Problem 3-7A (concluded)
Requirement 6 (closing entries posted in red)
Retained Earnings
Service Revenue
19,000
Salaries Expense
Interest Expense
Rent Expense
Utilities Expense
24,500
0
0
Requirement 7
Crimson Tide Music Academy
Post-Closing Trial Balance
December 31, 2018
Accounts
Debit
Credit
Cash
$ 10,300
Accounts Receivable
9,500
Supplies
Prepaid Rent
Equipment
Accumulated Depreciation
$ 18,000
Accounts Payable
7,700
Salaries Payable
2,100
Interest Payable
Utilities Payable
Notes Payable
Common Stock
Retained Earnings
Problem 3-8A (LO 3-3, 3-4, 3-5, 3-6, 3-7)
Requirement 1
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr.
Salaries Payable
15,000
5,000
7,500
15,000
5,000
7,500
Common Stock
Retained Earnings
Service Revenue
25,000
0
Dividends
Salaries Expense
R&M Expense
0
0
0
0
0
0
0
Chapter 3 – The Accounting Cycle: End of the Period
Problem 3-8A (continued)
Requirement 2
(a) March 12
Debit
Credit
Accounts Receivable
21,000
Cash
39,000
Service Revenue
60,000
(Service revenue on account and for cash)
(b) May 2
Debit
Credit
Cash
Accounts Receivable
18,000
(Collect on account)
(c) June 30
Debit
Credit
Cash
6,000
Common Stock
6,000
(Issue common stock)
(d) August 1
Debit
Credit
Salaries Payable
(Pay past and current salaries)
(e) September 25
Debit
Credit
(Pay repairs and maintenance expenses)
(f) October 19
Debit
Credit
Equipment
8,000
Cash
8,000
(Purchase equipment)
Debit
Credit
Dividends
Cash
(Pay dividends)
Problem 3-8A (continued)
Requirement 3 (entries posted in red)
Cash
Accounts Receivable
Supplies
20,000
39,000
26,000
13,000
8,000
4,000
Equipment
Accumulated Depr.
Salaries Payable
8,000
15,000
5,000
7,500
Common Stock
Retained Earnings
Service Revenue
25,000
6,000
9,500
0
60,000
Salaries Expense
Problem 3-8A (continued)
Requirement 4
Red Storm Cleaners
Unadjusted Trial Balance
December 31, 2018
Accounts
Debit
Credit
Cash
$34,900
Accounts Receivable
11,000
Supplies
Common Stock
Retained Earnings
Dividends
1,100
Service Revenue
60,000
Repairs and Main. Expense
13,000
Depreciation Expense
Supplies Expense
Requirement 5
December 31
Debit
Credit
Salaries Expense
1,100
Salaries Payable
1,100
(Adjust salaries payable)
(Adjust accumulated depreciation)
Supplies
2,800
Problem 3-8A (continued)
Requirement 6 (adjusted entries posted in red)
Cash
Accounts Receivable
Supplies
34,900
11,000
1,200
20,000
26,000
8,000
4,000
2,800
Equipment
Accumulated Depr.
Salaries Payable
15,000
8,000
5,000
5,000
7,500
7,500
1,100
23,000
10,000
1,100
Common Stock
Retained Earnings
Service Revenue
31,000
60,000
Salaries Expense
1,100
1,100
13,000
Supplies Expense
5,000
2,800
25,000
9,500
0
Chapter 3 – The Accounting Cycle: End of the Period
Problem 3-8A (continued)
Requirement 7
Red Storm Cleaners
Adjusted Trial Balance
December 31, 2018
Accounts
Debit
Credit
Cash
$ 34,900
Accounts Receivable
11,000
Supplies
1,200
Equipment
Salaries Payable
Common Stock
Retained Earnings
Dividends
Service Revenue
Salaries Expense
Repairs and Main. Expense
Depreciation Expense
Supplies expense
$111,600
Problem 3-8A (continued)
Requirement 8
Red Storm Cleaners
Income Statement
For the year ended December 31, 2018
Service revenue
$60,000
Expenses:
Salaries
19,600
Repairs and main.
Net income
Red Storm Cleaners
Balance Sheet
December 31, 2018
Assets
Liabilities
Current assets
Current liabilities.
Cash
$34,900
Salaries payable
$ 1,100
Accounts receivable
11,000
Supplies
1,200
Long-term assets:
Common stock
Equipment
23,000
Accumulated depr.
Problem 3-8A (continued)
Requirement 9
December 31
Debit
Credit
Service Revenue
60,000
Retained Earnings
60,000
Retained Earnings
Problem 3-8A (continued)
Requirement 10 (closing entries posted in red)
Cash
Accounts Receivable
Supplies
20,000
26,000
8,000
4,000
Equipment
Accumulated Depr.
