Question

**Ledger, Unadjusted Trial Balance, Adjusted Trial Balance, Income Statement, Statement of Stockholder's Equity, Balance Sheet, & Post-closing Trial Balance**

For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 20Y2, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond entered into the following transactions during July:

Jul.	1	The following assets were received from Steffy Lopez in exchange for common stock: cash, $12,500; accounts receivable, $20,800; supplies, $3,200; and office equipment, $7,000. There were no liabilities received.
	1	Paid two months’ rent on a lease rental contract, $4,800.
	2	Paid the premiums on property and casualty insurance policies, $4,860.
	4	Received cash from clients as an advance payment for services to be provided, and recorded it as unearned fees, $5,500.
	5	Purchased additional office equipment on account from Office Station Co., $6,500.
	6	Received cash from clients on account, $15,100.
	10	Paid cash for a newspaper advertisement, $400.
	12	Paid Office Station Co. for part of the debt incurred on July 5, $5,200.
	12	Recorded services provided on account for the period July 1–12, $13,300.
	14	Paid receptionist for two weeks’ salary, $1,800.

Record the following transactions on Page 2 of the journal:

Jul.	17	Recorded cash from cash clients for fees earned during the period July 1–17, $9,450.
	18	Paid cash for supplies, $600.
	20	Recorded services provided on account for the period July 13–20, $6,650.
	24	Recorded cash from cash clients for fees earned for the period July 17–24, $4,000.
	26	Received cash from clients on account, $12,000.
	27	Paid receptionist for two weeks’ salary, $1,800.
	29	Paid telephone bill for July, $350.
	31	Paid electricity bill for July, $675.
	31	Recorded cash from cash clients for fees earned for the period July 25–31, $5,300.
	31	Recorded services provided on account for the remainder of July, $3,000.
	31	Paid dividends, $12,500.

	Required:
1.	Journalize each transaction in a two-column journal starting on Page 1, referring to the chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.)
2.	Post the journal to a ledger of four-column accounts. Add the appropriate posting reference to the journal.
3.	Prepare an unadjusted trial balance.
4.	At the end of July, the following adjustment data were assembled. Analyze and use these data to complete requirements (5) and (6). A. Insurance expired during July is $405. B. Supplies on hand on July 31 are $1,550. C. Depreciation of office equipment for July is $750. D. Accrued receptionist salary on July 31 is $180. E. Rent expired during July is $2,400. F. Unearned fees earned on July 31, $2,000.
5.	(Optional) On your own paper or spreadsheet, enter the unadjusted trial balance on an end-of-period work sheet and complete the work sheet.
6.	A. Journalize the adjusting entries on page 3 of the journal. Adjusting entries are recorded on July 31. Refer to the Chart of Accounts for exact wording of account titles. B. Post the adjusting entries, inserting balances in the accounts affected.
7.	Prepare an adjusted trial balance.
8.	A. Prepare an income statement for the month ended July 31, 20Y2. Be sure to complete the statement heading. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. You will not need to enter colons (:) on the income statement. B. Prepare a statement of stockholders’ equity for the month ended July 31, 20Y2. Be sure to complete the statement heading. Negative amount should be indicated by the minus sign. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. If an amount is zero, enter "0". C. Prepare a balance sheet as of July 31, 20Y2. Be sure to complete the statement heading. Fixed assets must be entered in order according to account number. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary. Negative amount should be indicated by the minus sign.
9.	A. Journalize the closing entries on page 4 of the journal. Refer to the Chart of Accounts for exact wording of account titles. B. Post the closing entries, inserting balances in the accounts affected. Leave the ITEM column BLANK for each row. If the account balance is zero (0) after closing entries are posted, enter a zero (0) in the account's normal balance column.
10.	Prepare a post-closing trial balance.

