ACT 101 ? Comprehensive Problem

On January 1, 2005 Charlie Brown established a consulting business, Snoopy Consulting. During the month, Charlie completed the following transactions to the business:

Jan 1 Charlie transferred cash from a personal bank account to an account to the used for the

business, $15,000.

2 Purchased supplies for cash, $2,000.

3 Paid three months? rent on a lease rental contract, $3,600.

4 Paid one years? premium on property and casualty insurance policies, $1,200.

5 Received cash from clients as an advance payment for services to be provided and

recorded it as unearned fees, $4,000.

8 Purchased office equipment on account from Woods Company, $10,000.

9 Paid cash for a newspaper advertisement, $150.

10 Recorded services provided on account for the period January 1-10, $1,500.

12 Paid part-time receptionist for two weeks? salary, $900.

15 Recorded cash from cash clients for fees earned during the first half of January, $3,000.

16 Purchased supplies on account, $800.

17 Received cash from clients on account, $1,000.

18 Paid Woods Company for part of the debt incurred on January 8, $5,000.

20 Recorded services provided on account for the period January 11-20, $1,200.

22 Received cash from clients on account, $1,200.

23 Paid telephone bill for January, $150.

24 Paid part-time receptionist for two weeks? salary, $900.

29 Charlie withdrew $3,000 for personal use.

30 Paid electricity bill for January, $250.

31 Recorded cash from cash clients for fees earned for the remainder of January, $2,200.

Instructions:

Part 1 : 1. Journalize each transaction in a two-column journal, referring to the following chart of accounts in selecting the accounts to be debited and credited.

11 Cash 31 Charlie Brown, Capital

12 Accounts Receivable 32 Charlie Brown, Drawing

14 Supplies 33 Income Summary

15 Prepaid Rent 41 Fees Earned

16 Prepaid Insurance 51 Salary Expense

18 Office Equipment 52 Rent Expense

19 Accumulated Depreciation 53 Supplies Expense

21 Accounts Payable 54 Depreciation Expense

22 Salaries Payable 55 Insurance Expense

23 Unearned Fees 59 Miscellaneous Expense

2. Post the journal to a ledger of four-column accounts.

Part 2 :

3. Prepare a trial balance as of January 31, 2005, on a ten-column work sheet. Complete the work sheet, using the following adjustment data:

Supplies on hand on January 31 are $1,000. Rent expired during January is $1,200. Insurance expired during January is $100. Depreciation of office equipment for January is $500. Accrued receptionist salary on January 31 is $450. Unearned Fees on January 31 are $2,500.

