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.)
12 Accounts Receivable 32 Jeff Horton, Drawing
14 Supplies 41 Fees Earned
15 Prepaid Rent 51 Salary Expense
16 Prepaid Insurance 52 Supplies Expense
18 Office Equipment 53 Rent Expense
19 Accumulated Depreciation 54 Depreciation Expense
21 Accounts Payable 55 Insurance Expense
22 Salaries Payable 59 Miscellaneous Expense
23 Unearned Fees
2. Post the journal to a ledger of four-column accounts.
3. Prepare an unadjusted 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 on 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 (work sheet) 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.
Answer:
1. and 2.
JOURNAL Page 1
Date
Post.
Ref. Debit Credit
2014
Apr. 1 Cash 11 20,000
Accounts Receivable 12 14,700
Supplies 14 3,300
Office Equipment 18 12,000
Jeff Horton, Capital 31 50,000
1 Prepaid Rent 15 6,000
Cash 11 6,000
2 Prepaid Insurance 16 4,200
Cash 11 4,200
4 Cash 11 9,400
Unearned Fees 23 9,400
5 Office Equipment 18 8,000
Accounts Payable 21 8,000
6 Cash 11 11,700
Accounts Receivable 12 11,700
10 Miscellaneous Expense 59 350
Cash 11 350
12 Accounts Payable 21 6,400
Cash 11 6,400
12 Accounts Receivable 12 21,900
Fees Earned 41 21,900
14 Salary Expense 51 1,650
Cash 11 1,650
JOURNAL Page 2
Date
Post.
Ref. Debit Credit
2014
Apr. 17 Cash 11 6,600
Fees Earned 41 6,600
18 Supplies 14 725
Cash 11 725
20 Accounts Receivable 12 16,800
Fees Earned 41 16,800
24 Cash 11 4,450
Fees Earned 41 4,450
26 Cash 11 26,500
Accounts Receivable 12 26,500
27 Salary Expense 51 1,650
Cash 11 1,650
29 Miscellaneous Expense 59 540
Cash 11 540
30 Miscellaneous Expense 59 760
Cash 11 760
30 Cash 11 5,160
Fees Earned 41 5,160
30 Accounts Receivable 12 2,590
Fees Earned 41 2,590
30 Jeff Horton, Drawing 32 18,000
Cash 11 18,000
2., 6., and 9.
Account: Cash Account No. 11
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 1 20,000 20,000
1 1 6,000 14,000
2 1 4,200 9,800
4 1 9,400 19,200
6 1 11,700 30,900
10 1 350 30,550
12 1 6,400 24,150
14 1 1,650 22,500
17 2 6,600 29,100
18 2 725 28,375
24 2 4,450 32,825
26 2 26,500 59,325
27 2 1,650 57,675
29 2 540 57,135
30 2 760 56,375
30 2 5,160 61,535
30 2 18,000 43,535
Account: Accounts Receivable Account No. 12
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 1 14,700 14,700
6 1 11,700 3,000
12 1 21,900 24,900
20 2 16,800 41,700
26 2 26,500 15,200
30 2 2,590 17,790
Account: Supplies Account No. 14
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 1 3,300 3,300
18 2 725 4,025
30 Adjusting 3 2,800 1,225
Account: Prepaid Rent Account No. 15
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 1 6,000 6,000
30 Adjusting 3 2,000 4,000
Account: Prepaid Insurance Account No. 16
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 2 1 4,200 4,200
30 Adjusting 3 350 3,850
Account: Office Equipment Account No. 18
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 1 12,000 12,000
5 1 8,000 20,000
Account: Accumulated Depreciation Account No. 19
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 30 Adjusting 3 400 400
Account: Accounts Payable Account No. 21
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 5 1 8,000 8,000
12 1 6,400 1,600
Account: Salaries Payable Account No. 22
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 30 Adjusting 3 275 275
Account: Unearned Fees Account No. 23
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 4 1 9,400 9,400
