Concept explainers
Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2016. 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. Kelly withdrew $10,500 for personal use.
Instructions
1. The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing
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.
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
7. Prepare an adjusted trial balance.
8. Prepare an income statement, a statement of owner’s equity, and a balance sheet.
9. Prepare and
10. Prepare a post-closing trial balance.
(1)
Journal:
Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.
T-Accounts:
T-accounts are referred as T-account because its format represents the letter “T”. The T-accounts consists of the following:
- The title of accounts.
- The debit side (Dr) and,
- The credit side (Cr).
Adjusted trial balance:
The unadjusted trial balance is the summary of all the ledger accounts that appears on the ledger accounts before making adjusting journal entries.
Adjusting entries:
An adjusting entry is prepared when the trial balance is not up-to-date, and complete, and they are usually prepared at the end of the accounting period. This adjusting entry is essential for preparing the financial statements of the business.
Spreadsheet: A spreadsheet is a worksheet. It is used while preparing a financial statement. It is a type of form having multiple columns and it is used in the adjustment process. The use of a worksheet is optional for any organization. A worksheet can neither be considered as a journal nor a part of the general ledger.
Statement of owners’ equity:
This statement reports the beginning owner’s equity and all the changes, which led to ending owners’ equity. Additional capital, net income from income statement is added to and drawing is deducted from beginning owner’s equity to arrive at the end result, ending owner’s equity.
Income statement:
An income statement is one of the financial statements which shows the revenues, and expenses of the company. The income statement is prepared to ascertain the net income/loss of the company, by deducting the expenses from the revenues.
Balance sheet:
A balance sheet is a financial statement consists of the assets, liabilities, and the stockholder’s equity of the company. The balance of the assets account must be equal to that of the liabilities and the stockholder’s equity account.
Closing entries:
Closing entries are recorded in order to close the temporary accounts such as incomes and expenses by transferring them to the permanent accounts. It is passed at the end of the accounting period, to transfer the final balance.
Post-Closing Trial Balance:
After passing all the journal entries and the closing entries of the permanent accounts and then further posting them to each of the respective accounts, a post-closing trial balance is prepared which consists of a list of all the permanent accounts. A post-closing trial balance serves as an evidence to prove that the balance of the permanent accounts is equal.
To journalize: The transactions of May in a two column journal beginning on page 5.
Explanation of Solution
Journalize the transactions of May in a two column journal beginning on page 5.
Journal Page 5 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
2016 | 3 | Cash | 11 | 4,500 | |
May | Unearned fees | 23 | 4,500 | ||
(To record the cash received for the service yet to be provide) | |||||
5 | Cash | 11 | 2,450 | ||
Accounts receivable | 12 | 2,450 | |||
(To record the cash received from clients) | |||||
9 | Miscellaneousexpense | 59 | 225 | ||
Cash | 11 | 225 | |||
(To record the payment made for Miscellaneous expense) | |||||
13 | Accounts payable | 21 | 640 | ||
Cash | 11 | 640 | |||
(To record the payment made to creditors on account) | |||||
15 | Accounts receivable | 12 | 9,180 | ||
Fees earned | 41 | 9,180 | |||
(To record the revenue earned and billed) | |||||
14 | Salary Expense | 51 | 630 | ||
Salaries payable | 22 | 120 | |||
Cash | 11 | 750 | |||
(To record the payment made for salary) | |||||
Cash | 11 | 8,360 | |||
17 | Fees earned | 41 | 8,360 | ||
(To record the receipt of cash) |
Table (1)
Journal Page 6 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
2016 | 18 | Supplies | 14 | 735 | |
May | Accounts payable | 21 | 735 | ||
(To record the payment made for automobile expense) | |||||
21 | Accounts receivable | 12 | 4,820 | ||
Fees earned | 41 | 4,820 | |||
(To record the payment of advertising expense) | |||||
25 | Cash | 11 | 7,900 | ||
Fees earned | 41 | 7,900 | |||
(To record the cash received from client for fees earned) | |||||
27 | Cash | 11 | 9,520 | ||
Accounts receivable | 12 | 9,520 | |||
(To record the cash received from clients) | |||||
28 | Salary expense | 51 | 750 | ||
Cash | 11 | 750 | |||
(To record the payment of salary) | |||||
30 | Miscellaneous Expense | 59 | 260 | ||
Cash | 11 | 260 | |||
(To record the payment of telephone charges) | |||||
31 | Miscellaneous Expense | 59 | 810 | ||
Cash | 11 | 810 | |||
(To record the payment of electricity charges) | |||||
31 | Cash | 11 | 3,300 | ||
Fees earned | 41 | 3,300 | |||
(To record the cash received from client for fees earned) | |||||
31 | Accounts receivable | 12 | 2,650 | ||
Fees earned | 41 | 2,650 | |||
(To record the revenue earned and billed) | |||||
31 | Dividends | 33 | 10,500 | ||
Cash | 11 | 10,500 | |||
(To record the drawing made for personal use) |
Table (2)
(2), (6) and (9)
To record: The balance of each accounts in the appropriate balance column of a four-column account and post them to the ledger.
