Lee Chang opened Changs Cleaning Service on July 1, 2010. During July the following transactions were completed.

Question:

Lee Chang opened Chang’s Cleaning Service on July 1, 2010. During July the following transactions were completed.

July 1 Chang invested $20,000 cash in the business.

1 Purchased used truck for $9,000, paying $4,000 cash and the balance on account.

3 Purchased cleaning supplies for $2,100 on account.

5 Paid $1,800 cash on one-year insurance policy effective July 1.

12 Billed customers $4,500 for cleaning services.

18 Paid $1,500 cash on amount owed on truck and $1,400 on amount owed on cleaning supplies.

20 Paid $2,000 cash for employee salaries.

21 Collected $3,400 cash from customers billed on July 12.

25 Billed customers $9,000 for cleaning services.

31 Paid gas and oil for month on truck $350.

31 Withdraw $1,600 cash for personal use.

The chart of accounts for Chang’s Cleaning Service contains the following accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation—Equipment, No. 201 Accounts Payable, No. 212 Salaries Payable, No. 301 Lee Chang, Capital; No. 306 Lee Chang, Drawing; No. 350 Income Summary, No. 400 Service Revenue, No. 633 Gas & Oil Expense, No. 634 Cleaning Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries Expense.

Instructions

(a) Journalize and post the July transactions. Use page J1 for the journal and the three-column form of account.

(b) Prepare a trial balance at July 31 on a worksheet.

(1) Services provided but unbilled and uncollected at July 31 were $2,700.

(2) Depreciation on equipment for the month was $500.

(3) One-twelfth of the insurance expired.

(4) An inventory count shows $700 of cleaning supplies on hand at July 31.

(5) Accrued but unpaid employee salaries were $1,000.

(d) Prepare the income statement and owner’s equity statement for July and a classified balance sheet at July 31.

(e) Journalize and post adjusting entries. Use page J2 for the journal.

(f) Journalize and post closing entries and complete the closing process. Use page J3 for the journal.

(g) Prepare a post-closing trial balance at July 31.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...