Lena Kuznetsova provides coaching and mentoring services to individuals and companies. She operates the business as a proprietorship, under the name LVK Coaching Services, which has a December 31 year end. On November 30, 2024, the company’s general ledger included the following accounts (all accounts have normal balances):

December transactions were as follows:
Dec. 1 Paid December rent on her office space, $525.

1 Purchased additional equipment with a manufacturer’s suggested price of $3,270. After negotiations with the retailer, paid $1,270 cash and signed a note payable for $2,000.

4 Collected $1,880 from customers in payment of their accounts.

7 Paid the $308 monthly insurance premium.

8 Purchased $135 of supplies on account.

10 Paid $2,140 of the accounts payable from November.

12 Finished a coaching contract with a client for $765. The client had paid her in November. In November, Lena had recorded the $765 as a liability, Unearned Revenue. By finishing the coaching contract, she has “paid” this obligation.)

20 Received $3,480 cash from clients for services provided in December.

21 Paid office expenses of $115.

24 Withdrew $2,860 for personal use.

28 Billed clients $2,280 for coaching services provided in December. These clients will pay in January.

29 Received $560 cash advance from a client for a coaching contract that will start in January.

30 Paid part-time office assistant $655 cash.

31 Made a $170 payment on the note payable. Of this amount, $10 is interest and the remainder is a principal payment on the note payable.

Instructions

a. Using T accounts, enter the November 30 balances in the ledger accounts.

b. Journalize the December transactions.

c. Post the December journal entries to the T accounts. Add new accounts if needed.

d. Prepare a trial balance at December 31, 2024.

Taking It Further

Comment on the company’s cash balance. What concerns and suggestions do you have for the company to consider in January?

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Accounts payable Accounts receivable Advertising expense Cash Equipment Insurance expense L. Kuznetsova, capital $ 4,245 2,110 1,265 3,165 17,730 3,388 19,300 L. Kuznetsova, drawings Rent expense Salaries expense Service revenue Supplies Unearned revenue $31,190 5,775 6,310 47,963 1,340 765