Reference no: EM131519916
Question: The general ledger of Red Storm Cleaners at January 1, 2012, includes the following account balances:
The following is a summary of the transactions for the year:
a. Sales of services, $50,000, of which $20,000 is on account.
b. Collect on accounts receivable, $17,000.
c. Issue shares of common stock in exchange for $5,000 cash.
d. Pay salaries, $25,000 (of which $5,000 is for salaries payable in 2011).
e. Pay repairs and maintenance expenses, $12,000.
f. Purchase equipment for $7,000 cash.
g. Pay $1,000 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 Dividends, Service Revenue, Salaries Expense, Repairs and Maintenance Expense, Depreciation Expense, and Supplies Expense.
2. Record each of the summary transactions listed above.
3. Post the transaction to the accounts.
4. Prepare an unadjusted trial balance.
5. Record adjusting entries. Accrued salaries at year-end amounted to $1,000. Depreciation for the year on the equipment is $4,000. Office supplies remaining on hand at the end of the year equal $1,000.
6. Post adjusting entries.
7. Prepare an adjusted trial balance.
8. Prepare an income statement for 2012 and a classified balance sheet as of December 31, 2012.
9. Record closing entries.
10. Post closing entries.
11. Prepare a post-closing trial balance.