Business, 13.10.2020 04:01 Leahma327

Ryan Hope, controller of Hope Inc., provides you with the following information concerning Hope during 2017. (Hope Inc. began operations on January 1, 2017.) 1. Issued 1,000 shares of common stock at $95 per share.
2. Paid $2,600 for each of 12 months to rent office and warehouse space for 2017. The rent was paid on the last day of each month.
3. Made total sales for services of $190,000: $65,000 for cash and $125,000 on account.
4. Purchased land for $32,000.
5. Borrowed $75,000 on December 31. The note payable matures in two years.
6. Salaries and wages totaling $80,000 were paid during the year.
7. Miscellaneous expenses totaling $40,000 were paid during the year.
8. $56,000 was received from customers as payment on account.
9. Declared and paid a dividend of $26,000.

Required:
a. Prepare journal entries for these transactions.
b. Establish T-accounts for each account, and post the journal entries to these T-accounts.
c. Prepare an income statement for 2017.

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Answer from: starreee

1. Issued 1,000 shares of common stock at $95 per share.

Dr Cash 95,000

Cr Common stock 95,000

2. Paid $2,600 for each of 12 months to rent office and warehouse space for 2017. The rent was paid on the last day of each month.

Dr Rent expense 31,200

Cr Cash 31,200

3. Made total sales for services of $190,000: $65,000 for cash and $125,000 on account.

Dr Cash 65,000

Dr Accounts receivable 125,000

Cr Service revenue 190,000

4. Purchased land for $32,000.

Dr Land 32,000

Cr Cash 32,000

5. Borrowed $75,000 on December 31. The note payable matures in two years.

Dr Cash 75,000

Cr Notes payable 75,000

6. Salaries and wages totaling $80,000 were paid during the year.

Dr Wages expense 80,000

Cr Cash 80,000

7. Miscellaneous expenses totaling $40,000 were paid during the year.

Dr Miscellaneous expense 40,000

Cr Cash 40,000

8. $56,000 was received from customers as payment on account.

Dr Cash 56,000

Cr Accounts receivable 56,000

9. Declared and paid a dividend of $26,000.

Dr Dividends 26,000

Cr Cash 26,000

Cash

debit credit

95,000

31,200

65,000

32,000

75,000

80,000

40,000

56,000

26,000

81,800

Common stock

debit credit

95,000

Rent expense

debit credit

31,200

Accounts receivable

debit credit

125,000

56,000

69,000

Service revenue

debit credit

190,000

Land

debit credit

32,000

Notes payable

debit credit

75,000

Wages expense

debit credit

80,000

Miscellaneous expense

debit credit

40,000

Dividends

debit credit

26,000

Retained earnings

debit credit

38,800

26,000

12,800

closing entries

Dr Service revenue 190,000

Cr Income summary 190,000

Dr Income summary 151,200

Cr Rent expense 31,200

Cr Wages expense 80,000

Cr Miscellaneous expense 40,000

Dr Income summary 38,800

Cr Retained earnings 38,800

Dr Retained earnings 26,000

Cr Dividends 26,000

c. Hope, inc.

Income Statement

For the year ended December 31, 2017

Revenues $190,000

Operating expenses:

Rent expense $31,200Wages expense $80,000Miscellaneous expense $40,000 ($151,200)

Net income $38,800

Answer from: Quest

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Answer from: Quest

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