Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $13. At the start of January 2015, VGC's income statement accounts had zero balances and its balance sheet account balances were as follows:

Cash	$2,230,000
Accounts receivable	211,000
Supplies	16,700
Equipment	928,000
Land	1,630,000
Building	425,000
Accounts payable	134,000
Unearned revenue	132,000
Notes payable (due 2018)	123,000
Common stock	2,900,000
Retained earnings	2,151,700

In addition to the above accounts, VGC?s chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense.

The following transactions took place:

1. Record the receipt of $71,750 cash from customers for subscriptions that had already been earned in 2014.

2. Record the receipt of $220,000 cash from Electronic Arts, Inc. for service earned in the month of January.

3. Record the purchase of 10 new computer servers for $40,800; paid $15,600 as cash and signed a three year note for the remainder owed.

4. Record the payment of $15,100 for an Internet advertisement run on Yahoo! in January.

5. Record the sale of 13,800 monthly subscriptions at $13 each for services provided during January. Half was collected in cash and half was sold on account.

6. Record the receipt of an electric and gas utility bill for $5,750 for January utility services. The bill will be paid in February.

7. Record the payment of $370,000 in wages to employees for work done in January.

8. Record the purchase $4,500 of supplies on account.

9. Record the payment of $4,500 cash to the supplier in (h).

Required:

4. Prepare an unadjusted trial balance as of January 31, 2015.

5. Prepare an Income Statement for the month ended January 31, 2015, using unadjusted balances from part 4.

6. Prepare a Statement of Retained Earnings for the month ended January 31, 2015, using the beginning balance given above and the net income from part 5. Assume VGC has no dividends.

7. Prepare a classified Balance Sheet at January 31, 2015, using your response to part 6.

Answer rating: 100% (QA)

Journal entries Refrence Number Date Account Title Debit Credit a 1Jan Cash 5000000 Accounts Receivables 5000000 cash Received against balance b 2Jan Computer Server 3350000 cash 1000000 Notes Payable ... View the full answer