818 Co. commenced operations on July 1, 2022. The following represents their post-closing trial balance as of 8/31/2022:

818 Co. – Post-Closing Trial Balance
August 31, 2022
	Debit	Credit
Cash	25,000
Short-Term Investments	11,500
Accounts Receivable	47,000
Inventory	35,000
Prepaid Expenses	31,500
Land	50,000
Building	90,000
Equipment	30,000
Accumulated Depreciation		1,500
Accounts Payable		33,600
Unearned revenue		20,000
Wages Payable		23,000
Utilities Payable		10,000
Interest Payable		400
Notes Payable		30,000
Common Stock (20,000 shares issues and outstanding, $1 par)		20,000
Additional Paid-In-Capital		180,000
Retained Earnings		1,500

818 had the following transactions in the month of September:

Issued more 1,000 shares for cash at the same price it did for its other outstanding shares

Purchased 30,000 of inventory on account

Earned revenues of $50,000, of which $15,000 was cash and $35,000 was credit sales. This transaction was the sale $27,000 of inventory

Paid $10,000 each towards its accounts payable and wages payable balance, $5,000 towards its utilities payable balance

Incurred the following expenses:

$5,000 of salaries and wages

$6,000 of utilities

Received $30,000 in collections from customers for past credit sales

Also note the following:

Prepaid expenses consist of a $1,800 insurance policy and a rental agreement paid in advance for $36,000. Both are for a one-year period.

The building and equipment were acquired at the start of the company. The building has a useful life of 30 yrs and the equipment a useful life of 5 years. Both have no salvage value.

818 entered into a contract with a major customer to provide goods over a period of one year. The customer advanced 818 $24,000.

818 has not paid dividends to its shareholders since its inception.

Required:

Record the above transactions, including end of month adjustments, and update the balances for each account.

Prepare a balance sheet as of 9/30/22 and an income statement for the month ended September 2022.

Prepare a rollforward of retained earnings for the month of September 2022.

Answer rating: 100% (QA)

To record the above transactions and update the balances for each account we need to follow the given information and make the necessary journal entries Lets go through each transaction step by step 1 ... View the full answer