80.2K

Verified Solution

Link Copied!

Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $13. At the start of January 2021, VGCs income statement accounts had zero balances and its balance sheet account balances were as follows:

Cash	$ 2,000,000
Accounts Receivable	187,000
Supplies	23,900
Equipment	886,000
Buildings	463,000
Land	1,660,000
Accounts Payable	130,000
Deferred Revenue	88,000
Notes Payable (due 2025)	70,000
Common Stock	2,300,000
Retained Earnings	2,631,900

In addition to the above accounts, VGCs chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense. The January transactions are shown below:

1. Received $70,000 cash from customers on 1/1 for subscriptions that had already been earned and charged on account in 2020.
2. Purchased 10 new computer servers for $31,500 on 1/2; paid $16,500 cash and signed a three-year note for the remainder owed.
3. Paid $16,200 for an Internet advertisement run on 1/3.
4. On January 4, purchased and received $3,900 of supplies on account.
5. Received $190,000 cash on 1/5 from customers for service revenue earned in January.
6. Paid $3,900 cash to a supplier on January 6.
7. On January 7, sold 19,300 subscriptions at $13 each for services provided during January. Half was collected in cash and half was sold on account.
8. Paid $400,000 in wages to employees on 1/30 for work done in January.
9. On January 31, received an electric and gas utility bill for $6,010 for January utility services. The bill will be paid in February.

Each journal entry is posted automatically to the general ledger.

No. Date Debit Credit Balance January 01 2,000,000 1 January 01 70,000 2,070,000 2 January 02 16,500 2,053,500 3 January 03 16,200 2,037,300 5 January 05 190,000 2,227,300 6 January 06 3,900 2,223,400 7 January 07 125,450 2,348,850 8 January 30 400,000 1,948,850	Cash						No. Date Debit Credit Balance January 01 187,000 1 January 01 70,000 117,000	Accounts Receivable
No. Date Debit Credit Balance January 01 23,900 4 January 04 3,900 27,800	Supplies						No. Date Debit Credit Balance January 01 1,660,000	Land
No. Date Debit Credit Balance January 01 463,000	Buildings						No. Date Debit Credit Balance January 01 886,000 2 January 02 31,500 917,500	Equipment
No. Date Debit Credit Balance January 01 130,000 4 January 04 3,900 133,900 6 January 06 3,900 130,000 9 January 31 6,010 136,010	Accounts Payable						No. Date Debit Credit Balance 88,000	Deferred Revenue
No. Date Debit Credit Balance January 01 70,000 2 January 02 15,000 85,000	Notes Payable (long-term)						No. Date Debit Credit Balance January 01 2,300,000	Common Stock
No. Date Debit Credit Balance January 01 2,631,900	Retained Earnings						No. Date Debit Credit Balance January 01 0 5 January 05 190,000 190,000 7 January 07 125,450 315,450	Service Revenue
No. Date Debit Credit Balance January 01 0 3 January 03 16,200 16,200	Advertising Expense						No. Date Debit Credit Balance January 01 0 8 January 30 400,000 400,000	Salaries and Wages Expense
No. Date Debit Credit Balance January 01 0 9 January 31 6,010 6,010	Utilities Expense

Answer & Explanation Solved by verified expert

See Answer