Explanation of Solution
Account: Cash Account no.11 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 1 |
|
✓ | 22,100 | |||
3 | 5 | 4,500 | 26,600 | ||||
5 | 5 | 2,450 | 29,050 | ||||
9 | 5 | 225 | 28,825 | ||||
13 | 5 | 640 | 28,185 | ||||
16 | 5 | 750 | 27,435 | ||||
17 | 5 | 8,360 | 35,795 | ||||
25 | 6 | 7,900 | 43,695 | ||||
27 | 6 | 9,520 | 53,215 | ||||
28 | 6 | 750 | 52,465 | ||||
30 | 6 | 260 | 52,205 | ||||
31 | 6 | 810 | 51,395 | ||||
31 | 6 | 3,300 | 54,695 | ||||
31 | 6 | 10,500 | 44,195 |
Table (3)
Account: Accounts Receivable Account no.12 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 1 |
|
✓ | 3,400 | |||
5 | 5 | 2,450 | 950 | ||||
15 | 5 | 9,180 | 10,130 | ||||
21 | 6 | 4,820 | 14,950 | ||||
27 | 6 | 9,520 | 5,430 | ||||
31 | 6 | 2,650 | 8,080 |
Table (4)
Account: Supplies Account no.14 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 1 |
|
✓ | 1,350 | |||
20 | 6 | 735 | 2,085 | ||||
30 | Adjusting | 7 | 1,350 | 715 |
Table (5)
Account: Prepaid Rent Account no.15 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 1 |
|
✓ | 3,200 | |||
31 | Adjusting | 7 | 1,600 | 1,600 |
Table (6)
Account: Prepaid Insurance Account no.16 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 1 |
|
✓ | 1,500 | |||
31 | Adjusting | 7 | 275 | 1,225 |
Table (7)
Account: Office equipment Account no.18 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 1 |
|
✓ | 14,500 |
Table (8)
Account: Accumulated Depreciation-Office equipment Account no.19 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 1 |
|
✓ | 330 | |||
31 | Adjusting | 7 | 330 | 660 |
Table (9)
Account: Accounts Payable Account no.21 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 1 |
|
✓ | 800 | |||
13 | 5 | 640 | 160 | ||||
20 | 6 | 735 | 895 |
Table (10)
Account: Salaries Payable Account no.22 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 1 |
|
✓ | 120 | |||
16 | 5 | 120 | |||||
31 | Adjusting | 7 | 325 | 325 |
Table (11)
Account: Unearned Fees Account no.23 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 1 |
|
✓ | 2,500 | |||
3 | 5 | 4,500 | 7,000 | ||||
31 | Adjusting | 7 | 3,790 | 3,210 |
Table (12)
Account: Common Stock Account no.31 |
|||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 1 |
|
✓ | 42,300 | |||
31 | Closing | 8 | 33,425 | 75,725 | |||
31 | Closing | 8 | 10,500 | 65,225 |
Table (13)
Account: Dividends Account no.33 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 31 | 6 | 10,500 | 10,500 | |||
31 | Closing | 8 | 10,500 |
Table (14)
Account: Income Summary Account no.34 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 31 | Closing | 8 | 40,000 | 40,000 | ||
31 | Closing | 8 | 6,575 | 33,425 | |||
31 | Closing | 8 | 33,425 |
Table (15)
Account: Fees earned Account no.41 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 15 | 5 | 9,180 | 9,180 | |||
17 | 5 | 8,360 | 17,540 | ||||
