Question

Post the transactions to the General Ledger accounts.

January 1              Owner, Tom Ford, invested $260,000 cash along with office equipment that had a $90,000 market value in exchange for 35,000 shares of $10 par value common stock in Celebrity Consultants, Inc.

January 1              Purchased land and an office building for $140,000, of which $20,000 was attributable to the fair market value of the land. A $50,000 cash down payment was made and a 5% five-year note was signed for the balance. Interest and 20% of the principal will be paid annually on this date. (Assume a 360-day year for interest computation purposes.)

January 1              Purchased a one-year insurance policy, effective January 1, for $2,400.

January 3 Purchased office supplies of $3,600 on account from Office Depot.

January 5              Established a petty cash fund of $400.

January 7              Placed an order with the LA Times newspaper for advertising, which will run during January, February, and March. The advertising, which cost $1,800, was paid for on this date in order to obtain a lower price.

January 10            Completed consulting job for Brad Pitt, and billed him total of $12,000, due in 30 days.

January 12            Completed consulting job totaling $18,500 for Beyonce’ Knowles, and collected $10,000 cash with the balance due in 30 days.

January 15            Paid the semi-monthly payroll, which totaled $8,000, to the firm’s workers, all of which are classified as independent contractors.

January 18            Received $15,000 from Tiger Woods for 6 month’s consulting services to begin February 1.

January 19            Paid Office Depot $2,500 on the account balance.

January 20            Received $8,000 from Brad Pitt for services billed January 10^th.

January 24            Completed $5,000 consulting job for Taylor Swift and received full cash payment.

January 25            Received $4,000 from Beyonce’ Knowles for consulting services completed January 12.

January 30            Received the January telephone bill from AT&T for $375, due Feb 15.

January 31            Paid the payroll to firm’s workers for the second half of January.

January 31            Received utility bills for January due Feb 16, from SWEPCO for $360 & L.A. Water Utilities for $280.

January 31            An audit of the petty cash fund determined the following:

                                                Receipts:               Postage                                  $ 24

                                                                                Office supplies                     38

                                                                                Misc. Exp.                             22

                                                                Currency and Coin                             313

Reimburse Petty Cash and record the entry from the information above.

January 31            Declared & paid cash dividend of $.10 per share to the shareholders of record on January 31.

SUPPLEMENTAL ADJUSTING ENTRY INFORMATION:

a. An inventory of office supplies was taken on January 31 & found that $2,100 of supplies remained on hand.

b. An invoice of $280 for repair of office equipment dated January 26 had not yet been recorded.

c. The building will be depreciated on a straight-line basis over 30 years with no salvage value.

d. The equipment will be depreciated on a straight-line basis over 10 years with no salvage value.

e. Review accounts for other adjustments necessary at January 31 in addition to those indicated in items a - d.

CHART OF ACCOUNTS

Cash, Petty Cash, Accounts Receivable, Office Supplies, Prepaid Insurance, Prepaid Advertising, Office Equipment, Accumulated Depreciation, Office Equipment, Building, Accumulated Depreciation:Building, Land, Accounts Payable, Unearned Consulting Revenue, Notes Payable, Interest Payable, Common Stock, Retained Earnings, Dividends, Consulting Revenue, Interest Revenue, Payroll Expense, Advertising Expense, Insurance Expense, Interest Expense, Telephone Expense, Utilities Expense, Repairs Expense, Postage Expense, Supplies Expense, Depreciation Expense, Office Equipment, Depreciation Expense, Building, Miscellaneous Expense, Cash Over and Short, Income Summary.

Answer 1

Journal Entries:

Date	Particulars	Debit ($)	Credit ($)
Jan 1	Cash	260,000
	Office Equipment	90,000
	Common Stock		350,000
Jan 1	Land	20,000
	Building	120,000
	Cash		50,000
	Notes Payable		90,000
Jan 1	Insurance Expense	2,400
	Cash		2,400
Jan 3	Office Supplies	3,600
	Accounts Payable		3,600
Jan 5	Petty Cash	400
	Cash		400
Jan 7	Advertising Expense	1,800
	Cash		1,800
Jan 10	Accounts Receivable	12,000
	Consulting Revenue		12,000
Jan 12	Cash	10,000
	Accounts Receivable	8,500
	Consulting Revenue		18,500
Jan 15	Payroll Expenses	8,000
	Cash		8,000
Jan 18	Cash	15,000
	Unearned Consulting Revenue		15,000
Jan 19	Accounts Payable	2,500
	Cash		2,500
Jan 20	Cash	8,000
	Accounts Receivable		8,000
Jan 24	Cash	5,000
	Consulting Revenue		5,000
Jan 25	Cash	4,000
	Accounts Receivable		4,000
Jan 30	Telephone Expenses	375
	Accounts Payable		375
Jan 31	Payroll Expenses	8,000
	Cash		8,000
Jan 31	Utility Expenses [260+280]	640
	Accounts Payable		640
Jan 31	Postage Expenses	24
	Supplies Expenses	38
	Miscellaneous Expenses	22
	Cash Over and Short	3
	Petty Cash		87
Jan 31	Petty Cash	87
	Cash		87
Jan 31	Retained Earnings	3,500
	Dividends		3,500
	Dividends	3,500
	Cash		3,500

Adjusting Entries:

S.No.	Date	Particulars	Debit ($)	Credit ($)
a.	Jan 31	Supplies Expenses [3,600-2,100]	1,500
		Office Supplies		1,500
b.	Jan 31	Repairs Expense	280
		Accounts Payable		280
c.	Jan 31	Deprecition Expense - Building	4,000
		Accumulated Depreciation - Building		4,000
d.	Jan 31	Depreciation Expense - Office Equipment	9,000
		Accumulated Depreciation - Office Equipment		9,000
e.	Jan 31	Interest Expense [90,000 * 5% * 1/12]	375
		Interest Payable		375
	Jan 31	Prepaid Insurance [2,400 * 11/12]	2,200
		Insurance Expense		2,200
	Jan 31	Prepaid Advertising [1,800 / 3] *2	1,200
		Advertising Expense		1,200
	Jan 31	Consulting Revenue	35,500
		Income Summary		2,443
		Insurance Expense		200
		Supplies Expense		1,500
		Advertising Expense		600
		Payroll Expenses		16,000
		Telephone Expenses		375
		Utility Expenses		640
		Postage Expenses		24
		Supplies Expenses		38
		Miscellaneous Expenses		22
		Cash Over and Short		3
		Repair Expense		280
		Depreciation Expense - Building		4,000
		Depreciation Expense - Office Equipment		9,000
		Interest Expense		375