Question

Knockout Consulting entered into the following transactions during April:

Apr. 1.		The following assets were received : cash, $20,000; accounts receivable, $14,700; supplies, $3,300; and office equipment, $12,000.
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, $8,000.
6.		Received cash from clients on account, $11,700.
10.		Paid cash for advertisements, $350.
12.		Paid for part of the debt incurred on April 5, $6,400.
12.		Provided services on account for the period April 1–12, $21,900.
14.		Paid receptionist for two weeks' salary, $1,650.

17.		Received cash from cash clients for fees earned during the period April 1–16, $6,600.
18.		Paid cash for supplies, $725.
20.		Provided services on account for the period April 13–20, $16,800.
24.		Received 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.		Received cash from cash clients for fees earned for the period April 25–30, $5,160.
30.		Provided services on account for the remainder of April, $2,590.
30.		Withdrew $18,000 for personal use.

Instructions

1. Prepare journal entries for the above.

2. Prepare an unadjusted trial balance.

3. At the end of April, the following adjustment data were assembled.

   1. Insurance expired during April is $350.

   2. Supplies on hand on April 30 are $1,225.

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

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

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

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

4. Prepare the adjusting journal entries for the above.

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

6. Prepare closing entries.

Answer 1

	Journal Entries	Dr. ($)	Cr. ($)
1	cash	20000
	accounts receivable	14700
	supplies	3300
	office equipment	12000
	To common stock		50000
1	prepaid rent	6000
	To cash		6000
2	prepaid insurance	4200
	To cash		4200
4	cash	9400
	To unearned fees		9400
5	office equipment	8000
	To accounts payable		8000
6	cash	11700
	To accounts receivable		11700
10	advertisement expenses	350
	To cash		350
12	accounts payable	6400
	To cash		6400
12	accounts receivable	21900
	To service fees		21900
14	salary expenses	1650
	To cash		1650
17	cash	6600
	To service fees		6600
18	supplies	725
	To cash		725
20	accounts receivable	16800
	To service fees		16800
24	cash	4450
	To service fees		4450
26	cash	26500
	To accounts receivable		26500
27	salary expenses	1650
	To cash		1650
29	telephone expenses	540
	To cash		540
30	electricity expenses	760
	To cash		760
30	cash	5160
	To service fees		5160
30	accounts receivable	2590
	To service fees		2590
30	drawings	18000
	To cash		18000
	Adjusting Journal Entry	Dr. ($)	Cr. ($)
1	insurance expenses	350
	To prepaid insurance		350
2	supplies expenses	2800
	To supplies		2800
3	depreciation expenses	400
	To accumulated depreciation		400
4	salary expenses	275
	To salary payable		275
5	rent expenses	2000
	To prepaid rent		2000
6	unearned fees	2350
	To service fees		2350
	Income Statement
	For the month April 30 (amounts in $)
	service fee		59850
	expenses
	salary expenses	3575
	telephone expenses	540
	electricity expenses	760
	insurance expenses	350
	supplies expenses	2800
	depreciation expenses	400
	rent expenses	2000
	advertisement expenses	350
	total expenses		10775
	net income		49075
	Statement of Stockholders Equity
	For the month April 30 (amounts in $)
	common stock		50000
	net income		49075
	less:drawings		-18000
	ending balance		81075
	Balance Sheet
	As of April 30 (amounts in $)
	current assets
	cash	43535
	accounts receivable	17790
	prepaid rent	4000
	prepaid insurance	3850
	supplies	1225
	total current assets		70400
	non current assets
	office equipment	20000
	accumulated depreciation	-400	19600
	total assets		90000
	liabilities and stockholders equity
	current liabilities
	accounts payable	1600
	unearned fees	7050
	salary payable	275
	total current liabilities		8925
	stockholders equity
	common stock	50000
	retained earnings	31075
	total stockholders equity		81075
	total liabilities and stockholders equity		90000
	Post Closing Journal Entry	Dr. ($)	Cr. ($)
	service fee	59850
	To income summary		59850
	income summary	10775
	salary expenses		3575
	telephone expenses		540
	electricity expenses		760
	insurance expenses		350
	supplies expenses		2800
	depreciation expenses		400
	rent expenses		2000
	advertisement expenses		350
	income summary	49075
	To retained earnings		49075
	retained earnings	18000
	To drawings		18000
	Post Closing Trial Balance
	Accounts	Dr. ($)	Cr. ($)
	cash	43535
	accounts receivable	17790
	prepaid rent	4000
	prepaid insurance	3850
	supplies	1225
	office equipment	20000
	accumulated depreciation		400
	accounts payable		1600
	unearned fees		7050
	salary payable		275
	common stock		50000
	retained earnings		31075
	totals	90400	90400