21 | 6 | 4,820 | 22,360 | ||||
25 | 6 | 7,900 | 30,260 | ||||
31 | 6 | 3,300 | 33,560 | ||||
31 | 6 | 2,650 | 36,210 | ||||
31 | Adjusting | 7 | 3,790 | 40,000 | |||
31 | Closing | 8 | 40,000 |
Table (16)
Account: Salary expense Account no.51 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 16 | 5 | 630 | 630 | |||
28 | 6 | 750 | 1,380 | ||||
31 | Adjusting | 7 | 325 | 1,705 | |||
31 | Closing | 8 | 1,705 |
Table (17)
Account: Rent expense Account no.52 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 31 | Adjusting | 7 | 1,600 | 1,600 | ||
31 | Closing | 8 | 1,600 |
Table (18)
Account: Supplies expense Account no.53 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 31 | Adjusting | 7 | 1,370 | 1,370 | ||
31 | Closing | 8 | 1,370 |
Table (19)
Account: Depreciation expense Account no.54 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 31 | Adjusting | 7 | 330 | 330 | ||
31 | Closing | 8 | 330 |
Table (20)
Account: Insurance expense Account no.54 | |||||||
Date | Item | PostRef. |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 31 | Adjusting | 7 | 275 | 275 | ||
31 | Closing | 8 | 275 |
Table (21)
Account: Miscellaneous expense Account no.59 | |||||||
Date | Item | Post. Ref |
Debit ($) |
Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
2016 | |||||||
May | 9 | 5 | 225 | 225 | |||
30 | 6 | 260 | 485 | ||||
31 | 6 | 810 | 1,295 | ||||
31 | Closing | 8 | 1,295 |
Table (22)
(3)
To prepare: The unadjusted trial balance of Consulting K at May, 31.
Explanation of Solution
Prepare an unadjusted trial balance of Consulting K for the month ended May, 31 as follows:
K Consulting Unadjusted Trial Balance May 31, 2016 |
|||
Particulars | Account No. |
Debit $ | Credit $ |
Cash | 11 | 44,195 | |
Accounts receivable | 12 | 8,080 | |
Supplies | 14 | 2,085 | |
Prepaid rent | 15 | 3,200 | |
Prepaid insurance | 16 | 1,500 | |
Office Equipment | 18 | 14,500 | |
Accumulated depreciation-Office equipment | 19 | 330 | |
Accounts payable | 21 | 895 | |
Salaries payable | 22 | 0 | |
Unearned fees | 23 | 7,000 | |
KP Capital | 31 | 42,300 | |
KP Drawings | 33 | 10,500 | |
Fees earned | 41 | 36,210 | |
Salary expense | 51 | 1,380 | |
Rent expense | 52 | 0 | |
Supplies expense | 53 | 0 | |
Depreciation expense | 54 | 0 | |
Insurance expense | 55 | 0 | |
Miscellaneous expense | 59 | 1,295 | |
Total | $86,735 | $86,735 |
Table (23)
The debit column and credit column of the unadjusted trial balance are agreed, both having balance of $86,735.
(5)
To enter: The unadjusted trial balance on an end-of-period spreadsheet.
Explanation of Solution
The unadjusted trial balance on an end-of-period spreadsheet is prepared as follows:
Table (24)
Hence, the unadjusted trial balance on an end-of-period spreadsheet is prepared and completed.
(6)
To Journalize: The adjusting entries of Consulting K for May 31.
