HENDERSON COMPANY On April 1, Mary Henderson started Henderson Company. The company was organized as a corporation and has a monthly accounting period. The following transactions occurred during the company’s first month. Apr. 1 Mary Henderson invested $45,000 cash in the company in exchange for its common stock. Apr. 1 The company paid $25,000 cash for equipment. Apr. 1 The company paid $1,400 cash to rent office space for April. Apr. 1 The company paid $840 cash for the premium on a 12-month insurance policy. Coverage begins on April 1. Apr. 5 The company purchased $120 of supplies on account. Apr. 12 The company provided $1,575 in services to a customer. The customer must pay within 30 days. Apr. 14 The company paid $950 cash for employee salary. Apr. 25 The company provided services to a customer and immediately received $5,400 cash. Apr. 28 The company paid $950 cash for employee salary. Apr. 30 The company paid $475 cash in dividends.
Directions
Complete the entire accounting cycle for Henderson Company. The nine steps are listed below.
- Steps 1-3 take place daily. These three steps should be repeated, in order, each time a transaction takes place during the period.
- Steps 4-9 take place at the end of the period. These steps should be completed, in order, after the period is over.
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Daily |
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Step 1: Analyze transactions |
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Step 2: Journalize |
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Step 3: Post |
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End of Period |
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Step 4: Unadjusted |
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Step 5: |
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Step 6: Adjusted trial balance |
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Step 7: Financial statements |
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Step 8: Closing entries |
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Step 9: Post-closing trial balance |
The working papers for this problem begin on the next page.
HENDERSON COMPANY
On April 1, Mary Henderson started Henderson Company. The company was organized as a corporation and has a monthly accounting period. The following transactions occurred during the company’s first month.
Apr. 1 Mary Henderson invested $45,000 cash in the company in exchange for its common stock.
Apr. 1 The company paid $25,000 cash for equipment.
Apr. 1 The company paid $1,400 cash to rent office space for April.
Apr. 1 The company paid $840 cash for the premium on a 12-month insurance policy. Coverage begins on April 1.
Apr. 5 The company purchased $120 of supplies on account.
Apr. 12 The company provided $1,575 in services to a customer. The customer must pay within 30 days.
Apr. 14 The company paid $950 cash for employee salary.
Apr. 25 The company provided services to a customer and immediately received $5,400 cash.
Apr. 28 The company paid $950 cash for employee salary.
Apr. 30 The company paid $475 cash in dividends.
The company’s chart of accounts follows:
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CHART OF ACCOUNTS |
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ASSETS |
DIVIDENDS |
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Cash |
Dividends |
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Supplies |
REVENUES |
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Prepaid Insurance |
Service Revenue |
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Equipment |
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Accumulated |
EXPENSES |
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Salaries Expense |
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LIABILITIES |
Rent Expense |
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Accounts Payable |
Supplies Expense |
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Salaries Payable |
Insurance Expense |
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Depreciation Expense-Equipment |
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EQUITY |
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Common Stock |
CLEARING |
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Income Summary |
Adjustment Information
- Depreciation on the company’s equipment for April is $400.
- As of April 30, the company has $72 of supplies remaining.
- As of April 30, the company has incurred $190 of unpaid and unrecorded salary.
- As of April 30, one month of insurance coverage has expired.
Date
Account Titles
Debit
Credit
Date
Account Titles
Debit
Credit
Cash
Service Revenue
Salaries Expense
Accounts Receivable
Supplies
Rent Expense
Prepaid Insurance
Supplies Expense
Equipment
Accumulated Depreciation-Equipment
Insurance Expense
Accounts Payable
Depreciation Expense-Equipment
Salaries Payable
Common Stock
Income Summary
Retained Earnings
Dividends
HENDERSON COMPANY
Unadjusted Trial Balance
April 30
Credit
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accumulated Depreciation-Equipment
Accounts Payable
Salaries Payable
Common Stock
Retained Earnings
Dividends
Service Revenue
Salaries Expense
Rent Expense
Supplies Expense
Insurance Expense
Depreciation Expense-Equipment
Totals
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