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ACC120 - Principles of Financial Accounting 2020 Mid-Term Problem Information Janet Stevens began her tax business,...
ACC120 - Principles of Financial Accounting 2020 Mid-Term Problem Information Janet Stevens began her tax business, Stevens Tax Service, on February 1, 2020. Below is the Chart of Accounts for the company: Acct # Account Title 11 Cash 12 Accounts receivable 14 Supplies 15 Prepaid Rent 16 Prepaid Insurance 18 Office Equipment 19 Accumulated Depreciation 21 Accounts Payable 23 Unearned Fees 31 Janet Stevens, Capital 32 Janet Stevens, Drawing 41 Fees Earned 51 Salary Expense 52 Rent Expense 53 Supplies Expense 54 Depreciation Expense 55 Insurance Expense 59 Miscellaneous Expense After closing the books at the end of March, Stevens Tax Service had the following post-closing trial balance: Stevens Tax Service Post-Closing Trial Balance March 31, 2020 Acct # Account Title Debit Credit 11 Cash 12,800 12 Accounts Receivable 9,750 14 Supplies 725 15 Prepaid Rent 5,000 16 Prepaid Insurance 2,250 18 Office Equipment 10,500 19 Accumulated Depreciation 700 21 Accounts Payable 1,510 23 Unearned Fees 1,800 31 Janet Stevens, Capital 37,015 Totals 41,025 41,025 2 During the month of April, 2020, Stevens Tax Service entered into the following transactions: Apr. 3. Received cash from clients as advance payments for services to be provided and recorded it as unearned fees, $4,500.
5. Received cash from clients on account, $5,550.
8. Paid cash for an online advertisement for $600.
10. Paid Office Depot on account, $1,000.
12. Recorded services provided on account for the period of April 1-15, $9,450.
14. Paid receptionist for two weeks’ salary $1,500.
15. Recorded cash from cash clients for fees earned during the period of April 1-15, $8,300.
16. Purchased office supplies on account, $1,500.
20. Paid telephone bill, $500.
21. Paid electricity bill, $720.
25. Recorded cash received from clients on account, $6,200.
28. Paid receptionist for two weeks’ pay, $1,500.
30. Recorded cash from cash clients for fees earned for the period March 16-30, $8,900.
30. Recorded services on account for February 16-30, $10,600. 30. Janet withdrew $9,000 for personal use. Instructions:
1. Journalize each of the April transactions in the two-column journal provided. Record transactions for April 1-15 on page 5 of the journal. Record transactions for April 16-30 on page 6 of the journal. Only use accounts listed in the Chart of Accounts.
2. Post the transactions from the journal to the general ledger accounts.
3. Prepare an unadjusted trial balance on the worksheet provided.
4. At the end of April, the following adjustment data were assembled. Analyze and use this data to prepare and journalize the adjusting journal entries in journal page 7: a. Insurance expired during April, $250. b. Supplies on hand on April 30, $l,250. c. Depreciation on office equipment for April, $350. d. Rent expired during April, $500. e. Unearned fees on April 30, $3,400.
