Question

The following transactions apply to Walnut Enterprises for 2016, its first year of operations:
1. Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, 2016.
2. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent.
3. Paid $62,000 cash for other operating expenses during the year.
4. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until 2017.
5. Recognized the accrued interest at December 31, 2016.
The following transactions apply to Walnut Enterprises for 2017:
1. Paid the balance of the sales tax due for 2016.
2. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent.
3. Repaid the principal of the note and applicable interest on April 1, 2017.
4. Paid $102,500 of other operating expenses during the year.
5. Paid the sales tax due on $185,000 of the service revenue. The sales tax on the balance of the revenue is not due until 2018.
Required
a. Record the 2016 transactions in general journal form.
b. Post the transactions to T-accounts.
c. Prepare a balance sheet, statement of changes in stockholders’ equity, income statement, and statement of cash flows for 2016.
d. Prepare the closing entries and post them to the T-accounts.
e. Prepare a post-closing trial balance.
f. Repeat Requirements a through e for 2017.


$1.99
Sales5
Views99
Comments0
  • CreatedApril 20, 2015
  • Files Included
Post your question
5000