Question

MIKE’S QUALITY REPAIR SERVICES

Accounting 101 Term Project

In this project, you will use the concepts you have learned in Chapters 1 – 6 to complete the accounting functions for a business for a single month. You will start with the initial investment of cash in the business, and end the month by preparing the month-end adjustments and financial statements. The purpose of this project is to bring together the concepts that you have learned so far in this class, and see how all of the pieces fit together.

CHART OF ACCOUNTS

Assets Revenue

111 Cash 411 Income from Services

112 Accounts Receivable

114 Supplies Expenses

116 Prepaid Insurance 511 Advertising Expense

121 Office Equipment 512 Supplies Expense

122 Accum. Depr., Office Equipment 513 Insurance Expense

123 Tools 514 Utilities Expense

124 Accum. Depr., Tools 515 Salaries Expense

125 Truck 516 Truck Expense

521 Depreciation Expense - Office Equipment

Liabilities 522 Depreciation Expense - Tools

211 Accounts Payable

Owner’s Equity

311 Mike Hammer, Capital

312 Mike Hammer, Drawing

330 Income Summary

Instructions

Download the Excel file found in Canvas, Mike’s Quality Repair Services.xlsx. You will complete all work for this assignment in that file, and upload it to Canvas when completed.

Journalize the transactions for the month of January, 2018, beginning on page GJ1. Be sure and list the Debit Account(s) first; Credit Account(s) next. Write a brief explanation for each transaction, and skip a line in-between transactions.

Post the journal entries to the general ledger accounts. Be sure and use the Post Reference #s for each posting. (Hint: the balance of the cash account after all journal entries have been posted should be $9,915).

Prepare the Trial Balance section of the worksheet.

Prepare the Adjustments section of the worksheet.

Compute and record the adjustment for supplies used during the month. An inventory showed supplies on hand of $250.

One month insurance has been used up.

Record the adjustment for depreciation of Office Equipment of $85 for the month.

Record the adjustment for depreciation of Tools of $125 for the month.

Complete the worksheet.

Prepare an Income Statement, Statement of Owner’s Equity, and Balance Sheet for the month. Be sure to add the date to each financial statement.

Journalize and post the Adjusting entries.

Journalize and post the Closing entries.

Prepare a Post-closing Trial Balance.

Transactions for the month:

You made the following transactions for Mike’s Quality Repair Services during the month of January:

Jan. 1 Invested $15,000 cash, and a truck with a fair market value of $8,500 into the business.

3 Paid $1800 to Liberty Mutual for a 1-year insurance policy. The policy is effective immediately. Ck# 1001

4 Bought tools from Sears on account, $7500, Inv. #X-1357

5 Bought computer system from Ben’s Computer Center, $5000, putting $2500 down and putting the balance on account, Ck. #1002, Inv. #Y-4152.

6 Bought supplies-Office Mart, $850, Ck. #1003.

7 Performed services for cash, $1,650.

10 Performed services on account, $1275.

12 Received and paid telephone bill, $420, ck#1004.

13 Bought supplies on account from Office Mart, $900, Inv. AB1477.

15 Received and paid the utility bill, $600, Ck. #1005.

15 Paid salary for office clerk, 1/1-1/15-$1000, Ck# 1006.

20 Received The Times Review bill for advertising for the month, $410, Inv. #TR198.

(Note that you did not PAY the bill – you only received it).

