(Learning Objectives 3, 4, 5: Adjusting the accounts; preparing the fi nancial statements;

closing the accounts) Refer to Exercise 2-36. Start from the trial balance and the posted T-accounts that Jerome Smith, Certifi ed Public Accountant, Professional Corporation (P.C.), prepared for his accounting practice at March 18. A professional corporation is not subject to income tax. Later in March, the business completed these transactions:

❙ Requirements 1. Journalize the transactions of March 21 through 31.

2. Post the March 21 to 31 transactions to the T-accounts, keying all items by date.

3. Prepare a trial balance at March 31.

4. At March 31, gathers the following information for the adjusting entries:

a. Accrued service revenue, $1,600

b. Earned $600 of the service revenue collected in advance on March 21

c. Supplies on hand, $100

d. Depreciation expense equipment, $40; furniture, $125

e. Accrued expense for secretary’s salary, $600 Make these adjustments in the adjustments columns and complete the adjusted trial balance at January 31.

5. Journalize and post the adjusting entries. Denote each adjusting amount as Adj and an account balance as Bal.

6. Prepare the income statement and statement of changes in equity of Jerome Smith Certifi ed Public Accountant, P.C., for the month ended March 31 and the classifi ed balance sheet at that date.

7. Journalize and post the closing entries at March 31. Denote each closing amount as Clo and an account balance as Bal.

Challenge Exercises