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