Question

Mike Greenberg opened Bramble Window Washing Inc. on July 1, 2017. During July, the following transactions were completed.

July 1		Issued 14,900 shares of common stock for $14,900 cash.
1		Purchased used truck for $9,920, paying $2,480 cash and the balance on account.
3		Purchased cleaning supplies for $1,120 on account.
5		Paid $2,280 cash on a 1-year insurance policy effective July 1.
12		Billed customers $4,590 for cleaning services performed.
18		Paid $1,240 cash on amount owed on truck and $620 on amount owed on cleaning supplies.
20		Paid $2,480 cash for employee salaries.
21		Collected $1,980 cash from customers billed on July 12.
25		Billed customers $3,100 for cleaning services performed.
31		Paid $360 for maintenance of the truck during month.
31		Declared and paid $740 cash dividend.

The chart of accounts for Bramble Window Washing contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Equipment, Accumulated Depreciation—Equipment, Accounts Payable, Salaries and Wages Payable, Common Stock, Retained Earnings, Dividends, Income Summary, Service Revenue, Maintenance and Repairs Expense, Supplies Expense, Depreciation Expense, Insurance Expense, and Salaries and Wages Expense.

1. Journalize the July transactions.

2. Post to the ledger accounts.

3. Prepare a trial balance at July 31.

4.

Journalize the following adjustments.

(1)		Services performed but unbilled and uncollected at July 31 were $2,110.
(2)		Depreciation on equipment for the month was $220.
(3)		One-twelfth of the insurance expired.
(4)		A count shows $400 of cleaning supplies on hand at July 31.
(5)		Accrued but unpaid employee salaries were $500.

5.

Post adjusting entries to the T-accounts.

Cash
7/1	14,900	7/1	2,480
7/21	1,980	7/5	2,280
		7/18	1,860
		7/20	2,480
		7/31	360
		7/31	740
7/31 Bal.	6,680

6. Prepare an adjusted trial balance.

7. Prepare the income statement for July.

8. Prepare a retained earnings statement for July. (List items that increase retained earnings first.)

9. Prepare a classified balance sheet at July 31. (List Current Assets in order of liquidity.)

10. Journalize and post closing entries and complete the closing process.

Answer 1

1)

July	Particulars	Debit	Credit
1	Cash	14900
	Common stock		14900
1	Equipment	9920
	Cash		2480
	Accounts payable		7440
3	Supplies	1120
	Accounts payable		1120
5	Prepaid insurance	2280
	Cash		2280
12	Accounts receivable	5490
	Service renenue		5490
18	Accounts payable	1860
	Cash		1860
20	Salaries and wages expense	2480
	Cash		2480
21	Cash	1980
	Accounts receivable		1980
25	Accounts receivable	3100
	Service renenue		3100
31	Maintenance and repairs expense	360
	Cash		360
31	Dividends	740
	Cash		740

2) & 5)

Cash
Common stock	14,900	Equipment	2480
Accounts receivable	$    1,980	Prepaid insurance	$    2,280
		Accounts payable	1860
		Salaries and wages expense	$    2,480
		Maintenance and repairs expense	$        360
		Dividend	$        740
7/31 Bal.	$    6,680

Accounts Receivable
7/12	$    5,490	7/21	1980
7/25	$    3,100
7/31	$    2,110
Balance	$    8,720

Supplies
Accounts payable	$    1,120	Supplies expense	720
Balance	$        400

Equipment
Cash	$    2,480
Accounts payable	$    7,440
Balance	$    9,920

Prepaid insurance
Cash	$    2,280	Insurance expense	$        190
Balance	$    2,090		0

Accounts Payable
Cash	$    1,860	Equipment	$    7,440
		Supplies	$    1,120
Balance	0		$    6,700

Salaries and wages payable
		Salaries and wages expense	$        500
Balance	0		$        500

Accumulated depreciation- Equipment
		Depreciation expense	$        220
Balance	0		$        220

