Accounting Cycle

PROBLEM: Skinny Enterprise has operated a business for the past two years from his home. In January 2020, she decided to move to a lease office space. Skinny registered the business as a corporation according to Delaware laws in January 2020. Skinny Enterprise Corporation received authorization to issue 1,500,000 common shares with $1.4 par value. During January 2020, the business entered the following transactions: Jan 2)The following assets received from Skinny Enterprise in exchange for 175,000 common shares: Cash, $156,000; Accounts Receivable, $75,000; Office Supplies, $8,280; Pre Insurance $36,000 (for 24 month) and Building, $208,000. There were no liabilities assumed. Jan 2)Borrowed $125,000 from Banco Popular with 8% of interest. Jan 3)Paid Three year of rent on a lease rental contract, $36,000 (recorded as Prepaid) Jan3) Purchased office equipment on account for $28,000. Jan4)Purchase a Building with a market value of $160,000 in exchange of 47,890 company shares. Jan4)Paid the premiums on property and casualty insurance policies, $9,000 for 18 months (recorded as Prepaid) Jan5)Received cash from clients as an advance payment for services to provided and recorded it as unearned fees, $34,000. Jan6)Invests cash not needed for operations in trading shares at 5%, $180,000. Jan 7)Received cash from clients on account, $43,000. Jan 10) Paid cash for a newspaper advertisement for two years, $2,400 (recorded as Prepaid) Jan 11) Paid part of debt incurred on January 3, $7,000. Jan 12)Recorded services provided on account for the period January 1-15, $48,000. Jan 13 )Recorded cash from cash clients for fees earned during January 1-15, $55,000. Jan 15) Skinny declared cash dividends of $.30 for outstanding shares to be paid on January 31. 17 Paid telephone, cable, and internet bills for January, $1,825. Jan18)Issue 18,000 new shares for a market value of $2.00. Jan 19) Paid cash for supplies, $5,700. Jan21) Received cash from clients on account, $38,000. Jan22) Received $1,575 from a leased space. Jan25)Paid electricity bill for January, $1,340. Jan26)Obtain the investor list for dividend payment on January 31 Jan27)Paid part of debt incurred on January 3, $7,000. Jan30) Paid monthly office salary, $16,000; sales salaries for $24,000; and $8,000 to Skinny as General Manager of Skinny Enterprise Corporation. Deductions for FICA 6.2% and Medicare Tax 1.45%, federal income tax withheld 20%. Voluntary deductions are: United Funds $200 and Red Cross $500. Jan30)Recorded employer payroll taxes expense for FICA 6.2% and Medicare Tax 1.45%, 5.4% for state unemployment (SUTA tax) and .8% for federal unemployment (FUTA tax). Jan29) Recorded cash from cash clients for fees earned during January 16-30, $54,880 Jan30)Recorded services provided on account for the remainder of January 16-30, $46,000. Jan31)Skinny paid cash dividends declared on January 15. Instructions: 1.Prepare a General Journal 2)Journalize each transaction in a General ledger. Refer to the following chart of accounts: 1105 Cash 1106 Trading security shares 1115 Account receivable 1135 Office supplies 1148 Prepaid Advertising 1149 Prepaid rent 1150Prepaid insurance 1500 Office Equipment 1510 Accumulated depreciation-off. Equip 1580 Building 1585 Accumulated Depreciation-building 2105Account payable 2106 Interest payable 2107 Unearned fees 2110 Administrative Salary Payable 2111Office salary payable 2112 Federal Income Tax Payable 2115 FICA SS Tax Payable 2125 FICA Medicare Tax Payable 2126 United Funds Payable 2127 Red Cross Payable 2128 FUTA Tax Payable 2135 SUTA Tax Payable 2140 Dividends Payable 2145 Note Payable 2500 Bonds Payable 2510 Capital Stock - Common 3110 Additional Paid in Capital -Common 3111 Retained Earnings 3115 Cash Dividends 4106 Fees Earned 4107 Rent Revenue 6105 Advertising Expense 6110 Depreciation Expense -- Building 6120 Depreciation Expense -- Office Equipment 6150 Insurance Expense 6155 Salary Expense -- Admin 6160 Salary Expense -- Office 6165 Salary Expense -- Sales 6170 Supplies Expense 6200 Employer Payroll Taxes Expense 6210 Rent Expense 6215 Utilities Expense 8105 Interest Expense 8106 Unrealized Holding Gain or Loss Trading 3.Prepare an unadjusted trial balance on January 31,2021 4)Also... Prepare adjusting entries for: a Insurance expired during January for each policy. b. Supplies on hand on January 31 are $4,375. c. Depreciation of office equipment for January 31, use the straight-line method (Residual value $5,000, and useful life 60 months) d. Depreciation of building for January 31, use the straight-line method (Residual value $18,000, and useful life 120 months) e. Rent expired during January. f. Unearned fees earned during January 31 are $15,000. g. Market value in Investment in trading securities increase to $189,500. h. Advertising expired during January. i. Record one month of interest accrued on note payable. j. Record one month of interest accrued on trading securities. 5)Journalize and post adjusting entries to the ledger accounts. 6)Prepare an adjusted trial balance