Question

J. Jones opened a consulting business on January 2, 2019. He hired an old friend. His friend had the right to buy 25% of the company for $100,000. The following transactions occurred in January and February:

January:

2     Cash injection of $90,000 from Jones in cash. $40,000 is to be treated as a shareholder loan. The balance as a capital investment. The cash was deposited in the company bank account. Jones also gave a computer equipment worth $2,000, but wanted nothing in return for it.

3     Purchase of $570 of supplies for cash and $8,200 worth of furniture on account.

3     Signed a 3-year lease with monthly rates of $1,110. Paid rent for January.

4     Performed consulting services for Client 1 and received $2,500 in cash.

7     Paid $33,000 cash to acquire land for a future office site.

11   Consulted for Client #2 and sent an invoice to the client for $2,100.

12   Bought a used company car for $5,000. Salvage value estimated at $2,000 & useful life is 3 years.

15   Paid administrator a salary of $1975.

16 Paid for the furniture bought on account on January 3.

18   Received partial payment of $600 from client #2.

19   Provide major consulting to client #4, Invoiced for $11,350.

22   Paid utility bills totalling $300.

29   Received $2,700 payment for additional consulting provided to client #4.

31   Paid administrator a salary of $1975.

31   Jones withdrew $12,000 for personal use.

February:

1     Purchased additional $250 in supplies.

1     Signed an insurance policy costing $3,600 over 3 years. Paid for February, March and April.

2     Client #4 paid half of its bill.

5     Bought supplies on account required for a client presentation. Supplies cost $250. Invoiced Client #5 a total of $1,400 for the presentation.

7     Paid administrator a salary of $1,875.

16 Received balance owing from client #2.

19   Received invoice for utility bills totalling $500.

28   Administrator was not working out.   Worked until end of February but, as yet, has not been paid.

28   Jones estimates the same amount of supplies were used for each month. The remaining balance of supplies when counted on February 28 was $200.

Status of J. Jones International:

The administrator was to do the books, but did nothing. Jones is not a happy camper. He has heard you are

an up and coming accounting whiz.

Your Assignment:

Your assignment is to prepare a ‘full accounting’ for each of January and February. Including in this work are journal entries, T-accounts, trial balances, adjusting entries, adjusted trial balances, financial statements and closing entries.

Notes:

1. Include a cover sheet and table of contents
2. After each journal entry, draw the ‘balance sheet diagram used in class’ (as a t-account)and show the impacts on the balance sheet of the entries being posted.
3. Do not try to cram information. Use more sheets if possible.
4. If your package is not stapled, one mark will be deducted.

Opening Balances for February

Cash                                                                24,650

Accounts Receivable                                     11,950

Supplies (Asset)                                              400

Computers                                                      2,000

Accumulated Amortization - Computer          79

Vehicles                                                          5,000

Accumulated Amortization - Vehicles             111

Furniture                                                          2,800

Accumulated Amortization - Furniture            22

Land                                                                38,000

Accounts Payable                                           750

J. Jones, Capital                                             83,838

           

The client is in January transaction but I just want February Journal transactions, ledger account(t-account), Trial balance and Adjusted trial balance with closing balance

Answer 1

Journal Entries:

Date	Particulars	Debit	Credit
Feb 1	Supplies	250
	Cash		250
	(To record purchase of supplies)
Feb 1	Prepaid Insurance (3,600/3)*3/12	300
	Cash		300
	(To record insurance paid for 3 months)
Feb 2	Cash (11,350/2)	5,675
	Accounts Receivable		5,675
	(To record 50% payment received from client 4)
Feb 5	Supplies	250
	Accounts Receivable	1,400
	Accounts Payable		250
	Revenue		1,400
	(To record Supplies puchased and revenue on account)
Feb 7	Salary Expense	1,875
	Cash		1,875
	(To record administrator's salary paid)
Feb 16	Cash (2,100-600)	1,500
	Accounts Receivable		1,500
	(To record balance received from client 4)
Feb 19	Utility Expenses	500
	Utility Expenses Payable		500
	(To record utility expenses for the month)
Feb 28	Salary Expenses	1,875
	Salary Payable		1,875
	(To record salary to administrator due but not paid)
Feb 28	Supplies Expenses (400+250+250-200)	700
	Supplies		700
	(To record supplies expenses for the month of february)

