At the beginning of 2011, Mitchell Cleaning Service had the following normal balances in its accounts:

The following events apply to Mitchell for 2011.
1. Provided \(\$ 65,000\) of services on account.
2. Incurred \(\$ 3,100\) of operating expenses on account.
3. Collected \(\$ 56,000\) of accounts receivable.
4. Paid \(\$ 36,000\) cash for salaries expense.
5. Paid \(\$ 15,000\) cash as a partial payment on accounts payable.
6. Paid an \(\$ 8,000\) cash dividend to the stockholders.
Required
a. Record these events in a general journal.
b. Open T-accounts and post the beginning balances and the preceding transactions to the appropriate accounts. Determine the balance of each account.
c. Record the beginning balances and the events in a horizontal statements model such as the following one:

d. Record the closing entries in the general journal and post them to the T-accounts. What is the amount of net income for the year?
e. What is the amount of change in retained earnings for the year? Is the change in retained earnings different from the amount of net income? If so, why?

Transcribed Image Text:

Account Balance Cash $30,000 Accounts Receivable 19,000 Accounts Payable 12,400 Common Stock 24,000 Retained Earnings 12,600