4-5

Illustration of the Accounting Cycle

Obj. 5

complete the accounting cycle for one period is illustrated. Assume that for several years Kelly Pitney has operated a part-time consulting business from her home. As of April 1, 2019, Kelly decided to move to rented quarters and to operate the business on a full-time basis. The business will be known as Kelly Consulting. During April, Kelly Consulting entered into the following transactions:

Apr. 1.The following assets were received from Kelly Pitney: cash, $13,100; accounts receivable, $3,000; supplies, $1,400; and office equipment, $12,500. There were no liabilities received.1.Paid three months' rent on a lease rental contract, $4,800.2.Paid the premiums on property and casualty insurance policies, $1,800.4.Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $5,000.5.Purchased additional office equipment on account from Office Station Co., $2,000.6.Received cash from clients on account, $1,800.10.Paid cash for a newspaper advertisement, $120.12.Paid Office Station Co. for part of the debt incurred on April 5, $1,200.12.Provided services on account for the period April 1-12, $4,200.14.Paid part-time receptionist for two weeks' salary, $750.17.Received cash from cash clients for fees earned during the period April 1-16, $6,250.18.Paid cash for supplies, $800.20.Provided services on account for the period April 13-20, $2,100.24.Recorded cash from cash clients for fees earned for the period April 17-24, $3,850.26.Received cash from clients on account, $5,600.27.Paid part-time receptionist for two weeks' salary, $750.29.Paid telephone bill for April, $130.30.Paid electricity bill for April, $200.30.Received cash from cash clients for fees earned for the period April 25-30, $3,050.30.Provided services on account for the remainder of April, $1,500.30.Kelly withdrew $6,000 for personal use.

JOURNAL Page1 Post. Date Description Ref. Debit Credit 2019 July 1 Cash 11 Accounts Receivable 12 Supplies 14 Office Equipment 18 Jolene Upton, Capital 31 1 Prepaid Rent 15 Cash 11 2 Prepaid Insurance 16 Cash 11 4 Cash 11 Unearned Fees 23 5 Office Equipment 18 Accounts Payable 21 6 Cash 11 Accounts Receivable 12 10 Miscellaneous Expense 59 Cash 11 12 Accounts Payable 21 Cash 11 12 Accounts Receivable 12 Fees Earned 41 14 Salary Expense 51 Cash 11 JOURNAL Page2 Post. Date Description Ref. Debit Credit 2019 July 17 Cash 11 Fees Earned 41 18 Supplies 14 Cash 11 20 Accounts Receivable 12 Fees Earned 41 24 Cash 11 Fees Earned 41 26 Cash 11 Accounts Receivable 12 27 Salary Expense 51 Cash 11 29 Miscellaneous Expense 59 Cash 11 31 Miscellaneous Expense 59 Cash 11 31 Cash 11 Fees Earned 41 31 Accounts Receivable 12 Fees Earned 41 31 Jolene Upton, Drawing 32 Cash 11 GENERAL LEDGER Cash 11 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 1 1 13,100 0 1 1 0 0 2 1 0 4,800 4 1 0 1,800 6 1 0 0 10 1 0 120 12 1 0 1,200 14 1 0 750 17 2 6,250 0 18 2 0 800 24 2 3,850 0 26 2 5,600 0 27 2 0 750 29 2 0 130 31 2 0 200 31 2 3,050 0 31 2 0 6,000 Accounts Receivable 12 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 1 1 0 0 6 1 3,000 0 12 1 4,200 1,800 20 2 2,100 0 26 2 0 5,600 31 2 1,500 0 Supplies 14 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 1 1 1,400 0 18 2 800 0 31 Adjusting 3 0 850 Prepaid Rent 15 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 1 1 4,800 0 31 Adjusting 3 0 1,600 Prepaid Insurance 16 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 2 1 1,800 0 31 Adjusting 3 0 300 Office Equipment 18 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 1 1 12,500 12,500 5 1 2,000 2,000 Accumulated Depreciation 19 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 31 Adjusting 3 330 Accounts Payable 21 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 5 1 2,000 12 1 1,200 Salaries Payable 22 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 31 Adjusting 3 Unearned Fees 23 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 4 31 Adjusting Jolene Upton, Capital 31 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 1 31 Closing 31 Closing Jolene Upton, Drawing 32 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 31 31 Closing Fees Earned 41 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 12 17 20 24 31 31 31 Adjusting 31 Closing Salary Expense 51 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 14 27 31 Adjusting 31 Closing Rent Expense 52 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 31 Adjusting 31 Closing Supplies Expense 53 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 31 Adjusting 31 Closing Depreciation Expense 54 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 31 Adjusting 31 Closing Insurance Expense 55 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 31 Adjusting 31 Closing Miscellaneous Expense 59 Post. Balance Date Item Ref. Dr. Cr. Dr. Cr. 2019 July 10 29 31 31 Closing GOURMET CONSULTING Unadjusted Trial Balance July 31, 2019 Acct.