30 Adjusting 3 7,050 2,350
Account: Jeff Horton, Capital Account No. 31
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 1 1 50,000 50,000
30 Closing 4 53,775 103,775
30 Closing 4 18,000 85,775
Account: Jeff Horton, Drawing Account No. 32
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 30 2 18,000 18,000
30 Closing 4 18,000 — —
Account: Income Summary Account No. 33
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 30 Closing 4 64,550 64,550
30 Closing 4 10,775 53,775
30 Closing 4 53,775 — —
Account: Fees Earned Account No. 41
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 12 1 21,900 21,900
17 2 6,600 28,500
20 2 16,800 45,300
24 2 4,450 49,750
30 2 5,160 54,910
30 2 2,590 57,500
30 Adjusting 3 7,050 64,550
30 Closing 4 64,550 — —
Account: Salary Expense Account No. 51
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 14 1 1,650 1,650
27 2 1,650 3,300
30 Adjusting 3 275 3,575
30 Closing 4 3,575 — —
Account: Supplies Expense Account No. 52
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 30 Adjusting 3 2,800 2,800
30 Closing 4 2,800 — —
Account: Rent Expense Account No. 53
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 30 Adjusting 3 2,000 2,000
30 Closing 4 2,000 — —
Account: Depreciation Expense Account No. 54
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 30 Adjusting 3 400 400
30 Closing 4 400 — —
Account: Insurance Expense Account No. 55
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 30 Adjusting 3 350 350
30 Closing 4 350 — —
Account: Miscellaneous Expense Account No. 59
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Apr. 10 1 350 350
29 2 540 890
30 2 760 1,650
30 Closing 4 1,650 — —
ROSEBUD CONSULTING
Unadjusted Trial Balance
April 30, 2014
Debit
Balances
Credit
Balances
Cash 43,535
Accounts Receivable 17,790
Supplies 4,025
Prepaid Rent 6,000
Prepaid Insurance 4,200
Office Equipment 20,000
Accumulated Depreciation 0
Accounts Payable 1,600
Salaries Payable 0
Unearned Fees 9,400
Jeff Horton, Capital 50,000
Jeff Horton, Drawing 18,000
Fees Earned 57,500
Salary Expense 3,300
Supplies Expense 0
Rent Expense 0
Depreciation Expense 0
Insurance Expense 0
Miscellaneous Expense 1,650
118,500 118,500
5. Optional (Appendix)
ROSEBUD CONSULTING
End-of-Period Spreadsheet (Work Sheet)
For the Month Ended April 30, 2014
Account Title
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
Income
Statement
Balance
Sheet
Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 43,535 43,535 43,535
Accounts Receivable 17,790 17,790 17,790
Supplies 4,025 (b) 2,800 1,225 1,225
Prepaid Rent 6,000 (e) 2,000 4,000 4,000
Prepaid Insurance 4,200 (a) 350 3,850 3,850
Office Equipment 20,000 20,000 20,000
Accum. Depreciation (c) 400 400 400
Accounts Payable 1,600 1,600 1,600
Salaries Payable (d) 275 275 275
Unearned Fees 9,400 (f) 7,050 2,350 2,350
Jeff Horton, Capital 50,000 50,000 50,000
Jeff Horton, Drawing 18,000 18,000 18,000
Fees Earned 57,500 (f) 7,050 64,550 64,550
Salary Expense 3,300 (d) 275 3,575 3,575
Supplies Expense (b) 2,800 2,800 2,800
Rent Expense (e) 2,000 2,000 2,000
Depreciation Expense (c) 400 400 400
Insurance Expense (a) 350 350 350
Miscellaneous Expense 1,650 1,650 1,650
118,500 118,500 12,875 12,875 119,175 119,175 10,775 64,550 108,400 54,625
Net income 53,775 53,775
64,550 64,550 108,400 108,400
6. JOURNAL Page 3
Date
Post.
