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226.
The general ledger of FastTrack Racing at January 1, 2018, includes the following account
balances:
Accounts
Debits
Credits
Cash
$42,500
Accounts Receivable
25,800
Land
115,800
Accounts Payable
15,100
Notes Payable
30,500
Common Stock
100,000
Retained Earnings
38,500
Totals
$184,100
$184,100
The following is a summary of the transactions for the year:
a. Provide services to customers on account, $63,400.
b. Provide services to customers for cash, $75,800.
c. Collect on accounts receivable, $45,600.
d. Issue shares of common stock in exchange for $32,000 cash.
e. Purchase supplies on account, $12,700.
f. Pay on accounts payable, $11,500.
g. Pay salaries for employee work in the current year, $66,200.
h. Pay advertising for the current year, $21,500.
i. Pay $2,800 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 $2,800. Accrued salaries at year-end amounted to $2,500. Supplies remaining on hand
at the end of the year equal $2,600.
6. Post adjusting entries.
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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.
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