Explanation of Solution
The adjusting entries of Consulting K for May 31, 2016are as follows:
Date | Accounts title and explanation | Post Ref. | Debit ($) |
Credit ($) |
|
2016 | Insurance expense | 55 | 275 | ||
May | 31 | Prepaid insurance | 16 | 275 | |
(To record the insurance expense for May ) | |||||
31 | Supplies expense | 53 | 1,370 | ||
Supplies | 14 | 1,370 | |||
(To record the supplies expense) | |||||
31 | Depreciation expense | 54 | 330 | ||
Accumulated Depreciation | 19 | 330 | |||
(To record the depreciation and the accumulated depreciation) | |||||
31 | Salaries expense | 51 | 325 | ||
Salaries payable | 22 | 325 | |||
(To record the accrued salaries payable) | |||||
31 | Rent expense | 52 | 1,600 | ||
Prepaid rent | 15 | 1,600 | |||
(To record the rent expense for May ) | |||||
31 | Unearned fees | 23 | 3,790 | ||
Fees earned | 41 | 3,790 | |||
(To record the receipt of unearned fees) |
Table (25)
Working notes:
(7)
To prepare: An adjusted trial balance of Consulting K for May 31, 2016.
Explanation of Solution
An adjusted trial balance of Consulting K for May 31, 2016 is prepared as follows:
K Consulting Adjusted Trial Balance May 31, 2016 |
|||
Particulars | Account No. |
Debit $ | Credit $ |
Cash | 11 | 44,195 | |
Accounts receivable | 12 | 8,080 | |
Supplies | 14 | 715 | |
Prepaid insurance | 16 | 1,600 | |
Prepaid rent | 15 | 1,225 | |
Office Equipment | 18 | 14,500 | |
Accumulated Depreciation-Office equipment | 19 | 660 | |
Accounts payable | 21 | 895 | |
Salaries payable | 22 | 325 | |
Unearned fees | 23 | 3,210 | |
Common stock | 31 | 30,000 | |
Retained earnings | 32 | 12,300 | |
Dividends | 33 | 10,500 | |
Fees earned | 41 | 40,000 | |
Salary expense | 51 | 1,705 | |
Rent expense | 52 | 1,600 | |
Supplies Expense | 53 | 1,370 | |
Depreciation expense | 54 | 330 | |
Insurance expense | 55 | 275 | |
Miscellaneous expense | 59 | 1,295 | |
Total | $87,390 | $87,390 |
Table (25)
The debit column and credit column of the adjusted trial balance are agreed, both having balance of $87,390.
(8)
To Prepare: An income statement for the year ended May 31, 2016.
Answer to Problem 1CPP
K Consulting | |||
Balance Sheet | |||
May 31, 2016 | |||
Assets | |||
Current Assets: | $ | $ | |
Cash | 44,195 | ||
Accounts Receivable | 8,080 | ||
Supplies | 715 | ||
Prepaid Rent | 1,600 | ||
Prepaid Insurance | 1,225 | ||
Total Current Assets | 55,815 | ||
Property, plant and equipment: | |||
Office Equipment | 14,500 | ||
Less: Accumulated Depreciation | (660) | ||
Total Plant Assets | 13,840 | ||
Total Assets | $69,655 | ||
Liabilities | |||
Current Liabilities: | |||
Accounts Payable | 895 | ||
Salaries Payable | 325 | ||
Unearned rent | 3,210 | ||
Total Liabilities | $4,430 | ||
Owners’ Equity | |||
Capital | 65,225 | ||
Total owners ‘equity | 65,225 | ||
Total Liabilities and Owners’ Equity | $69,655 |
Table (28)
Explanation of Solution
An income statement for the year ended May 31, 2016 is as follows:
K Consulting | ||
Income Statement | ||
For the year ended May 31, 2016 | ||
Particulars | Amount ($) | Amount ($) |
Revenues: | ||
Fees Earned | 40,000 | |
Expenses: | ||
Salaries Expense | 1,705 | |
Rent Expense | 1,600 | |
Supplies Expense | 1,370 | |
Depreciation Expense- Building | 330 | |
Insurance Expense | 275 | |
Miscellaneous Expense | 1,295 | |
Total Expenses | 6,575 | |
Net Income | $33,425 |
Table (26)
Hence, the net income of K Consulting for the year ended May 31, 2016is $33,425.
(9)
To Journalize: The closing entries for K Consulting.
