BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
13 views

Complete accounting cycle

For the past several years, Jeff Horton has operated a part-time consulting business from his home. As of April 1, 2016, Jeff decided to move to rented quarters and to operate the business, which was to be known as Rosebud Consulting, on a full-time basis. Rosebud Consulting entered into the following transactions during April:

Apr. 1. The following assets were received from Jeff Horton: cash, $20,000; accounts receivable, $14,700; supplies, $3,300; and office equipment, $12,000. There were no liabilities received.

1. Paid three months’ rent on a lease rental contract, $6,000.

2. Paid the premiums on property and casualty insurance policies, $4,200.

4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $9,400.

5. Purchased additional office equipment on account from Smith Office Supply Co., $8,000.

6. Received cash from clients on account, $11,700.

10. Paid cash for a newspaper advertisement, $350.

12. Paid Smith Office Supply Co. for part of the debt incurred on April 5, $6,400.

12. Recorded services provided on account for the period April 1–12, $21,900.

14. Paid receptionist for two weeks' salary, $1,650.

Record the following transactions on Page 2 of the journal:

17. Recorded cash from cash clients for fees earned during the period April 1–16, $6,600.

18. Paid cash for supplies, $725.

20. Recorded services provided on account for the period April 13–20, $16,800.

24. Recorded cash from cash clients for fees earned for the period April 17–24, $4,450.

26. Received cash from clients on account, $26,500.

27. Paid receptionist for two weeks’ salary, $1,650.

29. Paid telephone bill for April, $540.

30. Paid electricity bill for April, $760.

30. Recorded cash from cash clients for fees earned for the period April 25–30, $5,160.

30. Recorded services provided on account for the remainder of April, $2,590.

30. Jeff withdrew $18,000 for personal use.

Instructions

1. Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.)

11 Cash

12 Accounts Receivable

14 Supplies

15 Prepaid Rent

16 Prepaid Insurance

18 Office Equipment

19 Accumulated Depreciation

21 Accounts Payable

22 Salaries Payable

23 Unearned Fees

31 Jeff Horton, Capital

32 Jeff Horton, Drawing

41 Fees Earned

51 Salary Expense

52 Supplies Expense

53 Rent Expense

54 Depreciation Expense

55 Insurance Expense

59 Miscellaneous Expense

2. Post the journal to a ledger of four-column accounts.

3. Prepare an un adjusted trial balance.

4. At the end of April, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6).

a. Insurance expired during April is $350.

b. Supplies on hand o n April 30 are $1,225.

c. Depreciation of office equipment for April is $400.

d. Accrued receptionist salary on April 30 is $275.

e. Rent expired during April is $2,000.

f. Unearned fees on April 30 are $2,350.

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 3 of the journal.

7. Prepare an adjusted trial balance.

8. Prepare an income statement, a statement of owner's equity, and a balance sheet.

9. Prepare and post the closing entries. Record the closing entries on Page 4 of the journal. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.

10. Prepare a post-closing trial balance.

1.

To determine

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.

Netincome = Total revenues – Total expenses

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 April in a two column journal beginning on page 1.

Explanation

Journalize the transactions of April in a two column journal beginning on page 1.

                                                   Journal                                           Page 1
Date Description Post. Ref Debit ($) Credit ($)
2016   Cash 11 20,000  
April  1 Accounts receivable 12 14,700  
    Supplies 14 3,300  
    Office equipment 18 12,000  
        J’s Capital 31   50,000
    (To record the receipt of assets)      
 
  1 Prepaid Rent 15 6,000  
       Cash 11   6,000
    (To record the payment of rent)      
 
   2 Prepaid insurance 16 4,200  
        Cash 11   4,200
    (To record the payment of insurance premium)      
 
  4 Cash 11 9,400  
        Unearned fees 23   9,400
    (To record the cash received for the service yet to be provide)      
 
  5 Office equipment 18 8,000  
        Accounts payable 21   8,000
    (To record the purchase of supplies of account)      
 
  6 Cash 11 11,700  
        Accounts receivable 12   11,700
    (To record the cash received from clients)      
 
  10 Miscellaneous expense 59 350  
        Cash 11   350
    (To record the payment made for Miscellaneous expense)      
 
  12 Accounts payable  21 6,400  
     Office supplies 11   6,400
    (To record the payment made to creditors on account)      
 
  12 Accounts receivable 12 21,900  
         Fees earned 41   21,900
    (To record the revenue earned and billed)      
 
  14 Salary Expense 51 1,650  
        Cash 11   1,650
    (To record the payment made for salary)      

Table (1)

                                                   Journal                                           Page 2
Date Description Post...

(2), (6) and (9)

To determine

To record: The balance of each accounts in the appropriate balance column of a four-column account and post them to the ledger.

(3)

To determine

To prepare: The unadjusted trial balance of Consulting R at April, 31.

(5)

To determine

To enter: The unadjusted trial balance on an end-of-period spreadsheet.

(6)

To determine

To Journalize: The adjusting entries of Consulting R for April 30.

(7)

To determine

To prepare: An adjusted trial balance of Consulting R for April 30, 2016.

(8)

To determine

To Prepare: An income statement for the year ended April 31, 2016.

(9)

To determine

To Journalize: The closing entries for R Consulting.

(10)

To determine

To Journalize: The closing entries for R Consulting.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What are the three authorization controls?

Accounting Information Systems

Identify the five steps in the revenue recognition model.

Intermediate Accounting: Reporting And Analysis

PORTFOLIO BETA Suppose you held a diversified portfolio consisting of a 7,500 investment in each of 20 differen...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Discuss target market strategies

MKTG 12:STUDENT ED.-TEXT

How are inflation and unemployment related in the short run?

Essentials of Economics (MindTap Course List)