
Required:
Question 1: Prepare journal entries and T-accounts for each of the four transactions above.