Ledger Accounts:

Date	Particulars	$	Date	Particulars	$
Cash
Feb 1	Op. Bal	24,650	Feb 1	Supplies (Asset)	250
Feb 2	Accounts Receivable	5,675	Feb 1	Prepaid Insurance	300
Feb 16	Accounts Receivable	1,500	Feb 11	Salary	1,875
			Feb 28	Cl. Bal	29,400
		31,825			31,825
Accounts Receivable
Feb 1	Op. Bal	11,950	Feb 2	Cash	5,675
Feb 5	Revenue	1,400	Feb 16	Cash	1,500
			Feb 28	Cl. Bal	6,175
		13,350			13,350
Supplies (Asset)
Feb 1	Op. Bal	400	Feb 28	Supplies Expenses	700
Feb 1	Cash	250
Feb 5	Accounts Payable	250	Feb 28	Cl. Bal	200
		900			900
Computers
Feb 1	Op. Bal	2,000	Feb 28	Cl. Bal	2,000
		2,000			2,000
Accumulated Amortization - Computer
Feb 28	Cl. Bal	79	Feb 1	Op. Bal	79
		79			79
Vehicles
Feb 1	Op. Bal	5,000	Feb 28	Cl. Bal	5,000
		5,000			5,000
Accumulated Amortization - Vehicles
Feb 28	Cl. Bal	111	Feb 1	Op. Bal	111
		111			111
Furniture
Feb 1	Op. Bal	2,800	Feb 28	Cl. Bal	2,800
		2,800			2,800
Accumulated Amortization - Furniture
Feb 28	Cl. Bal	22	Feb 1	Op. Bal	22
		22			22
Land
Feb 1	Op. Bal	38,000	Feb 28	Cl. Bal	38,000
		38,000			38,000
Accounts Payable
			Feb 1	Op. Bal	750
Feb 28	Cl. Bal	1,000	Feb 5	Supplies (Asset)	250
		1,000			1,000
Capital
Feb 28	Cl. Bal	83,838	Feb 1	Op. Bal	83,838
		83,838			83,838
Prepaid Insurance
Feb 1	Cash	300	Feb 28	Cl. Bal	300
		300			300
Revenue
Feb 28	Income Summary	1,400	Feb 5	Accounts Receivable	1,400
		1,400			1,400
Salary
Feb 7	Cash	1,875
Feb 28	Salary Payable	1,875	Feb 28	Income Summary	3,750
		3,750			3,750
Utility Expensees
Feb 19	Utility Exp Payable	500	Feb 28	Income Summary	500
		500			500
Utility Expenses Payable
Feb 28	Cl. Bal	500	Feb 19	Utility Expenses	500
		500			500
Salary Payable
Feb 28	Cl. Bal	1,875	Feb 28	Salary Expenses	1,875
		1,875			1,875
Supplies (Expenses)
Feb 28	Supplies (Asset)	700	Feb 28	Income Summary	700
		700			700

Trial Balance:

Particulars	Debit	Credit
Cash	29,400
Accounts Receivable	6,175
Supplies (Asset)	200
Computers	2,000
Vehicles	5,000
Furniture	2,800
Land	38,000
Prepaid Insurance	300
Salary	3,750
Utility Expenses	500
Supplies (Expenses)	700
Revenue		1,400
Accounts Payable		1,000
Capital		83,838
Acc. Amort - Computer		79
Acc. Amort - Vehicles		111
Acc. Amort - Furniture		22
Salary Payable		1,875
Utility Expenses Payable		500
TOTAL	88,825	88,825