No. Debit

Balances Credit

Balances Cash 11 Accounts Receivable 12 Supplies 14 Prepaid Rent 15 Prepaid Insurance 16 Office Equipment 18 Accumulated Depreciation 19 Accounts Payable 21 Salaries Payable 22 Unearned Fees 23 Jolene Upton, Capital 31 Jolene Upton, Drawing 32 Fees Earned 41 Salary Expense 51 Rent Expense 52 Supplies Expense 53 Depreciation Expense 54 Insurance Expense 55 Miscellaneous Expense 59 GOURMET CONSULTING End-of-Period Spreadsheet (Work Sheet) For the Month Ended July 31, 2019 Adjusted Income Balance Unadjusted Trial Balance Adjustments Trial Balance Statement Sheet Account Title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Cash 38,750 Accounts Receivable 26,250 Supplies 4,800 Prepaid Rent 6,000 Prepaid Insurance 4,500 Office Equipment 14,000 Accum. Depreciation Accounts Payable 2,100 Salaries Payable Unearned Fees 8,000 Jolene Upton, Capital 54,000 Jolene Upton, Drawing 20,000 Fees Earned 54,700 Salary Expense 3,000 Rent Expense Supplies Expense Depreciation Expense Insurance Expense Miscellaneous Expense 1,500 118,800 118,800 JOURNAL Page3 Post. Date Description Ref. Debit Credit 2019 Adjusting Entries July 31 Insurance Expense Prepaid Insurance 31 Supplies Expense Supplies 31 Depreciation Expense Accumulated Depreciation 31 Salary Expense Salaries Payable 31 Rent Expense Prepaid Rent 31 Unearned Fees Fees Earned GOURMET CONSULTING Adjusted Trial Balance July 31, 2019 Acct.

No. Debit

Balances Credit

Balances Cash 11 Accounts Receivable 12 Supplies 14 Prepaid Rent 15 Prepaid Insurance 16 Office Equipment 18 Accumulated Depreciation 19 Accounts Payable 21 Salaries Payable 22 Unearned Fees 23 Jolene Upton, Capital 31 Jolene Upton, Drawing 32 Fees Earned 41 Salary Expense 51 Rent Expense 52 Supplies Expense 53 Depreciation Expense 54 Insurance Expense 55 Miscellaneous Expense 59 GOURMET CONSULTING Income Statement For the Month Ended July 31, 2019 Revenues: Fees earned Expenses: Salary expense Rent expense Supplies expense Depreciation expense Insurance expense Miscellaneous expense Total expenses Net income GOURMET CONSULTING Statement of Owner's Equity For the Month Ended July 31, 2019 Jolene Upton, capital, July 1, 2019 Investments during month Net income Withdrawals Increase in owner's equity Jolene Upton, capital, July 31, 2019 GOURMET CONSULTING Balance Sheet July 31, 2019 Assets Current assets: Cash Accounts receivable Supplies Prepaid rent Prepaid insurance Total current assets Property, plant, and equipment: Office equipment Accumulated depreciation Total property, plant, and equipment Total assets Liabilities Current liabilities: Accounts payable Salaries payable Unearned fees Total liabilities Owner's Equity Jolene Upton, capital Total liabilities and owner's equity JOURNAL Page4 Post. Date Description Ref. Debit Credit 2019 Closing Entries July 31 Fees Earned Salary Expense Rent Expense Supplies Expense Depreciation Expense Insurance Expense Miscellaneous Expense Jolene Upton, Capital 31 Jolene Upton, Capital Jolene Upton, Drawing GOURMET CONSULTING Post-Closing Trial Balance July 31, 2019 Acct.

No. Debit

Balances Credit

Balances Cash 11 Accounts Receivable 12 Supplies 14 Prepaid Rent 15 Prepaid Insurance 16 Office Equipment 18 Accumulated Depreciation 19 Accounts Payable 21 Salaries Payable 22 Unearned Fees 23 Jolene Upton, Capital 31