Assume that you are starting a new business, Arrow Accounting Services, with a new partner, Harry Fowl. Harry has had some existing business and you are leaving a position at a larger firm. You've decided for liability purposes to set yourself up as a small corporation. You agree to set up shop at the start of December to allow yourselves time to get ready for the upcoming tax ("busy") season. Your partner has some existing clients that will now be clients of Arrow. The chart of accounts for Arrow Accounting Services is listed below. Follow the instructions to complete the accounting records for the month of December. ARROW ACCOUNTING SERVICES Chart of Accounts ASSETS 101 Cash 111 Accounts Receivable REVENUE 401 Fees income 119 Alowance for Doubtul Accounts 121 Supplies 131 Prepaid Rent 134 Prepaid insurance 141 Equipment 142 Accumulated Deprecution-Equipment EXPENSES 511 Salaries Expense S14 UMes Expense 517 Supples Expense S20 Rent Expense 523 Depreciation Expense- Equpment S26 inurance Expense S29 Advertising Expense 532 Telephone Expense 535 Mainterance Expense LIABILITIES 202 Accounta Payable 211 Customer Deposits 540 Bad Debt Expense OWNERS EQUITY 301 Common Stock 302 Paid in captal 309 Retained Eamings 1. Analyze cach transaction below and record it in the general journal. 2. Post the transactions for the general ledger accounts. 3. Prepare a trial balance. 4. Prepare the adjusting entries using the following information: a. Compute and record the adjustment for supplies used during the month. An inventory taken on December 31 showed supplies of $475 on hand. b. Record the adjustment for expired rent of $2.500 for the month. c. Compute and record the adjustment for expired insurance for the month. d. Record the adjustment for depreciation of $250 on the old equipment for the month. The first adjustment for depreciation for the new cquipment will be reconded in January. 5. Prepare an income statement for the month. 6. Prepare a statement of owner's equity. 7. Prepare a balance sheet. 8. Journalize and post the adjusting entries. 9. Joumalize and post the closing entries. 10. Prepare a post closing trial balance. TRANSACTIONS Dec. I You contribute S16,000 for 100 shares of common stock in the new company (S1 par value). I Harry Fowl contribution to the business is $2.000 due on existing credit accounts, S15,000 of new equipment. He also receives 100 shares of $1 par common stock. 2 Purchase supplies for $1,500. Check 1009. 7 Sold services for $S,800 in cash and $745 on credit during the first week of December. 9 Purchased a one-ycar insurance policy for $3,600; issued Check 1010 to pay the full amount in advance. 11 Collected a total of 5395 on account from credit customer during the first week of 12 Issued Check 1011 for $395 to pay for advertising on the local radio station during the December. month. 13 Collected a total of ss00 on account from crodit customers during the second week of December. 14 Returned some supplies that were damaged for a cash refund of $40. 15 Sold services for S8,500 in cash and S400 on credit during the second week of December. 18 Purchased supplies for S800 from Fellowes, Inc. received Invoice 3284, payable in 30 days. 19 Sold services for the S3,890 in cash and $2,560 on credit during the third week of December. 20 Collected a total ofS750 on account from crodit customers during the third week of December. 21 Issued Check 1012 for $1,275 for pay for maintenance work on the office equipment. 22 Issued Check 1013 for S150 to pay for advetisements in the local newspaper. 23 Received the monthly telephone bill for S215 and paid it with Check 1014. 23 Collected a total of si.560 on account from credit customers during the fourth week of December. 26 Driving through town you notice that one of your new customers, a used book store, has put up a going out of business sale sign in its window. You look and notice that the business still owes you approximanely $500 for work you've completed. 28 Sent Check 1016 for S235 in payment of the monthly bill for utilities. 29 Sold services for S5,890 in cash and S675 on credit during the fourth week of December. 30 Issued Checks 1017-1022 for $5,400 to pay the monthly salaries of the regular employees and three part-time workers. 31 Issued Check 1023 for $415 to pay for cleaning services for the month. 31 Purchased additional equipment for S6.000 from Master Equipment Company, issued Check 1024 for $1.250 and bought the rest on credit. The cquipment has a five-year life and no salvage value. 31 Received advance payment for tax work for new clients in the amount of $2.500. 31 Sold services for s545 in cash and $325 on credit on December 31.