Unbilled revenue
		Accounts receivable	$    2,110
Balance	0		$    2,110

Common stock
		Cash	$ 14,900
Balance			$ 14,900

Dividends
Cash	$        740	Retained earnings	740
Balance	$           -

Service Revenue
Income summary	$    8,590	Accounts receivable	$    5,490
		Accounts receivable	$    3,100
Balance			$           -

Salaries and Wages expense
Cash	$    2,480	Income summary	$    2,980
Salaries and wages payable	$        500
Balance	$           -

Maintenance and repairs expense
Cash	$        360	Income summary	$        360
Balance	$           -

Insurance expense
Prepaid insurance	$        190	Income summary	$        190
Balance	$           -

Supplies expense
Supplies	$        720	Income summary	$        720
Balance	$           -

Depreciation expense
Accumulated depreciation- Equipment	$        220	Income summary	$        220
Balance	$           -

Income summary
Service revenue	$    8,590	Maintenance and repairs expense	$        360
Retained earnings	$    4,120	Supplies expense	$        720
		Depreciation expense	$        220
		Insurance expense	$        190
		Salaries and wages expense	$    2,980
Balance	0		$           -

Retained earnings
Dividend	$        740	Income summary	$    4,120
Balance	0		$    3,380

3)

Trail Balance	Debit	Credit
Cash	$   6,680
Accounts receivable	$   8,720
Supplies	$       400
Prepaid insurance	$   2,090
Equipment	$   9,920
Accumulated depreciation- Equipment		$             220
Accounts payable		$         6,700
Salaries and wages payable		$             500
Unbilled revenue		$         2,110
Common stock		$       14,900
Dividends	$       740
Service revenue		$         8,590
Maintenance and repairs expense	$       360
Supplies expense	$       720
Depreciation expense	$       220
Insurance expense	$       190
Salaries and wages expense	$   2,980
Totals	$ 33,020	$       33,020

4)

1	Accounts receivable	2110
	Unbilled revenue		2110
2	Depreciation expense	220
	Accumulated depreciation- Equipment		220
3	Insurance expesne	190
	Prepaid insurance		190
4	Supplies expesne	720
	Supplies		720
5	Salaries and wages expense	500
	Salaries and wages payable		500

6)

Trail Balance	Debit	Credit
Cash	$   6,680
Accounts receivable	$   8,720
Supplies	$       400
Prepaid insurance	$   2,090
Equipment	$   9,920
Accumulated depreciation- Equipment		$             220
Accounts payable		$         6,700
Salaries and wages payable		$             500
Unbilled revenue		$         2,110
Common stock		$       14,900
Retained earnings		$         3,380
Totals	$ 27,810	$       27,810

7)

Income statement
Service renenue	$   8,590
Expenses:
Maintenance and repairs expense	$       360
Supplies expense	$       720
Depreication expense	$       220
Insurance expense	$       190
Salaries and wages expense	$   2,980
Total expense	$   4,470
Net income	$   4,120

8)

Retained earnings:
Net income	$ 4,120
Less: Dividend	$   -740
Retained earnings	$ 3,380

9)

Classified Balance Sheet:
Assets:
Cash	$   6,680
Accounts receivable	$   8,720
Supplies	$       400
Prepaid insurance	$   2,090
Equipment (9920-220)	$   9,700
Total	$ 27,590
Liabilities:
Accounts payable	$   6,700
Salaries and wages payable	$       500
Ubilled revenue	$   2,110
Common stock	$ 14,900
Retained earnings	$   3,380
Total	$ 27,590

10)

Income Summary	$ 4,470
Maintenance and repairs expense		$     360
Supplies expense		$     720
Depreication expense		$     220
Insurance expense		$     190
Salaries and wages expense		$ 2,980
(Closing expenses)
Service revenue	$ 8,590
Income Summary		$ 8,590
(Closing income summary)
Income summary	$ 4,120
Retained earnings		$ 4,120
(Closing of income summary)
Retained earnings	$     740
Dividend		$     740
(Dividend accounted clsoed to retained earnings)