Assignment
Josh and Kelly McKay began operations of their furniture repair shop (Furniture Refinishers, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2017, was as follows:
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Account Titles
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Debit
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Credit
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Cash
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12,000
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Accounts receivable
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11,000
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Supplies
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5,000
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Small tools
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5,000
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Equipment
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Accumulated depreciation (on equipment)
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Other assets (not detailed to simplify)
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7,000
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Accounts payable
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10,000
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Notes payable
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Wages payable
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Interest payable
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Income taxes payable
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Unearned revenue
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Common stock (90,000 shares, $0.10 par value)
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9,000
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Additional paid-in capital
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12,000
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Retained earnings
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9,000
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Service revenue
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Depreciation expense
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Wages expense
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Interest expense
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Income tax expense
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Remaining expenses (not detailed to simplify)
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Totals
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40,000
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40,000
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Transactions during 2017 follow:
1. Borrowed $20,000 cash on July 1, 2017, signing a one-year, 10 percent note payable.
2. Purchased equipment for $18,000 cash on July 1, 2017.
3. Sold 30,000 additional shares on July 29, 2017, of capital stock for cash at $.50 market value per share at the beginning of the year.
4. Earned $141,000 in revenue. Transactions dated August 15, 2017, including $60,000 on credit and the rest in cash.
5. Incurred remaining expenses of $50,000, invoices dated September 15, 2017 including $9,000 on credit and the rest paid in cash.
6. Purchased additional small tools on September 23, 2017, $4,000 cash.
7. Collected accounts receivables on October 6, 2017, $11,000.
8. Paid accounts payable on November 11, 2017, $24,000.
9. Purchased $23,000 of supplies on account on November 30, 2017.
10. Received a $2,000 deposit on December 2, 2017, for work to start January 15, 2018.
11. Declared and paid cash dividends on December 17th, $14,000.
Data for adjusting entries:
1. Supplies of $7,000 and small tools of $8,000 were counted on December 31, 2017 (debit Remaining Expenses).
2. Depreciation for 2017, $6,000.
3. Interest accrued on notes payable (to be computed).
4. Wages earned since the December 24 payroll but not yet paid, $5,000.
5. Income tax expense was $5,000, payable in 2018.
1. Prepare journal entries for transactions (a) through (k). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Prepare the adjusting entries for transactions (l) through (p). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
3. Post the journal entries for transactions (a) through (k) and adjusting entries for transactions (l) through (p) to the respective T-Accounts.
4. Prepare an income statement (including earnings per share), statement of stockholders' equity, and balance sheet. (For the Statement of Stockholders' Equity and Balance Sheet only, items to be deducted must be indicated with a minus sign. Round "Earning per share" to 2 decimal places.)