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Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 20Y8. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $4,500. 5. Received cash from clients on account, $2,450. 9. Paid cash for a newspaper advertisement, $225. 13. Paid Office Station Co. for part of the debt incurred on April 5, $640. 15. Recorded services provided on account for the period May 1–15, $9,180. 16. Paid part-time receptionist for two weeks’ salary including the amount owed on April 30, $750. 17. Recorded cash from cash clients for fees earned during the period May 1–16, $8,360. Record the following transactions on Page 6 of the journal: 20. Purchased supplies on account, $735. 21. Recorded services provided on account for the period May 16–20, $4,820. 25. Recorded cash from cash clients for fees earned for the period May 17–23, $7,900. 27. Received cash from clients on account, $9,520. 28. Paid part-time receptionist for two weeks’ salary, $750. 30. Paid telephone bill for May, $260. 31. Paid electricity bill for May, $810. 31. Recorded cash from cash clients for fees earned for the period May 26–31, $3,300. 31. Recorded services provided on account for the remainder of May, $2,650. 31. Paid dividends, $10,500. Instructions 1. The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing trial balance as of April 30, 20Y8, is shown in Exhibit 17. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 20Y8, and place a check mark ( ) in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting on Page 5 of the journal and using Kelly Consulting’s chart of accounts. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). (a) Insurance expired during May is $275. (b) Supplies on hand on May 31 are $715. (c) Depreciation of office equipment for May is $330. (d) Accrued receptionist salary on May 31 is $325. (e) Rent expired during May is $1,600. (f) Unearned fees on May 31 are $3,210. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of stockholders’ equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 4, Problem 1COMP
Textbook Problem
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Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 20Y8. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions:

May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $4,500.

5. Received cash from clients on account, $2,450.

9. Paid cash for a newspaper advertisement, $225.

13. Paid Office Station Co. for part of the debt incurred on April 5, $640.

15. Recorded services provided on account for the period May 1–15, $9,180.

16. Paid part-time receptionist for two weeks’ salary including the amount owed on April 30, $750.

17. Recorded cash from cash clients for fees earned during the period May 1–16, $8,360.

Record the following transactions on Page 6 of the journal:

20. Purchased supplies on account, $735.

21. Recorded services provided on account for the period May 16–20, $4,820.

25. Recorded cash from cash clients for fees earned for the period May 17–23, $7,900.

27. Received cash from clients on account, $9,520.

28. Paid part-time receptionist for two weeks’ salary, $750.

30. Paid telephone bill for May, $260.

31. Paid electricity bill for May, $810.

31. Recorded cash from cash clients for fees earned for the period May 26–31, $3,300.

31. Recorded services provided on account for the remainder of May, $2,650.

31. Paid dividends, $10,500.

Instructions

  1. 1. The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing trial balance as of April 30, 20Y8, is shown in Exhibit 17. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 20Y8, and place a check mark (Chapter 4, Problem 1COMP, Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 20Y8. The accounting cycle ) in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting on Page 5 of the journal and using Kelly Consulting’s chart of accounts. (Do not insert the account numbers in the journal at this time.)
  2. 2. Post the journal to a ledger of four-column accounts.
  3. 3. Prepare an unadjusted trial balance.
  4. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6).
    1. (a) Insurance expired during May is $275.
    2. (b) Supplies on hand on May 31 are $715.
    3. (c) Depreciation of office equipment for May is $330.
    4. (d) Accrued receptionist salary on May 31 is $325.
    5. (e) Rent expired during May is $1,600.
    6. (f) Unearned fees on May 31 are $3,210.
  5. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet.
  6. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal.
  7. 7. Prepare an adjusted trial balance.
  8. 8. Prepare an income statement, a statement of stockholders’ equity, and a balance sheet.
  9. 9. Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.
  10. 10. Prepare a post-closing trial balance.

1.

To determine

Journalize the transactions of May in a two column journal beginning on page 5.

Explanation of Solution

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Journalize the transactions of May in a two column journal beginning on page 5.

                                                   Journal                                           Page 5
Date Description Post. Ref Debit ($) Credit ($)
20Y8 3 Cash 11 4,500  
May       Unearned fees 23   4,500
    (To record the cash received for the service yet to be provide)      
 
  5 Cash 11 2,450  
    Accounts receivable 12   2,450
    (To record the cash received from clients)      
 
  9 Miscellaneous expense 59 225  
        Cash 11   225
    (To record the payment made for Miscellaneous expense)      
 
  13 Accounts payable  21 640  
          Cash 11   640
    (To record the payment made to creditors on account)      
 
  15 Accounts receivable 12 9,180  
         Fees earned 41   9,180
    (To record the revenue earned and billed)      
 
  14 Salary Expense 51 630  
    Salaries payable 22 120  
        Cash 11   750
    (To record the payment made for salary)      
           
    Cash 11 8,360  
  17     Fees earned 41   8,360
    (To record the receipt of cash)      

Table (1)

                                                   Journal                                           Page 6
Date Description Post...

2, 6 and 9

To determine

Record the balance of each account in the appropriate balance column of a four-column account and post them to the ledger.

3.

To determine

Prepare an unadjusted trial balance for Consulting K.

5.

To determine

Enter the unadjusted trial balance on an end-of-period spreadsheet.

6.

To determine

Prepare the adjusting entries in the books of Consulting K for May 31, 20Y8.

7.

To determine

Prepare an adjusted trial balance as of May 31, 20Y8.

8.

To determine

Prepare an income statement, statement of stockholders’ equity and the balance for Consulting K for the year ended 31, May 20Y8.

9.

To determine

Prepare the closing entries for Consulting K.

10.

To determine

Prepare a post-closing trial balance.

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Chapter 4 Solutions

Financial And Managerial Accounting
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