The general ledger of the Karlin Company, a consulting company, at January 1, 2011, contained the following account balances:
The following is a summary of the transactions for the year:
a. Sales of services, $100,000, of which $30,000 was on credit.
b. Collected on accounts receivable, $27,300.
c. Issued shares of common stock in exchange for $10,000 in cash.
d. Paid salaries, $50,000 (of which $9,000 was for salaries payable).
e. Paid miscellaneous expenses, $24,000.
f. Purchased equipment for $15,000 in cash.
g. Paid $2,500 in cash dividends to shareholders.
1. Set up the necessary T-accounts and enter the beginning balances from the trial balance.
2. Prepare a general journal entry for each of the summary transactions listed above.
3. Post the journal entries to the accounts.
4. Prepare an unadjusted trial balance.
5. Prepare and post adjusting journal entries. Accrued salaries at year-end amounted to $1,000. Depreciation for the year on the equipment is $2,000. The allowance for uncollectible accounts is estimated to be $1,500.
6. Prepare an adjusted trial balance.
7. Prepare an income statement for 2011 and a balance sheet as of December 31, 2011.
8. Prepare and post closing entries.
9. Prepare a post-closing trial balance.