Question

The Angela’s home cleaning ltd provides home cleaning services. The following is the 1 March 2020 Trial Balance (TB). The company has not made all the March entries but the required info is given below. You will be asked to update the accounts as at 31 March 2020.

angela’s Cleaning COMPANY

Angela’s

Unadjusted Trial Balance

1 March 2020

            Cash...................................................................................... $ 5,700

            Accounts receivable...........................................................      1,800

            Cleaning supplies...............................................................         800

            Accounts payable...............................................................                              300

            Dividend payable................................................................                              500

            Dividends ............................................................................         500                                 Capital Stock ...............................................................................................      6,000

            Retained earnings...............................................................                           1,400

            Client revenue.....................................................................                           5,800

            Salaries expense................................................................      3,100

            Travel expense....................................................................      1,500

            Printing expense ................................................................         600

           

                                                                                                             $14,000       $14,000

the following transaction happened in march

1. Mar 10 Purchased a car for the business. Paid cash amounting to USD4,000
2. Mar 10 -Decided to give to its senior director gym membership for 12 months starting 1 Mar for USD600 for the year. This was paid on 10 March.
3. Mar. 15. Collected USD600 from client recorded on accounts receivable
4. Mar. 16 Issued shares for USD2,000
5. Mar. 16 Purchased cooking supplies for USD600 and paid for it via notes payable. The notes payable is due in 6 months time at interest rate of 4%.

ADJUSTING ENTRIES

6. Mar 31 Made an accrual for staff bonuses of USD1,000 payable in April.
7. Mar 31 Billed home owners on sales of USD2,000 and the amount if due in May 2020
8. Mar 31 Recorded and paid Mar salaries of USD700
9. Mar 31 Made an accrual for tax of USD400 and March telephone bill for USD120 .
10. Mar 31 wrote off bad debts of USD50 in accounts receivable.
11. Mar 31- Record interest for notes payable – item 5

Instructions

1. For each of the above data prepare journal entries and show the T accounts. 15%
2. Prepare a new trial balance after including these additional adjusting entries. 10%
3. Prepare an income statement 10%
4. Prepare a balance sheet 10%

Please show any working where required.

Answer 1

a.  

Date	General Journal	Debit	Credit
March 2020		$	$
10	Automobile	4,000
	Cash		4,000
10	Prepaid Employee Gym Membership Fees	600
	Cash		600
15	Cash	600
	Accounts Receivable		600
16	Cash	2,000
	Capital Stock		2,000
16	Cooking Supplies	600
	Notes Payable		600
Adjusting Entries
March 31	Salaries Expense	1,000
	Salaries Payable		1,000
March 31	Accounts Receivable	2,000
	Client Revenue		2,000
March 31	Salaries Expense	700
	Cash		700
March 31	Income Tax Expense	400
	Income Taxes Payable		400
March 31	Telephone Expense	120
	Accounts Payable		120
March 31	Bad Debt Expense	50
	Accounts Receivable		50
March 31	Interest Expense ( $ 600 x 4 % x 1/12 x 1/2)	1
	Interest Payable		1

b.

Angela's Cleaning Company Adjusted Trial Balance March 31, 2020
Accounts	Debit	Credit
	$	$
Cash	3,000
Accounts Receivable	3,150
Cleaning Supplies	800
Cooking Supplies	600
Prepaid Employees Gym Membership	600
Automobile	4,000
Accounts Payable		420
Salaries Payable		1,000
Income Taxes Payable		400
Interest Payable		1
Notes Payable		600
Dividends Payable		500
Capital Stock		8,000
Retained Earnings		1,400
Dividends	500
Client Revenue		7,800
Salaries Expense	4,800
Travel Expense	1,500
Printing Expense	600
Telephone Expense	120
Bad Debt Expense	50
Interest Expense	1
Income Tax Expense	400
Totals	$ 20,121	$ 20,121

c.

Angela's Cleaning Company Income Statement For the month ended March 31, 2020
Client Revenue		$ 7,800
Expenses
Salaries Expense	$ 4,800
Travel Expense	1,500
Printing Expense	600
Telephone Expense	120
Bad Debt Expense	50
Interest Expense	1
Income Tax Expense	400
Total Expenses		7,471
Net Income		$ 329

d.

Angela's Cleaning Company Balance Sheet March 31, 2020
Assets		Liabilities
Cash	$3,000	Accounts Payable	$ 420
Accounts Receivable	3,150	Salaies Payable	1,000
Cleaning Supplies	800	Income Taxes Payable	400
Cooking Supplies	600	Interest Payable	1
Prepaid Employee Gym Membership Fees	600	Dividends Payable	500
		Notes Payable	600
Automobile	4,000	Total Liabilities	2,921
		Stockholders Equity
		Capital Stock	8,000
		Retained Earnings	1,229
		Total Stockholders Equity	9,229
Total Assets	$ 12,150	Total Liabilities & Stockholders Equity	$ 12,150

Retained earnings = Beginning balance + net income - dividends = $ 1,400 + $ 329 - $ 500 = $ 1,229