Colton Enterprises experienced the following events for Year 1, the first year of operation:

 

Acquired $41,000 cash from the issue of common stock.

Paid $12,600 cash in advance for rent. The payment was for the period April 1, Year 1, to March 31, Year 2.

Performed services for customers on account for $84,000.

Incurred operating expenses on account of $38,000.

Collected $64,500 cash from accounts receivable.

Paid $27,000 cash for salary expense.

Paid $30,400 cash as a partial payment on accounts payable.

 

Adjusting Entries

Made the adjusting entry for the expired rent. (See Event 2.)

Recorded $3,600 of accrued salaries at the end of Year 1.

 

Events for Year 2

Paid $3,600 cash for the salaries accrued at the end of the prior accounting period.

Performed services for cash of $33,000.

Purchased $3,400 of supplies on account.

Paid $12,300 cash in advance for rent. The payment was for one year beginning April 1, Year 2.

Performed services for customers on account for $100,000.

Incurred operating expenses on account of $47,500.

Collected $95,000 cash from accounts receivable.

Paid $45,000 cash as a partial payment on accounts payable.

Paid $32,100 cash for salary expense.

Paid a $15,000 cash dividend to stockholders.

 

Adjusting Entries

Made the adjusting entry for the expired rent. (Hint: Part of the rent was paid in Year 1.)

Recorded supplies expense. A physical count showed that $750 of supplies were still on hand.

  

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b. Post the Year 1 events to T-accounts. Beg. Bal. End. Bal. Cash Beg. Bal. End. Bal. Accounts Receivable Prepaid Rent Accounts Payable Beg. Bal. Beg. Bal. End. Bal. End. Bal. b. Post the Year 1 events to T-accounts. Beg. Bal. End. Bal. Cash Beg. Bal. End. Bal. Accounts Receivable Prepaid Rent Accounts Payable Beg. Bal. Beg. Bal. End. Bal. End. Bal.