4. Journalize and post the adjusting entries.

5. Journalize and post the closing entries.

6. Prepare a post-closing trial balance.

7. Prepare an income statement, a statement of owner?s equity and a balance sheet.

ACT 101 - Comprehensive Problem On January 1, 2005 Charlie Brown established a consulting business, Snoopy Consulting. During the month, Charlie completed the following transactions to the business: Jan 1 Charlie transferred cash from a personal bank account to an account to the used for the business, $15,000. 2 Purchased supplies for cash, $2,000. 3 Paid three months' rent on a lease rental contract, $3,600. 4 Paid one years' premium on property and casualty insurance policies, $1,200. 5 Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $4,000. 8 Purchased office equipment on account from Woods Company, $10,000. 9 Paid cash for a newspaper advertisement, $150. 10 Recorded services provided on account for the period January 1-10, $1,500. 12 Paid part-time receptionist for two weeks' salary, $900. 15 Recorded cash from cash clients for fees earned during the first half of January, $3,000. 16 Purchased supplies on account, $800. 17 Received cash from clients on account, $1,000. 18 Paid Woods Company for part of the debt incurred on January 8, $5,000. 20 Recorded services provided on account for the period January 11-20, $1,200. 22 Received cash from clients on account, $1,200. 23 Paid telephone bill for January, $150. 24 Paid part-time receptionist for two weeks' salary, $900. 29 Charlie withdrew $3,000 for personal use. 30 Paid electricity bill for January, $250. 31 Recorded cash from cash clients for fees earned for the remainder of January, $2,200. 1 Instructions: Part 1 : 1. Journalize each transaction in a two-column journal, referring to the following chart of accounts in selecting the accounts to be debited and credited. 11 12 14 15 16 18 19 21 22 23 Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Office Equipment Accumulated Depreciation Accounts Payable Salaries Payable Unearned Fees 31 32 33 41 51 52 53 54 55 59 Charlie Brown, Capital Charlie Brown, Drawing Income Summary Fees Earned Salary Expense Rent Expense Supplies Expense Depreciation Expense Insurance Expense Miscellaneous Expense 2. Post the journal to a ledger of four-column accounts. Part 2 : 3. Prepare a trial balance as of January 31, 2005, on a ten-column work sheet. Complete the work sheet, using the following adjustment data: a) Supplies on hand on January 31 are $1,000. b) Rent expired during January is $1,200. c) Insurance expired during January is $100. d) Depreciation of office equipment for January is $500. e) Accrued receptionist salary on January 31 is $450. f) Unearned Fees on January 31 are $2,500. 4. Journalize and post the adjusting entries. 5. Journalize and post the closing entries. 6. Prepare a post-closing trial balance. 7. Prepare an income statement, a statement of owner's equity and a balance sheet. 2 General Journal Date Post Ref Description Debit Dr Credit Cr Post Ref Debit Dr Credit Cr General Journal Date Description 3 General Journal Date Post Ref Description Debit Dr Credit Cr Cash Date Item Post. Ref. Dr. Cr. Dr. Balance Cr. Accounts Receivable Post. Balance 4 Date Item Ref. Dr. Cr. Dr. Item Post. Ref. Dr. Cr. Dr. Item Post. Ref. Dr. Cr. Dr. Post. Ref. Dr. Cr. Cr. Dr. Supplies Date Balance Cr. Prepaid Rent Date Balance Cr. Prepaid Insurance Date Item Balance Cr. Office Equipment Date Item Post. Ref. Balance Dr. Cr. Dr. Cr. 5 Accumulated Depreciation Date Post. Ref. Dr. Cr. Dr. Post. Ref. Dr. Cr. Dr. Item Post. Ref. Dr. Cr. Dr. Item Post. Ref. Dr. Cr. Dr. Item Balance Cr. Accounts Payable Date Item Balance Cr. Salaries Payable Date Balance Cr. Unearned Fees Date Balance Cr. 6 Charlie Brown, Capital Date Item Post. Ref. Dr. Cr. Dr. Balance Post. Ref. Dr. Cr. Dr. Post. Ref. Dr. Cr. Dr. Cr. Charlie Brown, Drawing Date Item Balance Cr. Income Summary Date Item Balance Cr. Fees Earned (Revenue) Date Item Post. Ref. Balance Dr. Cr. Dr. Cr. 7 Salary Expense Date Item Post. Ref. Dr. Cr. Dr. Balance Item Post. Ref. Dr. Cr. Dr. Post. Ref. Dr. Cr. Dr. Post. Ref. Dr. Cr. Dr. Post. Ref. Dr. Cr. Dr. Cr. Rent Expense Date Balance Cr. Supplies Expense Date Item Balance Cr. Depreciation Expense Date Item Balance Cr. Insurance Expense Date Item Balance Cr. 8 Miscellaneous Expense Date Item Post. Ref. Balance Dr. Cr. Dr. Cr. 9 10 Unadjusted Trial Balance Description Debit Dr Credit Cr 11 General Journal - Adjusting Entries Date Description Post Ref Debit Dr Credit Cr 12 Adjusted Trial Balance Description Debit Dr Credit Cr 13 General Journal - Closing Entries Date Description Post Ref Debit Dr Credit Cr Post-Closing Trial Balance Description Debit Dr Credit Cr 14 INCOME STATEMENT 15 STATEMENT OF OWNERS' EQUITY BALANCE SHEET 16 17