ACCT 215 (CT)

Accounting Cycle Problem

The John Marshall Company, Inc., which provides consulting services to major utility companies, was formed on January 2 of this year. Transactions completed during the first year of operation were as follows:

January 2 Issued 600,000 shares of stock for $10,000,000.

January 10 Acquired equipment in exchange for $2,000,000 cash and a $6,000,000 note payable. The note is due in ten years.

February 1 Paid $24,000 for a business insurance policy covering the two-year period beginning on February 1.

February 22 Purchased $900,000 of supplies on account

March 1 Paid wages of $185,600

March 23 Billed $2,730,000 for services rendered on account

April 1 Paid $100,000 of the amount due on the supplies purchased February 22.

April 17 Collected $210,000 of the accounts receivable

May 1 Paid wages of $200,400.

May 8 Received and paid bill for $98,200 for utilities.

May 24 Paid $42,500 for sales commissions.

June 1 Made the first payment on the note issued January 10. The payment consisted of $60,000 interest and $200,000 applied against the principal of the note.

June 16 Billed customers for $560,000 of services rendered.

June 30 Collected $300,000 on accounts receivable.

July 10 Purchased $155,000 of supplies on account.

August 25 Paid $160,000 for administrative expenses.

September 23 Paid $30,000 for warehouse repairs.

October 1 Paid general wages of $90,000.

November 20 Purchased supplies for $60,000 cash.

December 15 Collected $125,600 in advance for services to be provided in December and January.

December 30 Declared and paid a $50,000 dividend to shareholders.

The chart of accounts that Marshall Company, Inc. uses is as follows:

Assets:

101 Cash

102 Accounts receivable

103 Supplies

104 Prepaid insurance

110 Equipment

112 Accumulated depreciation

Liabilities:

201 Accounts payable

202 Unearned service revenue

203 Wages payable

210 Interest payable

220 Notes payable

Stockholders Equity:

301 Common stock

310 Retained earnings

320 Dividends

Revenues:

401 Service revenue

Expenses:

501 Wage expense

502 Utility expense

503 Selling expense

504 Administrative expense

505 Repairs expense

506 Insurance expense

507 Supplies expense

510 Depreciation expense

520 Interest expense

Other:

601 Income summary

REQUIRED: Utilizing the information provided above, complete the following steps in an Excel workbook (Template provided):

1. Journalize the transactions for the year.
2. Post the journal entries to a T account.
3. Prepare an unadjusted trial balance as of December 31.
4. Journalize and post adjusting entries to the T accounts based on the following additional information:
   1. Eleven months of the insurance policy expired by the end of the year.
   2. Depreciation for equipment is $400,000.
   3. The company provided $70,000 of services related to the advance collection of December 15.
   4. There are $500,000 of supplies on hand at the end of the year.
   5. An additional $170,000 of interest has accrued on the note by the end of the year.
   6. Wilson accrued wages of $200,000 at the end of the ear.
5. Prepare an adjusted trial balance as of December 31.
6. Prepare a single-step income statement and statement of retained earnings for the year ended December 31 and a classified balance sheet as of December 31.
7. Journalize and post the closing entries
8. Prepare a post-closing trial balance as of December 31.

Submit your completed Excel workbook in Black Board under assignments by the due date.