Date	Particulars	$	Date	Particulars	$
Cash
Feb 1	Op. Bal	24,650	Feb 1	Supplies (Asset)	250
Feb 2	Accounts Receivable	5,675	Feb 1	Prepaid Insurance	300
Feb 16	Accounts Receivable	1,500	Feb 11	Salary	1,875
			Feb 28	Cl. Bal	29,400
		31,825			31,825
Accounts Receivable
Feb 1	Op. Bal	11,950	Feb 2	Cash	5,675
Feb 5	Revenue	1,400	Feb 16	Cash	1,500
			Feb 28	Cl. Bal	6,175
		13,350			13,350
Supplies (Asset)
Feb 1	Op. Bal	400	Feb 28	Supplies Expenses	700
Feb 1	Cash	250
Feb 5	Cash	250	Feb 28	Cl. Bal	200
		900			900
Computers
Feb 1	Op. Bal	2,000	Feb 28	Cl. Bal	2,000
		2,000			2,000
Accumulated Amortization - Computer
			Feb 1	Op. Bal	79
Feb 28	Cl. Bal	158	Feb 28	Amortization Exp	79
		158			158
Vehicles
Feb 1	Op. Bal	5,000	Feb 28	Cl. Bal	5,000
		5,000			5,000
Accumulated Amortization - Vehicles
			Feb 1	Op. Bal	111
Feb 28	Cl. Bal	222	Feb 28	Amort. Exp.	111
		222			222
Furniture
Feb 1	Op. Bal	2,800	Feb 28	Cl. Bal	2,800
		2,800			2,800
Accumulated Amortization - Furniture
			Feb 1	Op. Bal	22
Feb 28	Cl. Bal	44	Feb 28	Amort. Exp.	22
		44			44
Land
Feb 1	Op. Bal	38,000	Feb 28	Cl. Bal	38,000
		38,000			38,000
Accounts Payable
Feb 28	Cl. Bal	750	Feb 1	Op. Bal	750
		750			750
Capital
Feb 28	Cl. Bal	83,838	Feb 1	Op. Bal	83,838
		83,838			83,838
Prepaid Insurance
Feb 1	Cash	300	Feb 28	Insurance Expense	100
			Feb 28	Cl. Bal	200
		300			300
Revenue
Feb 28	Income Summary	1,400	Feb 5	Accounts Receivable	1,400
		1,400			1,400
Salary
Feb 7	Cash	1,875
Feb 28	Salary Payable	1,875	Feb 28	Income Summary	3,750
		3,750			3,750
Utility Expensees
Feb 19	Utility Exp Payable	500	Feb 28	Income Summary	500
		500			500
Utility Expenses Payable
Feb 28	Cl. Bal	500	Feb 19	Utility Expenses	500
		500			500
Salary Payable
Feb 28	Cl. Bal	1,875	Feb 28	Salary Expenses	1,875
		1,875			1,875
Supplies (Expenses)
Feb 28	Supplies (Asset)	700	Feb 28	Income Summary	700
		700			700
Amortization Expense
Feb 28	Acc. Amort. - Computer	79
Feb 28	Acc. Amort - Vehicles	111
Feb 28	Acc, Amort - Furniture	22	Feb 28	Income Summary	212
		212			212
Insurance Expense
Feb 28	Prepaid Insurance	100	Feb 28	Income Summary	100
		100			100

Adjusted Trial Balance:

Particulars	Debit	Credit
Cash	29,400
Accounts Receivable	6,175
Supplies (Asset)	200
Computers	2,000
Vehicles	5,000
Furniture	2,800
Land	38,000
Prepaid Insurance	200
Salary	3,750
Utility Expenses	500
Supplies (Expenses)	700
Insurance Expense	100
Amortization Expense	212
Revenue		1,400
Accounts Payable		1,000
Capital		83,838
Acc. Amort - Computer		158
Acc. Amort - Vehicles		222
Acc. Amort - Furniture		44
Salary Payable		1,875
Utility Expenses Payable		500
TOTAL	89,037	89,037