Answer 1

 

In the books of Diamond Consulting
Journal Entries for the month ended July 31, 20Y2 for an unadjusted trial balance
Date	Description	Debit	Credit
Jul. 1	Cash	$12,500
	Accounts Receivable	$20,800
	Supplies	$3,200
	Office Equipment	$7,000
	Common Stock		$43,500
Jul. 1	Prepaid Rent	$4,800
	Cash		$4,800
Jul. 2	Prepaid Insurance	$4,860
	Cash		$4,860
Jul. 4	Cash	$5,500
	Unearned Fees		$5,500
Jul. 5	Office Equipment	$6,500
	Accounts Payable		$6,500
Jul. 6	Cash	$15,100
	Accounts Receivable		$15,100
Jul. 10	Advertising Expense	$400
	Cash		$400
Jul. 12	Accounts Payable	$5,200
	Cash		$5,200
Jul. 12	Accounts Receivable	$13,300
	Fees		$13,300
Jul. 14	Salary Expense	$1,800
	Cash		$1,800
Jul. 17	Cash	$9,450
	Fees		$9,450
Jul. 18	Supplies	$600
	Cash		$600
Jul. 20	Accounts Receivable	$6,650
	Fees		$6,650
Jul. 24	Cash	$4,000
	Fees		$4,000
Jul. 26	Cash	$12,000
	Accounts Receivable		$12,000
Jul. 27	Salary Expense	$1,800
	Cash		$1,800
Jul. 29	Telephone Expense	$350
	Cash		$350
Jul. 31	Electricity Expense	$675
	Cash		$675
Jul. 31	Cash	$5,300
	Fees		$5,300
Jul. 31	Accounts Receivable	$3,000
	Fees		$3,000
Jul. 31	Dividends	$12,500
	Cash		$12,500

Ledger Entries for the month ended July 31, 20Y2 for an unadjusted trial balance
Cash
Common Stock	$12,500	Prepaid Rent	$4,800
Unearned Fees	$5,500	Prepaid Insurance	$4,860
Accounts Receivable	$15,100	Advertising Expense	$400
Fees	$9,450	Accounts Payable	$5,200
Fees	$4,000	Salary Expense	$1,800
Accounts Receivable	$12,000	Supplies	$600
Fees	$5,300	Salary Expense	$1,800
		Telephone Expense	$350
		Electricity Expense	$675
		Dividends	$12,500
		Closing Balance c/f	$30,865
	$63,850		$63,850
Accounts Receivable
Common Stock	$20,800	Cash	$15,100
Fees	$13,300	Cash	$12,000
Fees	$6,650	Closing Balance c/f	$16,650
Fees	$3,000
	$43,750		$43,750
Supplies
Common Stock	$3,200	Closing Balance c/f	$3,800
Cash	$600
	$3,800		$3,800
Office Equipment
Common Stock	$7,000	Closing Balance c/f	$13,500
Accounts Payable	$6,500
	$13,500		$13,500
Common Stock
Closing Balance c/f	$43,500	Cash	$12,500
		Accounts Receivable	$20,800
		Supplies	$3,200
		Office Equipment	$7,000
	$43,500		$43,500
Prepaid Rent
Cash	$4,800	Closing Balance c/f	$4,800
	$4,800		$4,800
Prepaid Insurance
Cash	$4,860	Closing Balance c/f	$4,860
	$4,860		$4,860
Unearned Fees
Closing Balance c/f	$5,500	Cash	$5,500
	$5,500		$5,500
Fees
Closing Balance c/f	$41,700	Accounts Receivable	$13,300
		Cash	$9,450
		Accounts Receivable	$6,650
		Cash	$4,000
		Cash	$5,300
		Accounts Receivable	$3,000
	$41,700		$41,700
Accounts Payable
Cash	$5,200	Office Equipment	$6,500
Closing Balance c/f	$1,300
	$6,500		$6,500
Advertising Expense
Cash	$400	Closing Balance c/f	$400
	$400		$400
Salary Expense
Cash	$1,800	Closing Balance c/f	$3,600
Cash	$1,800
	$3,600		$3,600
Telephone Expense
Cash	$350	Closing Balance c/f	$350
	$350		$350
Electricity Expense
Cash	$675	Closing Balance c/f	$675
	$675		$675
Dividends
Cash	$12,500	Closing Balance c/f	$12,500
	$12,500		$12,500

Unadjusted Trial Balance
Partculars	Debit	Credit
Cash	$30,865
Accounts Receivable	$16,650
Supplies	$3,800
Office Equipment	$13,500
Common Stock		$43,500
Prepaid Rent	$4,800
Prepaid Insurance	$4,860
Unearned Fees		$5,500
Fees		$41,700
Accounts Payable		$1,300
Advertising Expense	$400
Salary Expense	$3,600
Telephone Expense	$350
Electricity Expense	$675
Dividends	$12,500
Total	$92,000	$92,000