Salaries Payable
15,000
5,000
7,500
Common Stock
Retained Earnings
Service Revenue
25,000
6,000
40,400
9,500
60,000
60,000
0
60,000
Dividends
Salaries Expense
R&M Expense
0
0
0
Depr. Expense
Supplies Expense
0
0
Chapter 3 – The Accounting Cycle: End of the Period
Problem 3-8A (concluded)
Requirement 11
Red Storm Cleaners
Post-Closing Trial Balance
December 31, 2018
Accounts
Debit
Credit
Cash
$34,900
Accounts Receivable
11,000
Equipment
Accumulated Depreciation
$10,000
Common Stock
Retained Earnings
Problem 3-9A (LO 3-3, 3-4, 3-5, 3-6, 3-7)
Requirement 1
Cash
Accounts Receivable
Prepaid Insurance
24,600
15,400
12,000
24,600
15,400
12,000
Supplies
Land
Accounts Payable
Problem 3-9A (continued)
Requirement 2
(a) January 9
Debit
Credit
Cash
134,100
Accounts Receivable
52,200
Service Revenue
186,300
(Provide services for cash and on account)
(b) February 12
Debit
Credit
Cash
Accounts Receivable
(Collect on account)
(c) April 25
Debit
Credit
Cash
Deferred Revenue
(Receive cash in advance from customers)
(d) May 6
Debit
Credit
Supplies
9,200
Accounts Payable
9,200
(Purchase supplies on account)
(e) July 15
Debit
Credit
Property Tax Expense
Cash
8,500
(Pay property taxes)
(f) September 10
Debit
Credit
Accounts Payable
Cash
(Pay on account)
(g) October 31
Debit
Credit
Salaries Expense
Cash
(Pay salaries for the current year)
(g) November 20
Debit
Credit
Cash
27,000
Common Stock
27,000
(Issue shares of common stock)
(g) December 30
Debit
Credit
Dividends
2,800
Cash
(Pay dividends)
Problem 3-9A (continued)
Requirement 3 (entries posted in red)
Cash
Accounts Receivable
Prepaid Insurance
24,600
15,400
12,000
Supplies
Land
Accounts Payable
0
148,000
6,700
Deferred Revenue
Common Stock
Retained Earnings
5,800
143,000
44,500
Dividends
Service Revenue
Property Tax Expense
0
0
0
Salaries Expense
Insurance Expense
Supplies Expense
0
0
0
Chapter 3 – The Accounting Cycle: End of the Period
Problem 3-9A (continued)
Requirement 4
Zips Storage
Unadjusted Trial Balance
December 31, 2018
Accounts
Debit
Credit
Cash
$103,800
Accounts Receivable
16,100
Prepaid Insurance
12,000
Supplies
9,200
Common Stock
Retained Earnings
44,500
Dividends
2,800
Service Revenue
186,300
Salaries Expense
Insurance Expense
Supplies Expense
Requirement 5
December 31
Debit
Credit
Insurance Expense
7,000
Prepaid Insurance
7,000
(Reduce prepaid insurance due to passage of time)
(Provide services to customers who paid in advance)
Problem 3-9A (continued)
Requirement 6 (adjusted entries posted in red)
Cash
Accounts Receivable
Prepaid Insurance
16,100
24,600
8,500
15,400
12,000
7,000
Supplies
Land
Accounts Payable
0
Deferred Revenue
Common Stock
Retained Earnings
12,900
Dividends
Service Revenue
Property Tax Expense
0
2,800
0
186,300
0
8,500
Salaries Expense
Insurance Expense
Supplies Expense
0
0
0
Problem 3-9A (continued)
Requirement 7
Zips Storage
Adjusted Trial Balance
December 31, 2018
Accounts
Debit
Credit
Cash
$103,800
Accounts Receivable
16,100
Prepaid Insurance
5,000
Supplies
2,900
Common Stock
Retained Earnings
Dividends
2,800
Service Revenue
Salaries Expense
Insurance Expense
7,000
Supplies Expense
6,300
Problem 3-9A (continued)
Requirement 8
Zips Storage
Income Statement
For the year ended December 31, 2018
Service revenue
$198,100
Expenses:
Property Tax
8,500
Salaries
Net income
$ 52,700
Zips Storage
Balance Sheet
December 31, 2018
Assets
Liabilities
Current assets:
Current liabilities:
Cash
$103,800
Accounts Payable
$ 4,500
Accounts receivable
16,100
Deferred Revenue
6,900
Prepaid Insurance
Supplies
Long-term assets:
Retained earnings
Land
Chapter 3 – The Accounting Cycle: End of the Period
Problem 3-9A (continued)
Requirement 9
December 31
Debit
Credit
Service Revenue
198,100
Retained Earnings
198,100
(Close revenue accounts)
Retained Earnings
(Close expense accounts)
(Close dividends account)
Problem 3-9A (continued)
Requirement 10 (closing entries posted in red)
Cash
Accounts Receivable
Prepaid Insurance
103,800
24,600
134,100
8,500
11,400
15,400
52,200
51,500
12,000
7,000
Supplies
Land
Accounts Payable
0
9,200
6,300
148,000
11,400
6,700
9,200
2,900
148,000
4,500
Deferred Revenue
Common Stock
Retained Earnings
6,900
Salaries Expense
Supplies Expense
5,800
143,000
44,500