Question

Jack opened a cleaning business on April 1, 2020. During April, the following transactions were completed.

April 1 Shareholders invested $12,000 cash in the business in exchange for ordinary shares.

     1 Borrowed $5,000 cash by signing a 6-month, 6%, $5,000 note payable. Interest will be paid the first day of each subsequent month.

     1 Purchased used truck for $8,000 cash.

     2. Paid $1,500 cash to cover rent from April 1 through June 31.

     3. Paid $2,400 cash on a 6-month insurance policy effective April 1.

    6. Purchasing cleaning supplies for $2,000 on account.

    14 Billed customers $3,200 for cleaning services performed.

    18 Paid $400 on account owed on cleaning supplies.

    20 Paid $1,450 cash for employee salaries.

    21 Collected $1,600 cash from customers billed on April 14.

    28 Billed customers $4,500 for cleaning services performed

    30 Paid $350 for gas and oil use in truck during month (use Maintenance and Repairs Expense)

    30 Declared and paid $900 cash dividend.

Instructions

   a. Journalize the April transactions

   b. Post to the ledge accounts (Use T-accounts)

   c. Prepare a trial at April 30.

   d. Journalize the following adjustments.

     1. Services performed but not billed and uncollected at April 30 were $180

     2. Depreciation on equipment for the month was $250.

     3. One-sixth of the insurance expired.

     4. An inventory count shows $260 of cleaning supplies on hand at April 30.

     5. Accrued but unpaid employee salaries were $1,180.

     6. One month of the prepaid rent has expired.

     7. One month of interest expense related to the note payable has accrued and will be paid May 1.

   e. Post adjusting entries to the T-accounts

   f. Prepare an adjusted trial balance.

   g. Prepare the income statement and a retained earnings statement for April and a classified statement of financial position at April 30.

   h. Journalize and post-closing entries and complete the closing process.

   I. Prepare a post-closing trial balance at April 30.

Answer 1