In 2019, Lane King created the Chaos Coordination Company, which provided playground equipment and design for Day Care Centers and Elementary Schools. In 2019, the following transactions occurred:
1. 1/1/2019: Purchased Equipment for $10,000 in Cash
2. 1/1/2019: Stockholders invested $450,000 in cash in the business in exchange for common stock.
3. 2/1/2019: Paid $24,000 for One year Office Rent
4. 2/1/2019: Pre-paid $5,280 for two years of advertising in the local newspaper.
5. 2/1/2019: Purchased $7,400 in Office Supplies on Account
6. 3/1/2019: Purchased Business Insurance for an annual cost of $6,900
7. 4/1/2019: Paid 50% of Office Supplies bill purchased on account in transaction #5
8. 8/1/2019: Received a $175,000, 4-year note payable from Chase Bank with a 4.5% interest rate. Interest is payable semi-annually on 1/31 and 7/31.
9. Earned $690,000 for services and sales provided:
a. $225,000 was received by customers in cash
b. $465,000 was billed to customers
10. Paid salaries for employees of $144,500
11. Received a cash advance for Order of $85,000 not yet produced for the full year
12. Paid Utilities of $12,200
13. Received $385,200 in cash from customers for billed transactions of 12/31
14. Declared and Paid a $2,000 dividend
Step One: Journalize the above transactions, post to the ledger T-Accounts, and prepare a trial balance (pay special attention to dates).
In addition, the following adjustments were noted:
- Employees' salaries for the last week of December and not yet paid total $22,200
- After reviewing the A/R aging, management estimated that approximately $32,600 will not be collectible
- Utilities Expense incurred but not recorded totaled $2,750
- Equipment is depreciated on a straight-line basis with $1,000 salvage over 4 years
- A physical count of office supplies noted a balance of $725
- Services provided but not yet billed totaled $37,400
Post all adjusting entries to T-Accounts.
Step Three: Prepare an adjusted Trial balance after posting all of the above entries.
Step Four: Prepare an Income Statement, Statement of Retained Earnings, and Balance Sheet for the 2019 year.
Step Five: Prepare closing entries for the 2019 year.
