Question

COMPREHENSIVE PROBLEM

OJB Company began business in January, 2016. The following transactions occurred in February, 2016:

Feb 1      Purchased supplies on account, $ 400.

         2      Received cash from customers on account, $ 1,750.

3      Paid $ 400 on account.

5      Paid technician $ 750 in salary, including the amount owed at the end of January.

8      Billed customers for services provided on account, $ 3,200.

11     Paid cash for advertising on a local website, $ 300.

12     Received $ 3,875 cash for fees earned for jobs completed.

16     Paid electricity bill for the month, $ 290.

17     Received $ 8,200 cash for fees earned for jobs completed.

19     Paid technician $ 750 in salary.

20     Billed customers for services provided on account, $ 6,100.

22     Received cash from customers on account, $ 9,500.

25     Paid phone bill for the month, $ 120.

26     Received cash from customers as an advance payment for                                       technical support services to be provided in the future, $ 2,500.

27     Billed customers for services provided on account, $ 3,900.

28     Received cash from customers on account, $ 5,100.

28     OJB withdrew $8,000 for personal use.

INSTRUCTIONS:

The chart of accounts and the post-closing trial balance as of January 31, 2016 are given. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of the ledger. Date the balances February 1, 2016, and place a check mark ( ü ) in the Posting Reference column. Journalize each of the February transactions in the journal provided using OJB Company’s chart of accounts. (Do not insert the account numbers in the journal at this time).

Post the journal to the ledger.

Prepare an unadjusted trial balance.

At the end of February, the following adjustment data were assembled. Use this data to complete instructions ( 5 ) and ( 6 ):

Supplies on hand were $ 600.

Rent expired during the month was $ 1,600.

Unearned fees at the end of the month were $ 2,000.

Insurance expired during the month was $ 300.

Accrued salaries payable were $ 240.

Depreciation on equipment during the month was $ 330.

Optional: Enter the unadjusted trial balance on an end-of-period spreadsheet/worksheet and complete the worksheet.

Journalize and post the adjusting entries.

Prepare an adjusted trial balance.

Prepare an Income Statement, Statement of Owner’s Equity, and Balance Sheet.

Record and post the closing entries. Indicate closed accounts in the ledger by inserting a line in both of the Balance columns opposite each closing entry.

10.Prepare a post-closing trial balance.

OJB COMPANY SERVICE CHART OF ACCOUNTS

PROVIDED FOR YOU IN BLACKBOARD THIS ACCOUNT IS

LISTED BUT IS NOT USED—PLEASE IGNORE**

OJB COMPANY

POST-CLOSING TRIAL BALANCE

JANUARY 31, 2016

                                                                           DEBIT        CREDIT

Accounts Receivable3,400

Prepaid Rent3,200

Prepaid Insurance1,500

Office Equipment14,500

Accumulated Depreciation330

Accounts Payable800

Salaries Payable120

Unearned Fees2,500

OJB, Capital                  42,300

                                                                           46,050       46,050

Answer 1

1. In the books of OJB Company:

Date	Account Titles	Debit	Credit
February 2016		$	$
1	Supplies	400
	Accounts Payable		400
2	Cash	1,750
	Accounts Receivable		1,750
3.	Accounts Payable	400
	Cash		400
5.	Salaries Expense	630
	Salaries Payable	120
	Cash		750
8	Accounts Receivable	3,200
	Fees Earned		3,200
11.	Advertising Expense	300
	Cash		300
12	Cash	3,875
	Fees Earned		3,875
16	Utilities Expense	290
	Cash		290
17	Cash	8,200
	Fees Earned		8,200
19	Salaries Expense	750
	Cash		750
20	Accounts Receivable	6,100
	Fees Earned		6,100
22	Cash	9,500
	Accounts Receivable		9,500
25	Telephone Expense	120
	Cash		120
26	Cash	2,500
	Unearned Fees		2,500
27	Accounts Receivable	3,900
	Fees Earned		3,900
28	Cash	5,100
	Accounts Receivable		5,100
28	OJB, Withdrawals	8,000
	Cash		8,000

2. General Ledger:

Cash:

Balance, Jan 31	22,100	Feb 3	400
Feb 2	1,750	Feb 5	750
Feb 12	3,875	Feb 11	300
Feb 17	8,200	Feb 16	290
Feb 22	9,500	Feb 19	750
Feb 26	2,500	Feb 25	120
Feb 28	5,100	Feb 28	8,000
Balance, Feb 28	42,415

Accounts Receivable:

Balance, Jan 31	3,400	Feb 2	1,750
Feb 8	3,200	Feb 22	9,500
Feb 20	6,100	Feb 28	5,100
Feb 27	3,900
Balance, Feb 28	250

Supplies:

Balance, Jan31	1,350	Supplies Expense	1,150
Feb 1	400
Balance, Feb 28	600

Prepaid Rent:

Balance, Jan 31	3,200	Rent Expense	1,600
Balance, Feb 28	1,600

Prepaid Insurance:

Balance, Jan 31	1,500	Insurance Expense	300
Balance, Feb 28	1,200

Office Equipment:

Balance, Jan 31	14,500
Balance, Feb 28	14,500

Accumulated Depreciation:

		Balance, Jan 31	330
		Depreciation Expense	330
		Balance, Feb 28	660

Accounts Payable:

Feb 3	400	Balance, Jan 31	800
		Feb 1	400
		Balance, Feb 28	800

Salaries Payable:

Feb 5	120	Balance, Jan 31	120
		Salaries Expense	240
		Balance, Feb 28	240

Unearned Fees:

Fees Earned	3,000	Balance, Jan 31	2,500
		Feb 26	2,500
		Balance, Feb 28	2,000

OJB Capital:

OJB Withdrawals	8,000	Balance, Jan 31	42,300
		Net Income	22,565
		Balance, Feb 28	56,865

OJB Withdrawals:

Feb 28	8,000	OJB Capital	8,000

Fees Earned:

		Feb 8	3,200
		Feb 12	3,875
		Feb 17	8,200
		Feb 20	6,100
		Feb 27	3,900
		Unearned Fees	3,000
		Income Summary	28,275

Salaries Expense:

Feb 5	630
Feb 19	750
Feb 28	240
Income Summary	1,620

Rent Expense:

Feb 28	1,600
Income Summary	1,600

Insurance Expense:

Feb 28	300
Income Summary	300

Supplies Expense:

Feb 28	1,150
Income Summary	1,150

3.

OJB Company
Unadjusted Trial Balance
February 28, 2016
Account Titles	Debit	Credit
	$	$
Cash	42,415
Accounts Receivable	250
Supplies	1,750
Prepaid Rent	3,200
Prepaid Insurance	1,500
Office Equipment	14,500
Accumulated Depreciation		330
Accounts Payable		800
Unearned Fees		5,000
OJB Capital		42,300
OJB Withdrawals	8,000
Fees Earned		25,275
Advertising Expense	300
Salaries Expense	1,380
Telephone Expense	120
Utilities Expense	290
Totals	$ 73,705	$ 73,705

Adjusting Entries:

Adjustment	Account Titles	Debit	Credit
February 28, 2016		$	$
a.	Supplies Expense	1.150
	Supplies		1,150
b.	Rent Expense	1,600
	Prepaid Rent		1,600
c.	Unearned Fees	3,000
	Fees Earned		3,000
d.	Insurance Expense	300
	Prepaid Insurance		300
e.	Salaries Expense	240
	Salaries Payable		240
f.	Depreciation Expense	330
	Accumulated Depreciation : Office Equipment		330

4.

OJB Company
Adjusted Trial Balance
February 28, 2016
Account Titles	Debit	Credit
	$	$
Cash	42,415
Accounts Receivable	250
Supplies	600
Prepaid Rent	1,600
Prepaid Insurance	1,200
Office Equipment	14,500
Accumulated Depreciation		660
Accounts Payable		800
Salaries Payable		240
Unearned Fees		2,000
OJB Capital		42,300
OJB Withdrawals	8,000
Fees Earned		28,275
Advertising Expense	300
Salaries Expense	1,620
Rent Expense	1,600
Insurance Expense	300
Supplies Expense	1,150
Utilities Expense	290
Telephone Expense	120
Depreciation Expense	330
Totals	$ 74,275	$ 74,275

5.

OJB Company
Income Statement
For the month ended February 28, 2016
	$	$
Fees Earned		28,275
Less: Operating Expenses
Salaries Expense	1,620
Advertising Expense	300
Supplies Expense	1,150
Rent Expense	1,600
Insurance Expense	300
Utilities Expense	290
Telephone Expense	120
Depreciation Expense	330
Total Operating Expenses		5,710
Net Income		$ 22,565

6.

OJB Company
Statement of Changes in Equity
For the month ended February 28, 2016
OJB Capital, Balance, Jan 31	42,300
Add: Net Income	22,565
Less: OJB Withdrawals	(8,000)
OJB Capital, Balance, Feb 28	56,865

7.

OJB Company
Balance Sheet
February 28, 2016
Assets	$	$	Liabilities and Equity	$	$
Cash	42,415		Accounts Payable	800
Accounts Receivable	250		Salaries Payable	240
Supplies	600		Unearned Fees	2,000
Prepaid Rent	1,600		Total Current Liabilities		3,040
Prepaid Insurance	1,200
Total Current Assets		46,065	OJB Capital		56,865
Office Equipment	14,500
Accumulated Depreciation	(660)
Office Equipment, net		13,840
Total Assets		59,905	Total Liabilities and Equity		59,905

8. Closing Entries:

Date	Account Titles	Debit	Credit
Feb 28, 2016		$	$
a.	Fees Earned	28,275
	Income Summary		28,275
	To close the revenue account
b.	Income Summary	5,710
	Salaries Expense		1,620
	Supplies Expense		1,150
	Advertising Expense		300
	Rent Expense		1,600
	Insurance Expense		300
	Depreciation Expense		330
	Miscellaneous Expense		410
	To close the expense accounts
c.	Income Summary	22,565
	OJB Capital		22,565
	To close income summary
d.	OJB Capital	8,000
	OJB Withdrawals		8,000
	To close drawings account

9.

OJB Company
Post Closing Trial Balance
February 28, 2016
Account Titles	Debit	Credit
	$	$
Cash	42,415
Accounts Receivable	250
Supplies	600
Prepaid Rent	1,600
Prepaid Insurance	1,200
Office Equipment	14,500
Accumulated Depreciation : Office Equipment		660
Accounts Payable		800
Salaries Payable		240
Unearned Fees		2,000
OJB Capital		56,865
Totals	$ 60,565	$ 60,565