Answer to Problem 1CPP
Closing entry for revenue and expense accounts:
Date | Accounts title and Explanation | Post Ref. | Debit ($) |
Credit ($) |
May 31, 2016 | Fees earned | 41 | 40,000 | |
Income summary | 34 | 40,000 | ||
(To close the balances of revenue account) | ||||
May 31, 2016 | Income summary | 34 | 6,575 | |
Salary expense | 51 | 1,705 | ||
Rent Expense | 52 | 1,600 | ||
Supplies Expense | 53 | 1,370 | ||
Depreciation Expense | 54 | 330 | ||
Insurance Expense | 55 | 275 | ||
Miscellaneous Expense | 59 | 1,295 | ||
(To close the balances of expense account) | ||||
July 31 | Income Summary | 33 | 33,425 | |
KP Capital | 31 | 33,425 | ||
(To close balance of income summary are transferred to owners’ capital account) | ||||
July 31 | KP’s Capital | 31 | 10,500 | |
KP’s Drawing | 32 | 10,500 | ||
(To Close the capital and drawings account) |
Table (29)
Explanation of Solution
- A Service fee earned is revenue account. Since the amount of revenue is closed and transferred to JH’s capital account. Here, G Consulting earned an income of $64,550, and $18,000. Therefore, it is debited.
- Salaries Expense, Rent Expense, Insurance Expense, Utilities Expense, Supplies Expense, Depreciation Expense, Advertising Expense, JH Capital, and Miscellaneous Expense are expense accounts. Since the amount of expenses are closed to Income Summary account. Therefore, it is credited.
- Owner’s capital is a component of owner’s equity. Thus, owners ‘equity is debited since the capital is decreased on owners’ drawings.
- Owner’s drawings are a component of owner’s equity. It is credited because the balance of owners’ drawing account is transferred to owners ‘capital account.
(10)
To Journalize: The closing entries for K Consulting.
Explanation of Solution
Prepare a post–closing trial balance of K Consulting for the month ended May 31, 2016 as follows:
Consulting K Post-closing Trial Balance May, 31, 2016 |
|||
Particulars | Account Number | Debit $ | Credit $ |
Cash | 11 | 44,195 | |
Accounts receivable | 12 | 8,080 | |
Supplies | 14 | 715 | |
Prepaid rent | 15 | 1,600 | |
Prepaid insurance | 16 | 1,225 | |
Office Equipment | 18 | 14,500 | |
Accumulated depreciation –Office Equipment | 19 | 660 | |
Accounts payable | 21 | 895 | |
Salaries payable | 22 | 325 | |
Unearned rent | 23 | 3,210 | |
Common stock | 31 | 30,000 | |
Retained earnings | 32 | 35,225 | |
Total | $70,315 | $70,315 |
Table (30)
The debit column and credit column of the post–closing trial balance are agreed, both having balance of $70,315.
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Bundle: Accounting, Chapters 1-13, 26th + Working Papers, Chapters 1-17 For Warren/reeve/duchac's Accounting, 26th And Financial Accounting, 14th + ... For Warren/reeve/duchac's Accounting, 26th
- On July 1, 2019, Pat Glenn established Half Moon Realty. Pat completed the following transactions during the month of July: a. Opened a business bank account with a deposit of $30,000 from personal funds. b. Purchased office supplies on account, $3,010. c. Paid creditor on account, $1,900. d. Earned sales commissions, receiving cash, $30,690.arrow_forwardOn November 1, 2018, Kris Lehman established an interior decorating business, Modern Designs.During the month, Kris completed the following transactions related to the business:Nov. 1. Kris transferred cash from a personal bank account to an account to be used for the business in exchangefor common stock, $36,000.1. Paid rent for period of November 1 to end of month, $4,000.6. Purchased office equipment on account, $16,000.8. Purchased a truck for $43,000 paying $4,300 cash and giving a note payable for the remainder.10. Purchased supplies for cash, $1,860.12. Received cash for job completed, $8,000.15. Paid annual premiums on property and casualty insurance, $2,400.23. Recorded jobs completed on account and sent invoices to customers, $15,500.24. Received an invoice for truck expenses, to be paid in November, $1,250.Enter the following transactions on Page 2 of the two-column journal:29. Paid utilities expense, $3,660.29. Paid miscellaneous expenses, $1,700.30. Received cash from…arrow_forwardSammi started her business on 1 January 2021 called Trendy. You are