21 Performed services $7,250, received $2,250 cash, with the balance due in 30 days.

27 Received from clients $1,275, for work completed on January 10.

28 Paid for oil change on truck, $90, ck#1007.

29 Withdrew cash for personal use, $1500, Ck. #1008.

30 Paid salary for office clerk, 1/16-1/30, $1000, ck#1009.

30 Made partial payment of $500 to Office Mart for supplies purchased on January 13th, Ck#1010.

Answer 1

MIKES QUALITY SERVICES
DATE	ACCOUNT NAME	DEBIT	CREDIT
1-Jan	CASH	$ 15,000.00
	TRUCK	$    8,500.00
	TO CAPITAL ACCOUNT		$ 23,500.00
	(RECORDING OF CAPITAL INVESTMENT BY CASH & ASSET)
3-Jan	PREPAID INSURANCE	$    1,800.00
	TOCASH		$    1,800.00
	(PAYMENT OF INSURANCE PREMIUME)
4-Jan	TOOLS	$    7,500.00
	TO SEARS		$    7,500.00
	(PURCHASE OF ASSETS)
5-Jan	OFFICE EQUIPMENT	$    5,000.00
	TO CASH		$    2,500.00
	TO BENS COMPUTER CENTER		$    2,500.00
	(PURCHASE OF COMPUTER PARTIAL PAYMENT)
6-Jan	SUPPLIES	$       850.00
	TO CASH		$       850.00
7-Jan	CASH	$    1,650.00
	TO SERVICE INCOME		$    1,650.00
	(SERVICE INCOME)
10-Jan	DEBTORS	$    1,275.00
	TO SERVICE INCOME		$    1,275.00
	(SERVICE INCOME ON ACCOUNT)
12-Jan	TELEPHONE EXPENSES	$       420.00
	TO CASH		$       420.00
	(RECORDING OF TELEPHONE EXPENSES
13-Jan	SUPPLIES	$       900.00
	TO OFFICE MART		$       900.00
	(PURCHASE OF SUPPLIES ON ACCOUNT)
15-Jan	UTIL;ITY EXPENSES	$       600.00
	TO CASH		$       600.00
	(PAYMENT OF UTILITY BILL)
	SALARY	$    1,000.00
	TO CASH		$    1,000.00
	(PAYMENT OF SALARY)
20-Jan	ADVERTISEMENT	$       410.00
	TO THE TIMES REVIEW		$       410.00
	(RECORDING OF BILL FOR PAYMENT ADVERTISING)
21-Jan	CASH	$    2,250.00
	DEBTORS	$    5,000.00
	TO SERVICE INCOME		$    7,250.00
	(RECORDING OF INCOME)
27-Jan	CASH	$    1,275.00
	TO DEBTORS		$    1,275.00
	(RECEIPT OF TRADE RECEIVABLE)
28-Jan	MAINTENANCE EXPENSES	$          90.00
	TO CASH		$          90.00
	(OIL CHANGE)
29-Jan	DRAWINGS A/C	$    1,500.00
	TO CASH		$    1,500.00
	(DRAWINGS FOR PERSONAL USE)
30-Jan	SALARY	$    1,000.00
	TO CASH		$    1,000.00
	(OFFICE SALARY)
	OFFICE MART	$       500.00
	TOCASH		$       500.00
	( CASH PAYMENT TO TRADE PAYABLE)
31-Jan	SUPPLIES EXPENSES	$    1,500.00
	TO SUPPLIES		$    1,500.00
	ADJUSTENT OF SUPPLIES USED)
	INSURANCE	$       150.00
	TO PREPAID INSURANCE
	(USAGE OF INSURANCE)
	DEPRECIATION	$       210.00
	TO OFFICE EQUIPMENT		$          85.00
	TO TOOLS		$       125.00
	(BIENG DEPRECIATION)

UTILITY EXPENSES
15-Jan	CASH	$         600.00		PROFIT AND LOSS	$        600.00
SALARY
15-Jan	CASH	$      1,000.00
28-Jan	SLARY	$      1,000.00
ADVERTISEMENT EXP
20-Jan	THE TIMES REVIEW	$         410.00

TRAIL BALANCE
PARTICULARS	DEBIT	CREDIT
CAPITAL ACCOUNT		$   22,000.00
CASH	$             9,915.00
TRUCK	$             8,500.00
PREPAID INSURANCE	$             1,650.00
TOOLS	$             7,375.00
SEARS ACCOUNT		$      7,500.00
OFFICE EQUIPMENT	$             4,915.00
BENS COMPUTER		$      2,500.00
CLOSING INVENTORY	$                250.00
SERVICE INCOME		$   10,175.00
DEBTORS	$             5,000.00
TELEPHONE EXPENSES	$                420.00
OFFICE MART		$         400.00
UTILITY	$                600.00
SALARY	$             2,000.00
ADVERTISEMENT	$                410.00
TIMES REVIEW		$         410.00
INSURANCE	$                150.00
MAINTANANCE	$                   90.00
DEPRECIATION	$                210.00
SUPPLIES EXPENSES	$             1,500.00
	$          42,985.00	$   42,985.00

INCOME STATENT
PARTICLARS	AMOUNT	PARTICLUARS	AMOUNT
TELEPHONE EXPENSES	$        420.00	SERVICE INCOME	$ 10,175.00
UTILITY	$        600.00
SALARY	$    2,000.00
ADVERTISEMENT	$        410.00
INSURANCE	$        150.00
MAINTANANCE	$          90.00
DEPRECIATION	$        210.00
SUPPLIES EXPENSES	$    1,500.00
NET PROFIT	$    4,795.00
	$ 10,175.00		$ 10,175.00

BALANCE SHEET
LIABILITIES	AMOUNT	ASSETS	AMOUNT
CAPITAL ACCOUNT	$ 22,000.00	CASH	$    9,915.00
		FIXED ASSETS
REAINED EARNINGS	$    4,795.00	TRUCK	$    8,500.00
TRADE PAYABLES		TOOLS	$    7,375.00
SEARS ACCOUNT	$    7,500.00	OFFICE EQUIPMENT	$    4,915.00
BENS COMPUTER	$    2,500.00	CLOSING INVENTORY	$        250.00
OFFICE MART	$        400.00	DEBTORS	$    5,000.00
TIMES REVIEW	$        410.00	PREPAID INSURANCE	$    1,650.00
	$ 37,605.00		$ 37,605.00