Question

Project - Comprehensive Problem ACC 101

For the past several years, Kel El has operated a part-time consulting business from his home. As of July 1, 2019, Kel decided to move to rented quarters and to operate the business, which was to be known as KE Consulting, on a full-time basis. KE Consulting entered into the following transactions during

Transactions:

July:

1. Kel El deposited $30,000 into KE Consulting as the sole owner.

1. KE Consulting purchased supplies, $1,500; and office equipment, $17,500.

1. Paid three months’ rent on a lease rental contract, $3,600.

2. Paid the yearly premium on property and casualty insurance policies, $6,000.

4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $5,000.

4. Purchased additional office equipment on account from Office Equip Co., $2,500. 10. Paid cash for a newspaper advertisement, $150.

14. Recorded services provided on account for the period July 1–14, $2,500.

15. Paid Office Equip Co. for part of the debt incurred on July 4, $1,100.

15. Paid part-time receptionist for two weeks’ salary, $500.

17. Recorded cash from cash clients for fees earned during the period July 1–16, $4,500.

18. Paid cash for supplies, $500.

22. Recorded services provided on account for the period July 15–22, $2,100.

25. Recorded cash from cash clients for fees earned for the period July 17–25, $1,850.

26. Received cash from clients on account, $2,600.

28. Paid part-time receptionist for two weeks’ salary, $500.

29. Paid water bill for July, $50.

30. Received the electricity bill for July, $250. (Will pay it later)

30. Recorded cash from cash clients for fees earned for the period July 26–30, $3,250. 30. Recorded services provided on account for the remainder of July, $1,200.
30. Kel El withdrew $4,000 for personal use.

Instructions

1. Journalize each transaction in a two-column journal, 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.)

101 Cash
120 Accounts Receivable
122 Allowance for Doubtful Accounts 124 Supplies
125 Prepaid Rent
126 Prepaid Insurance
150 Office Equipment
155 Accumulated Depreciation
201 Accounts Payable
210 Salaries Payable
220 Unearned Fees

301 Kel El, Capital
310 Kel El, Drawing 401 Fees Earned
500 Bad Debt Expense 501 Salary Expense 502 Rent Expense

503 Supplies Expense
504 Depreciation Expense 505 Insurance Expense 509 Advertising Expense 512 Utilities Expense

2. Post the journal to a ledger of four-column accounts.
3. Prepare a trial balance as of July 31, 2019, listing all the accounts in the order given in the ledger. 4. Journalize and post the adjusting entries.

a) b) c) d) e) f) g) h)

a)One month of Insurance has expired.
b)Supplies on hand on July 31 are $1,300.
c)Accrued receptionist salary on July 31 is $100.
d)One month of rent was used.
e)Unearned fees on July 31 are $2,000.
f)$1000 of fees needs to be accrued
g)Depreciation of office equipment for July based on SL depreciation over 5 years.

h)Bad Debt is 1% of sales for the month of July. (Hint: Use the revenue balance)

5. Prepare the adjusted trial balance
6. Prepare an income statement, a statement of owner’s equity, and a balance sheet.

7. Journalize and post the closing entries. (Income Summary is account #320 in the chart of accounts.) Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry.

8. Prepare a post-closing trial balance.

Answer 1

1.

Date	Account Titles	Debit	Credit
July		$	$
1	Cash	30,000
	Kel El, Capital		30,000
1	Supplies	1,500
	Office Equipment	17,500
	Cash		19,000
1	Prepaid Rent	3,600
	Cash		3,600
2.	Prepaid Insurance	6,000
	Cash		6,000
4	Cash	5,000
	Unearned Fees		5,000
4	Office Equipment	2,500
	Accounts Payable		2,500
10	Advertising Expense	150
	Cash		150
14	Accounts Receivable	2,500
	Fees Earned		2,500
15	Accounts Payable	1,100
	Cash		1,100
15	Salaries Expense	500
	Cash		500
17	Cash	4,500
	Fees Earned		4,500
18	Supplies	500
	Cash		500
22	Accounts Receivable	2,100
	Fees Earned		2,100
25	Cash	1,850
	Fees Earned		1,850
25	Cash	2,600
	Accounts Receivable		2,600
28	Salaries Expense	500
	Cash		500
29	Utilities Expense	50
	Cash		50
30	Utilities Expense	250
	Accounts Payable		250
30	Cash	3,250
	Fees Earned		3,250
30	Accounts Receivable	1,200
	Fees Earned		1,200
30	Kel El, Drawing	4,000
	Cash		4,000

3.

KE Consulting Trial Balance July 31
Account Titles	Debit	Credit
	$	$
Cash	11,800
Accounts Receivable	3,200
Allowance for Doubtful Accounts		0
Supplies	2,000
Prepaid Rent	3,600
Prepaid Insurance	6,000
Office Equipment	20,000
Accumulated Depreciation		0
Accounts Payable		1,650
Salaries Payable		0
Unearned Fees		5,000
Kel El, Capital		30,000
Kel El, Drawing	4,000
Fees Earned		15,400
Bad Debt Expense	0
Salary Expense	1,000
Rent Expense	0
Supplies Expense	0
Depreciation Expense	0
Insurance Expense	0
Advertising Expense	150
Utilities Expense	300
Totals	$ 52,050	$ 52,050

4.

Date	Account Titles	Debit	Credit
July 31		$	$
a.	Insurance Expense	500
	Prepaid Insurance		500
b.	Supplies Expense	700
	Supplies		700
c.	Salary Expense	100
	Salaries Payable		100
d.	Rent Expense	1,200
	Prepaid Rent		1,200
e.	Unearned Fees	3,000
	Fees Earned		3,000
f.	Accounts Receivable	1,000
	Fees Earned		1,000
g.	Depreciation Expense	333
	Accumulated Depreciation		333
h.	Bad Debt Expense	194
	Allowance for Doubtful Accounts		194

5.

KE Consulting Adjusted Trial Balance July 31
Account Titles	Debit	Credit
	$	$
Cash	11,800
Accounts Receivable	4,200
Allowance for Doubtful Accounts		194
Supplies	1,300
Prepaid Rent	2,400
Prepaid Insurance	5,500
Office Equipment	20,000
Accumulated Depreciation		333
Accounts Payable		1,650
Salaries Payable		100
Unearned Fees		2,000
Kel El, Capital		30,000
Kel El, Drawing	4,000
Fees Earned		19,400
Bad Debt Expense	194
Salary Expense	1,100
Rent Expense	1,200
Supplies Expense	700
Depreciation Expense	333
Insurance Expense	500
Advertising Expense	150
Utilities Expense	300
Totals	$ 53,677	$ 53,677