Adjustment Journal Entries for the month ended July 31, 20Y2
Jul. 31	Insurance Expense	$405
	Prepaid Insurance		$405
Jul. 31	Supplies Expense	$2,250
	Supplies		$2,250
Jul. 31	Depreciation on Office Equipment	$750
	Accumulation of Depreciation		$750
Jul. 31	Salary Expense	$180
	Salary Payable		$180
Jul. 31	Rent Expense	$2,400
	Prepaid Rent		$2,400
Jul. 31	Unearned Fees	$2,000
	Fees		$2,000

Adjustment Ledger Entries for the month ended July 31, 20Y2
Insurance Expense
Prepaid Insurance	$405	Closing Balance c/f	$405
	$405		$405
Supplies Expense
Supplies	$2,250	Closing Balance c/f	$2,250
	$2,250		$2,250
Depreciation on Office Equipment
Accumulation of Depreciation	$750	Closing Balance c/f	$750
	$750		$750
Accumulation of Depreciation
Closing Balance c/f	$750	Depreciation on Office Equipment	$750
	$750		$750
Salary Payable
Closing Balance c/f	$180	Salary Expense	$180
	$180		$180
Rent Expense
Prepaid Rent	$2,400	Closing Balance c/f	$2,400
	$2,400		$2,400
Supplies
Common Stock	$3,200	Supplies Expense	$2,250
Cash	$600	Closing Balance c/f	$1,550
	$3,800		$1,550
Prepaid Insurance
Cash	$4,860	Insurance Expense	$405
		Closing Balance c/f	$4,455
	$4,860		$4,860
Salary Expense
Cash	$1,800	Closing Balance c/f	$3,780
Cash	$1,800
Salary Payable	$180
	$3,780		$3,780
Prepaid Rent
Cash	$4,800	Rent Expense	$2,400
		Closing Balance c/f	$2,400
	$4,800		$4,800
Unearned Fees
Fees	$2,000	Cash	$5,500
Closing Balance c/f	$3,500
	$5,500		$5,500
Fees
Closing Balance c/f	$43,700	Accounts Receivable	$13,300
		Cash	$9,450
		Accounts Receivable	$6,650
		Cash	$4,000
		Cash	$5,300
		Accounts Receivable	$3,000
		Unearned Fees	$2,000
	$43,700		$43,700

Adjusted Trial Balance
Partculars	Debit	Credit
Cash	$30,865
Accounts Receivable	$16,650
Supplies	$1,550
Office Equipment	$13,500
Common Stock		$43,500
Prepaid Rent	$2,400
Prepaid Insurance	$4,455
Unearned Fees		$3,500
Fees		$43,700
Accounts Payable		$1,300
Advertising Expense	$400
Salary Expense	$3,780
Telephone Expense	$350
Electricity Expense	$675
Dividends	$12,500
Insurance Expense	$405
Supplies Expense	$2,250
Depreciation on Office Equipment	$750
Accumulation of Depreciation		$750
Salary Payable		$180
Rent Expense	$2,400
Total	$92,930	$92,930

Income Statement for the month ended July 31, 20Y2
Fees		$43,700
Less: Operating Expenses
Advertising Expense	$400
Salary Expense	$3,780
Telephone Expense	$350
Electricity Expense	$675
Insurance Expense	$405
Supplies Expense	$2,250
Depreciation on Office Equipment	$750
Rent Expense	$2,400	$11,010
Net Income / Profit c/f		$32,690

Statement of Stockholders' Equity
Opening Balance of Common Stock		$43,500
Add: Net Income / Profit transferred from Income Statement		$32,690
		$76,190
Less: Dividends Paid		$12,500
Closing Balance of Common Stock		$63,690

Balance Sheet as at July 31, 20Y2
Liabilities	Assets
Common Stock		$63,690	Cash		$30,865
Unearned Fees		$3,500	Accounts Receivable		$16,650
Accounts Payable		$1,300	Supplies		$1,550
Salary Payable		$180	Office Equipment	$13,500
			Less: Accumulation of Depreciation	$750	$12,750
			Prepaid Rent		$2,400
			Prepaid Insurance		$4,455
Total	$68,670	Total	$68,670