Part 1: Ro Barry is a skin care specialist. During the month of June she started a new incorporated spa business with the following transactions:

June 1 Ro began her business by finding investors to contribute $10,000 into a checking account in the name of the corporation in exchange for 1,000 shares of common stock of the corporation.
1. Purchased a new massage table (fixed asset) costing $24,000. Paid $4,000 cash and signed a $20,000 note payable for the balance. The note carries an interest rate of 12% (1% per month) and requires interest to be paid monthly. The first interest payment is due July 1.
2. Purchased a one year insurance policy for $1,200. The policy begins immediately.
4. Purchased supplies on account for $500.
5. Completed a wedding party prep and billed the customer $1,200.
8. Hired an assistant at $10 per hour.
10. Purchased supplies for $200 in cash.
11. Received a $1,200 check from the customer billed on June 5.
14. Paid the assistant $250 for 25 hours of work.
22. Received a telephone bill for $60, due next month.
27. Received a $1,000 deposit from a customer for a large spa package that will not be started or completed until the following month.

REQUIRED

1. Journalize the June transactions.
2. Post the June entries to the ledger.
3. Prepare a trial balance as of June 30 ^th .

Part 2

At the end of the month R. Barry decided to prepare the financial statements for the company to demonstrate the strong opening month that the business incurred. Before creating the statements, Ro ensured that all of the accounting information was up-to-date. During this process she noted that:

• At the end of the month the assistant had worked 80 hours for which he had not been paid. He will be paid on the first Friday in July.
• The massage table will be depreciated, using the straight-line method, over a 5 year period (60 months) using no salvage value.
• An inspection of the supplies on hand as of June 30 ^th indicated that $300 of supplies remain.
• A dividend of $500 was declared but not scheduled to be paid until mid-July.

REQUIRED

1. Journalize all required adjusting entries for the month of June (including those that may not be explicitly listed)
2. Post the adjusting entries to the ledger.
3. Prepare an adjusted trial balance as of June 30 ^th .
4. Prepare an Income Statement, Statement of Shareholders’ Equity, and Balance Sheet for the period ending June 30.
5. For the purposes of this exercise, assume that the company’s accounting cycle ends on June 30 ^th . Journalize the closing entries for the spa.
6. Post the closing entries to the ledger
7. Prepare the post-closing trial balance.

Part 3

July 1 marks the beginning of a new cycle for R. Barry. They began their first month of the cycle with the following transactions:

July 1 Paid the interest due on the equipment purchased in June.

1 Received $500 in cash for spa services provided.

2 Paid the assistant $960 for the work completed over the past two weeks. (Remember some may have already been logged due to the timing of the pay)

10 Completed services previously paid for on June 27 ^th .

15 Paid $100 for repairs to spa equipment.

25 Received $800 in cash for completed spa services.

26 Billed a customer $1,000 for a completed spa treatment.

27 Refunded $100 to a client when it was determined that such client had been overcharged for services that were completed on July 10 ^th .

REQUIRED

1. Journalize all daily entries for the month of July.
2. Post the entries to the ledger.
3. Prepare a trial balance as of July 31 ^st .