Question

Diane Lane began her consulting business, Lane Consulting on April 1, 2018. After one year of operation, the post-closing trial balance on March 31, 2019 was;

                                                            Debit                                                   Credit

Cash	26,300
Accounts Receivable	4,400
Supplies	2,250
Prepaid Rent	3,600
Prepaid Insurance	2,000
Office Equipment	15,000
Accumulated Depr-Office Equipment		1,200
Accounts Payable		750
Salary Payable		440
Unearned Fees		3,500
Diane Lane, Capital		47,660
Totals	53,550	53,550

During April 2019 Lane Consulting entered into the following transactions:

Apr 2    Received cash from clients as an advance payment for services to be provided in May   for $ 3,500.

Apr 5   Received cash from clients on account, $ 3,800.

Apr 9   Paid cash for a newspaper advertisement, $ 300.

Apr 13 Paid Office Stationary Company for part of the debt incurred last year, $ 400. When the   office supplies were initially purchased, they were on account.

Apr 15 Cash received for services provided $ 8,500.

Apr 16 Paid part-time receptionist for two weeks’ salary including the amount owing on March   31, 2019. The total payment was for $ 750.

Apr 17 Recorded cash from cash clients for fees earned during Apr 1-17 for $ 8,200.

Apr 20 Purchased supplies on account, $ 400.

Apr 21 Recorded services provided on account for the period Apr 16 – 20, $ 3,900.

Apr 25 Recorded cash from cash clients for fees earned for the period Apr 17-23, $ 5,100.

Apr 27 Received cash from clients on account, $ 950.

Apr 28 Paid part-time receptionist for two weeks’ salary, $ 750.

Apr 29 Paid telephone bill for April, $ 120.

Apr 30 Paid electricity bill for April, $ 290.

Apr 30 Recorded cash from cash clients for fees earned for the period Apr 26-30, $ 3,875.

Apr 30 Recorded services provided on account for the remainder of April, $ 3,200.

Apr 30 Diane withdrew $ 8,000 for personal use.

Instructions

1. Record the above transactions in the general journal. An explanation line is not required.
2. Post the beginning account balance and all of April’s transactions to T accounts. Prepare an unadjusted trial balance. Ensure debits equal credits. Remember that the cash T account is quite large so give yourself enough room.
3. At the end of April, the following adjustment data was assembled. Journalize the adjusting entries in the general journal and post to the T accounts. .

Apr 30 Insurance used up during April, $ 300.

Apr 30 Supplies remaining on hand at Apr 30^th are $ 600.

Apr 30 Office equipment depreciated during the month. Original cost of equipment is $ 14,500. Equipment expected to last 3 years and have a salvage value of $2,625. Calculate and record the monthly depreciation amount rounded to full dollars.

Apr 30 Accrued receptionist salary on Apr 30^th is $ 240.

Apr 30 Rent expired (used up) during April was $ 1,600.

Apr 30 Unearned fees remaining on April 30 are $ 2,000.

Instructions (continued)

4. Prepare an adjusted trial balance ensuring total debits equal total credits.
5. Prepare an Income Statement, a Statement of Owner’s Equity and a Balance Sheet for April 2019. Ensure you use the proper timing in your financial statement titles.
6. Record the closing journal entries into the general journal and post to the T Accounts. (Usually closing entries are completed at year-end not after 1 month. I am trying to save you some work).
7. Prepare a post-closing trial balance.
8. What is the current ratio at April 30^th?
9. What is the acid-test ratio at April 30^th?

Answer 1