required to prepare the GENERAL JOURNAL for the following transactions of Trendy for the first month of operations. Jan 01Sammi invested RM50, 000 cash into the business.Jan 02Trendy purchased used motor vehicle for RM20,000.Jan 08Trendy paid rent for RM4, 000.Jan 08Trendy completed work for a client and immediately received RM15, 000.Jan 12Sammi signed a RM50,000 small business loans with CIMB Bank under Trendy’s name.Jan 15Ideal Homes renovated and installed fixtures and fittings at a cost of RM3, 000. Trendy will pay the bill at a later date.Jan 15Trendy paid RM1, 000 cash for advertisement in a local magazine.Jan 28Trendy completed work for another client on credit and invoiced the client RM5, 000. The client is allowed to settle the bill within 30 days.Jan 30Trendy paid Ideal Homes that installed the fixtures and fittings earlier.Jan 30Trendy paid RM150 for usage of electricity for the month.arrow_forward
- The following transactions occurred during the month of July 2021. July 1 Paid employee salaries, $2,700 for June. Sharon pays her employees’ accrued salaries on the first day of each calendar month. July 1 Paid office rent for the month of July, $2,300. July 8 Received $7,200 cash from a client on account. July 9 Purchased office supplies on credit, $2,000 14 Paid $3,500 of the accounts payable. July 15 Invoiced customers for accounting services performed, $12,300. July 25 Sharon withdrew capital of $2,250 July 31 Paid $4,200 for a one-year insurance policy. a) Prepare the cash at bank ledger account as at 31 July 2021.arrow_forwardOn November 10, JumpStart provides $2,170 in services to clients. At the time of service, the clients paid $650 in cash and put the balance on account. Required: (a) Journalize this event.* (b) On November 20, JumpStart’s clients paid an additional $560 on their accounts due. Journalize this event.* (c) Calculate the accounts receivable balance on November 30. *Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTSJumpStartGeneral Ledger ASSETS 11 Cash 12 Accounts Receivable 13 Office Supplies 14 Prepaid Insurance 15 Land 16 Office Equipment 17 Building 18 Truck LIABILITIES 21 Notes Payable 22 Accounts Payable 23 Unearned Revenue EQUITY 31 JumpStart, Capital 32 JumpStart, Drawing REVENUE 41 Fees Earned EXPENSES 51 Wages Expense 53 Rent Expense 54 Utilities Expense 55 Maintenance Expense 59 Miscellaneous Expense (a) On November 10, JumpStart…arrow_forwardJuice World Jamaica Limited, a leading juice manufacturing company has recently hired you as an Accounting Officer. As per job description, you are required to assist in the preparation of the financial statements. The Accounts Manager has extracted a list of balances as at December 2021 for you to review. Revenue 7 600 010 Administrative Expenses 2 300 000 Distribution Costs 980 231 Interest paid on loan Purchases 125 000 4 500 330 1 018 900 Inventories at 1 January 2021 Trade receivables 630 340 Provision for doubtful debts at Jan 2021 19 634 Bad debts 70 110 Non- current Investment 300 900 Additional notes i. Provide for Administrative Expenses of $500 000 paid in advance at 31 December 2021 and Distribution Costs of $50 528 owing at 31 December 2021 Provision for Doubtful Debts is to be maintained at 10% of receivables ii. iii. Inventories at 31 December 2021 were valued at $1 000 000 iv. Provide for corporation tax of S80 000 which is payable on October 1, 2022 Loan interest…arrow_forward
- Sammi started her business on 1 January 2021 called Trendy. You are required to prepare the GENERAL JOURNAL for the following transactions of Trendy for the first month of operations. Narratives are not required for each journal entry. Jan 01 Sammi invested RM50, 000 cash into the business.Jan 02 Trendy purchased used motor vehicle for RM20,000.Jan 08 Trendy paid rent for RM4, 000.Jan 08 Trendy completed work for a client and immediately received RM15, 000.Jan 12 Sammi signed a RM50,000 small business loans with CIMB Bank under Trendy’s name.Jan 15 Ideal Homes renovated and installed fixtures and fittings at a cost of RM3, 000. Trendy will pay the bill at a later date.Jan 15 Trendy paid RM1, 000 cash for advertisement in a local magazine.Jan 28 Trendy completed