Ref. Debit Credit
2014 Adjusting Entries
Apr. 30 Insurance Expense 55 350
Prepaid Insurance 16 350
Insurance expired.
30 Supplies Expense 52 2,800
Supplies 14 2,800
Supplies used ($4,025 – $1,225).
30 Depreciation Expense 54 400
Accumulated Depreciation 19 400
Equipment depreciation.
30 Salary Expense 51 275
Salaries Payable 22 275
Accrued salaries.
30 Rent Expense 53 2,000
Prepaid Rent 15 2,000
Rent expired.
30 Unearned Fees 23 7,050
Fees Earned 41 7,050
Unearned fees earned
($9,400 – $2,350).
7.
ROSEBUD CONSULTING
Adjusted Trial Balance
April 30, 2014
Debit
Balances
Credit
Balances
Cash 43,535
Accounts Receivable 17,790
Supplies 1,225
Prepaid Rent 4,000
Prepaid Insurance 3,850
Office Equipment 20,000
Accumulated Depreciation 400
Accounts Payable 1,600
Salaries Payable 275
Unearned Fees 2,350
Jeff Horton, Capital 50,000
Jeff Horton, Drawing 18,000
Fees Earned 64,550
Salary Expense 3,575
Supplies Expense 2,800
Rent Expense 2,000
Depreciation Expense 400
Insurance Expense 350
Miscellaneous Expense 1,650
119,175 119,175
8. ROSEBUD CONSULTING
Income Statement
For the Month Ended April 30, 2014
Fees earned $64,550
Expenses:
Salary expense $3,575
Supplies expense 2,800
Rent expense 2,000
Depreciation expense 400
Insurance expense 350
Miscellaneous expense 1,650
Total expenses 10,775
Net income $53,775
ROSEBUD CONSULTING
Statement of Owner’s Equity
For the Month Ended April 30, 2014
Jeff Horton, capital, April 1, 2014 $ 0
Investment during month $ 50,000
Net income 53,775
$103,775
Less withdrawals 18,000
Increase in owner’s equity 85,775
Jeff Horton, capital, April 30, 2014 $85,775
ROSEBUD CONSULTING
Balance Sheet
April 30, 2014
Assets Liabilities
Current assets: Current liabilities:
Cash $43,535 Accounts payable $1,600
Accounts receivable 17,790 Salaries payable 275
Supplies 1,225 Unearned fees 2,350
Prepaid rent 4,000 Total liabilities $ 4,225
Prepaid insurance 3,850
Total current assets $70,400
Property, plant, and equipment:
Office equipment $20,000 Owner’s Equity
Less accum. depreciation 400 Jeff Horton, capital 85,775
Total property, plant, and
equipment 19,600 Total liabilities and owner’s
Total assets $90,000 equity $90,000
9. JOURNAL Page 4
Date
Post.
Ref. Debit Credit
2014 Closing Entries
Apr. 30 Fees Earned 41 64,550
Income Summary 33 64,550
30 Income Summary 33 10,775
Salary Expense 51 3,575
Supplies Expense 52 2,800
Rent Expense 53 2,000
Depreciation Expense 54 400
Insurance Expense 55 350
Miscellaneous Expense 59 1,650
30 Income Summary 33 53,775
Jeff Horton, Capital 31 53,775
30 Jeff Horton, Capital 31 103,775
Jeff Horton, Drawing 32 103,775
ROSEBUD CONSULTING
Post-Closing Trial Balance
April 30, 2014
Debit
Balances
Credit
Balances
Cash 43,535
Accounts Receivable 17,790
Supplies 1,225
Prepaid Rent 4,000
Prepaid Insurance 3,850
Office Equipment 20,000
Accumulated Depreciation 400
Accounts Payable 1,600
Salaries Payable 275
Unearned Fees 2,350
Jeff Horton, Capital 85,775
90,400 90,400