5. Enter the adjusting entries on the worksheet and complete all ten columns of the worksheet.
6. Post the adjusting journal entries in the general ledger accounts.
7. Prepare an income statement, statement of owner’s equity, and classified balance sheet.
8. Prepare and journalize the closing entries on page 8 of the journal.
9. Post the closing entries in the general ledger accounts.
10. Prepare a post-closing trial balance as of April 30, 2020.
Solutions
Expert Solution
1)
| Steven Tax service | |||
| Journal entries | |||
| For the month of April 2020 | |||
| Date | Particular | Debit ($) | Credit($) |
| Apr-03 | Cash | 4500 | |
| To unearned fees | 4500 | ||
| Apr-05 | Cash | 5550 | |
| To accounts receivable | 5550 | ||
| Apr-08 | Miscellaneous expenses | 600 | |
| To Cash | 600 | ||
| Apr-10 | Accounts payable | 1000 | |
| To Cash | 1000 | ||
| Apr-12 | Accounts receivable | 9450 | |
| To service revenue | 9450 | ||
| Apr-14 | Salaries expenses | 1500 | |
| To cash | 1500 | ||
| Apr-15 | Cash | 8300 | |
| To service revenue | 8300 |
| Apr-16 | Supplies | 1500 | |
| To accounts payable | 1500 | ||
| Apr-20 | Miscellaneous expenses | 500 | |
| To Cash | 500 | ||
| Apr-21 | Miscellaneous expenses | 720 | |
| To Cash | 720 | ||
| Apr-25 | Cash | 6200 | |
| To Accounts receivable | 6200 | ||
| Apr-28 | Salaries expenses | 1500 | |
| To Cash | 1500 | ||
| Apr-30 | Cash | 8900 | |
| To service revenue | 8900 | ||
| Apr-30 | Accounts receivable | 10600 | |
| To service revenue | 10600 | ||
| Apr-30 | Drawings | 9000 | |
| To Cash | 9000 |
2)
| Steven Tax service | |||
| General Ledger | |||
| Cash | |||
| Particular | Debit($) | Particular | Credit($) |
| To balance | 12800 | By miscellaneous | 1820 |
| To unearned fees | 4500 | (600+500+720) | |
| To accounts receivable | 11750 | By accounts payable | 1000 |
| (5550+6200) | By drawings | 9000 | |
| To service revenue | 17200 | To salary expenses | 3000 |
| (8300+8900) | (1500+1500) | ||
| By balance | 31430 | ||
| 46250 | 46250 | ||
| Accounts receivable | |||
| Particular | Debit($) | Particular | Credit($) |
| To balance | 9750 | By cash | 11750 |
| To service revenue | 20050 | (5550+6200) | |
| (9450 + 10600) | By balance | 18050 | |
| 29800 | 29800 | ||
| Supplies | |||
| Particular | Debit($) | Particular | Credit($) |
| To balance | 725 | By balance | 2225 |
| To accounts payable | 1500 | ||
| 2225 | 2225 | ||
| Accounts payable | |||
| Particular | Debit($) | Particular | Credit($) |
| To cash | 1000 | By balance | 1510 |
| 2010 | By supplies | 1500 | |
| 3010 | 3010 | ||
| Unearned fees | |||
| Particular | Debit($) | Particular | Credit($) |
| To balance | 6300 | By balance | 1800 |
| By cash | 4500 | ||
| 6300 | 6300 | ||
| Service revenue | |||
| Particular | Debit($) | Particular | Credit($) |
| To balance | 37250 | By cash | 17200 |
| (8300+8900) | |||
| By accounts receivable | 20050 | ||
| (9450 + 10600) | |||
| 37250 | 37250 | ||
| Miscellaneous expenses | |||
| Particular | Debit($) | Particular | Credit($) |
| To cash | By balance | 1820 | |
| Advertisment | 600 | ||
| Electricity | 720 | ||
| Telephone | 500 | ||
| Salary Expense | |||
| Particular | Debit($) | Particular | Credit($) |
| To cash | 3000 | By balance | 3000 |
| (1500+1500) |
3)
| Steven Tax service | ||
| Unadjusted Trial Balance | ||
| Particular | Debit ($) | Credit($) |
| Cash | 31430 | |
| acconts receivable | 18050 | |
| supplies | 2225 | |
| prepaid rent | 5000 | |
| prepaid insurance | 2250 | |
| office equipment | 10500 | |
| accumulated depreciation | 700 | |
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11 Cash
12 Accounts receivable
14 Supplies
15 Prepaid Rent
16 Prepaid Insurance
18 Office Equipment
19 Accumulated Depreciation
21 Accounts Payable
23 Unearned Fees
31 Janet Stevens, Capital
32 Janet Stevens, Drawing
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