work for another client on credit and invoiced the client RM5, 000. The client is allowed to settle the bill within 30 days.Jan 30 Trendy paid Ideal Homes that installed the fixtures and fittings earlier.Jan 30 Trendy paid…arrow_forwardJuice World Jamaica Limited, a leading juice manufacturing company has recently hired you as an Accounting Officer. As per job description, you are required to assist in the preparation of the financial statements. The Accounts Manager has extracted a list of balances as at December 2021 for you to review. Revenue 7 600 010 Administrative Expenses 2 300 000 Distribution Costs 980 231 Interest paid on loan Purchases 125 000 4 500 330 Inventories at 1 January 2021 Trade receivables 1 018 900 630 340 Provision for doubtful debts at Jan 2021 19 634 Bad debts 70 110 Non- current Investment 300 900 Additional notes i. Provide for Administrative Expenses of $500 000 paid in advance at 31 December 2021 and Distribution Costs of $50 528 owing at 31 December 2021 Provision for Doubtful Debts is to be maintained at 10% of receivables ii. iii. Inventories at 31 December 2021 were valued at $ı 000 000 iv. Provide for corporation tax of $80 000 which is payable on October 1, 2022 Loan interest…arrow_forwardYou work as a freelance accounting professional and have been recently engaged by the auditors of Life-Positive Inc. for an assignment. In examining the company’s records, you have extracted the following information: Life-Positive’s Account Balances 2021 ($) 2022 ($) Accounts Payable 24,600.00 21,250.00 Accounts receivable 15,700.00 12,340.00 Cash 23,450.00 28,600.00 Cost of goods sold 19,700.00 23,000.00 Depreciation 3,090.00 4,590.00 Dividends 5,800.00 10,800.00 Interest 2,340.00 2,890.00 Inventory 7,050.00 8,640.00 Long-term debt 28,000.00 30,000.00 Net fixed assets 41,500.00 48,000.00 Other expenses 2,400.00 2,800.00…arrow_forward
- You work as a freelance accounting professional and have been recently engaged by the auditors of Life-Positive Inc. for an assignment. In examining the company’s records, you have extracted the following information: Life-Positive’s Account Balances 2021 ($) 2022 ($) Accounts Payable 24,600.00 21,250.00 Accounts receivable 15,700.00 12,340.00 Cash 23,450.00 28,600.00 Cost of goods sold 19,700.00 23,000.00 Depreciation 3,090.00 4,590.00 Dividends 5,800.00 10,800.00 Interest 2,340.00 2,890.00 Inventory 7,050.00 8,640.00 Long-term debt 28,000.00 30,000.00 Net fixed assets 41,500.00 48,000.00 Other expenses 2,400.00 2,800.00 Sales 58,000.00 62,500.00 Short-term Notes Payable 2,890.00 2,340.00 Shares outstanding 85,000.00 90,000.00 Note: The tax rate is 32% Required: 1. Prepare a balance sheet for 2021 and 2022 for the company, clearly showing information about…arrow_forwardKelly Pitney began her consulting business, Kelly Consulting, on April 1, 2016. The accounting cycle for Kelly Consulting for April, including financial statements, was illustratedin 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 providedand 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 onApril 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.…arrow_forwardCostanza Company experienced the following events and transactions during July. The company has the following partial chart of accounts: Cash; Accounts Receivable; Unearned Fees; and Fees Earned. July 1 Received $3,000 cash in advance of performing work for Vivian Solana. 6 Received $7,500 cash in advance of performing work for Iris Haru. 12 Completed the job for Solana. 18 Received $8,500 cash in advance of performing work for Amina Jordan. 27 Completed the job for Haru. 31 None of the work for Jordan has been performed. a. Prepare journal entries (including any adjusting entries as of the July 31 month-end) to record these events using the procedure of initially crediting the Unearned Fees account when payment is received from a customer in advance of performing services. b. Prepare journal entries (including any adjusting entries as of the July 31 month-end) to record these events using the alternative procedure of initially crediting the Fees Earned account when payment is received…arrow_forward
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