Question

The Complete Accounting Cycle

On April 1, Mr. Oscar Matthews Opened up Oscar’s Home R & M, as a sole proprietor. During April he completed the following transactions:

April    1        Invested $40,000 cash in the business.

2        Purchased a lightly used pickup truck for $25,000, paying $6,000 cash and the balance on account.

3        Purchased supplies for $5,100 on account.

5        Paid $2,400 cash on a 1-year insurance policy effective April 1.

12        Billed customers $6,400 for home repair and maintenance services.

18        Paid $4,000 cash on amount owed on van and $2,100 on amount owed on supplies.

20        Paid $4,000 cash for employee salaries and wages.

21        Collected $4,000 cash from customers billed on April 12.

25        Billed customers an additional $8,000 for services.

30        Paid $400 for the monthly gasoline bill for the van.

30        Withdrew $1,800 cash for personal use.

Chart of Accounts
Account #	Account Name		Account #	Account Name
101	Cash		306	Owner’s Drawing
112	Accounts Receivable		350	Income Summary
126	Supplies		400	Service Revenue
130	P/P Insurance		631	Supplies Exp.
157	Equipment		633	Gasoline Exp.
158	Accum. Depr. – Equip.		711	Depr. Exp.
201	Account Payable		722	Insurance Exp.
212	Salaries & Wages Payable		726	Salaries & Wages Exp.
301	Owner’s Capital

Instructions:

This project, which must be completely typewritten, covers the entire accounting cycle. (Blank accounting forms may be downloaded from the blackboard). Hand written (in whole or in part) submittals will not be accepted and will receive a grade of zero.

1. Journalize and post the April transactions shown above.
2. Journalize and post the following adjustments:
   1. Unbilled and uncollected revenue for services performed on April 30 were $3,500.
   2. Depreciation on equipment for the month was $400.
   3. Expired insurance (hint: think).
   4. An inventory count shows $1,000 of supplies on hand on April 30.
   5. Accrued but unpaid employee salaries were $1,000.

1. Submit: 1. Adjusted Balance Sheet. 2. Income Statement. 3. Balance Sheet

Answer 1