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1 Obj. 4, 5 For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 2018,

1
Obj. 4, 5 For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 2018, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond entered into the following transactions during July:
2 July 1.
3
4 The following assets were received from Steffy Lopez in exchange for common stock: cash, $13,500; accounts receivable, $20,800; supplies, $3,200; and office equipment, $7,500. There were no liabilities received.
5 1.
6
7 Paid two months' rent on a lease rental contract, $4,800.
8 2.
9
10 Paid the premiums on property and casualty insurance policies, $4,500.
11 4.
12
13 Received cash from clients as an advance payment for services to be provided, and recorded it as unearned fees, $5,500.
14 5.
15
16 Purchased additional office equipment on account from Office Station Co., $6,500.
17 6.
18
19 Received cash from clients on account, $15,300.
20 10.
21
22 Paid cash for a newspaper advertisement, $400.
23 12.
24
25 Paid Office Station Co. for part of the debt incurred on July 5, $5,200.
26 12.
27
28 Recorded services provided on account for the period July 112, $13,300.
29 14.
30
31 Paid receptionist for two weeks' salary, $1,750.
32 Record the following transactions on Page 2 of the journal:
33 17.
34
35 Recorded cash from cash clients for fees earned during the period July 117, $9,450.
36 18.
37
38 Paid cash for supplies, $600.
39 20.
40
41 Recorded services provided on account for the period July 1320, $6,650.
42 24.
43
44 Recorded cash from cash clients for fees earned for the period July 1724, $4,000.
45 26.
46
47 Received cash from clients on account, $12,000.
48 27.
49
50 Paid receptionist for two weeks' salary, $1,750.
51 29.
52
53 Paid telephone bill for July, $325.
54 31.
55
56 Paid electricity bill for July, $675.
57 31.
58
59 Recorded cash from cash clients for fees earned for the period July 2531, $5,200.
60 31.
61
62 Recorded services provided on account for the remainder of July, $3,000.
63 31.
64
65 Paid dividends, $12,500.
66 Instructions
67 Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.)
68 11
69 Cash
70 31
71 Common Stock
72 12
73 Accounts Receivable
74 32
75 Retained Earnings
76 14
77 Supplies
78 33
79 Dividends
80 15
81 Prepaid Rent
82 41
83 Fees Earned
84 16
85 Prepaid Insurance
86 51
87 Salary Expense
88 18
89 Office Equipment
90 52
91 Rent Expense
92 19
93 Accumulated Depreciation
94 53
95 Supplies Expense
96 21
97 Accounts Payable
98 54
99 Depreciation Expense
100 22
101 Salaries Payable
102 55
103 Insurance Expense
104 23
105 Unearned Fees
106 59
107 Miscellaneous Expense
108
109 Post the journal to a ledger of four-column accounts.
110 Prepare an unadjusted trial balance.
111 At the end of July, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6).
A Insurance expired during July is $375.
B Supplies on hand on July 31 are $1,525.
C Depreciation of office equipment for July is $750.
D Accrued receptionist salary on July 31 is $175.
E Rent expired during July is $2,400.
F Unearned fees on July 31 are $2,750.
112 (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet.
113 Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal.
114 Prepare an adjusted trial balance.
115 Prepare an income statement, a retained earnings statement, and a balance sheet.AnswerCheck Figure: Net income: $33,475

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