Assume that you are the chief accountant for Elis Consulting Services. Follow the instructions to complete the accounting records for the month of January.
INSTRUCTIONS
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Open the general ledger accounts and enter the balances for January 1, 2020. Obtain the necessary figures from the postclosing trial balance prepared on December 31, 2019
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Analyze each transaction and record it in the general journal. Use page 3 to begin Januarys transactions.
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Post the transactions to the general ledger accounts.
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Prepare the Trial Balance section of the worksheet.
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Prepare the Adjustments section of the worksheet.
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Compute and record the adjustment for supplies used during the month. An inventory taken on January 31 showed supplies of $5,200 on hand.
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Compute and record the adjustment for expired insurance for the month.
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Record the adjustment for one month of expired rent of $4,000.
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Record the adjustment for depreciation of $183 on the old equipment for the month. The first adjustment for depreciation for the new equipment will be recorded in February.
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Complete the worksheet.
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Prepare an income statement for the month.
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Prepare a statement of owners equity.
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Page 193Prepare a balance sheet using the report form.
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Journalize and post the adjusting entries.
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Journalize and post the closing entries.
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Prepare a postclosing trial balance.
Analyze: Compare the January 31 balance sheet you prepared with the December 31 balance sheet shown next:
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What changes occurred in total assets, liabilities, and the owners ending capital?
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What changes occurred in the Cash and Accounts Receivable accounts?
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Has there been an improvement in the firms financial position? Why or why not?
As you work on the assignment, here are key check figures that you must match (your work will be incorrect if your figures do not match these figures):
- Trial Balance: $234,320
- Worksheet Adjustments: $11,933
- Net Income: $28,122
- Post-closing Trial Balance: $155,655
Eli's Consulting Services Chart of Accounts Assets Revenue 101 Cash 401 Fees Income 111 Accounts Receivable Expenses 121 Supplies 511 Salaries Expense Read this sec topic. 134 Prepaid Insurance 514 Utilities Expense 137 Prepaid Rent 517 Supplies Expense 141 Equipment 520 Rent Expense 142 Accumulated Depreciation, Equipment 523 Depreciation Expense- Equipment Liabilities 526 Advertising Expense 529 Maintenance Expense 202 Accounts Payable Owner's Equity 532 Telephone Expense 301 Trayton Eli, Capital 535 Insurance Expense 302 Trayton Eli, Drawing 309 Income Summary Eli's Consulting Services Postclosing Trial Balance December 31, 2019 CREDIT ACCOUNT NAME Cash Accounts Receivable Supplies Prepaid Rent Equipment Accumulated Depreciation-Equipment Accounts Payable Trayton Eli, Capital Totals DEBIT 111 35 000 500 000 100 000 400000 11 00000 1 8 3 00 35 00 00 128 6 6 7 00 132 35 000 132 35 000 TDI Eli's Consulting Services Income Statement Month Ended December 31, 2019 4700000 Revenue Fees Income Expenses Salaries Expense Utilities Expense Supplies Expense Rent Expense Depreciation Expense-Equipment Total Expenses Net Income for the Month 800000 65 000 50 000 400000 1 8 3 00 13 3 3 3 00 33 6 6 700 Eli's Consulting Services Statement of Owner's Equity Month Ended December 31, 2019 10000000 Trayton Eli, Capital, December 1, 2019 Net Income for December Less Withdrawals for December Increase in Capital Trayton Eli, Capital, December 31, 2019 33 6 6 7 00 500000 28 6 6 7 00 128 6 6 7 00 Eli's Consulting Services Balance Sheet December 31, 2019 Assets Cash Accounts Receivable Supplies Prepaid Rent Equipment Less Accumulated Depreciation Total Assets 111 35 000 500 000 100 000 400000 110 00 00 1 8 3 00 10 8 1 7 00 132 1 6 7 00 350 000 Liabilities and Owner's Equity Liabilities Accounts Payable Owner's Equity Trayton Eli, Capital Total Liabilities and Owner's Equity 128 6 6 700 132 1 6 7 00 DATE TRANSACTIONS Jan. 2. Purchased supplies for $7,000; issued Check 1015. 2 Purchased a one-year insurance policy for $8,400; issued Check 1016. 7 Sold services for $20,000 in cash and $5,000 on credit during the first week of January. Read this section if you do not understand the highlighted Collected a total of $4,000 on account fron topic. X 12 iry. 12 Issued Check 1017 for $3,600 to pay for special promotional advertising to new businesses on the local radio station during the month. 13 14 Collected a total of $4,500 on account from credit customers during the second week of January. Returned supplies that were damaged for a cash refund of $750. Sold services for $20,700 in cash and $2,300 on credit during the second week of January. Purchased supplies for $5,000 from White's, Inc., received Invoice 2384 payable in 30 days. 15 20 20 Sold services for $12,500 in cash and $3,500 on credit during the third week of January. 20 Collected a total of $5,600 on account from credit customers during the third week of January. 21 22 Issued Check 1018 for $7,065 to pay for maintenance work on the office equipment. Issued Check 1019 for $3,600 to pay for special promotional advertising to new businesses in the local newspaper. Received the monthly telephone bill for $1,025 and paid it with Check 1020. 23 26 Collected a total of $1,600 on account from credit customers during the fourth week of January. 27 Issued Check 1021 for $3,000 to Office Plus as payment on account for Invoice 2223. 28 Sent Check 1022 for $2,675 in payment of the monthly bill for utilities. 29 Sold services for $19,000 in cash and $2,750 on credit during the fourth week of January. Issued Checks 10231027 for $32,800 to pay the monthly salaries of the regular employees and three part-time workers. 31 31 Issued Check 1028 for $12,000 for personal use. 31 Issued Check 1029 for $4,150 to pay for maintenance services Read this section if you do not understand the highlighted topic. 31 Purchased additional equipment for $15,000 from Contemporary Equipment Company; issued Check 1030 for $10,000 and bought the rest on credit. The equipment has a five-year life and no salvage value. 31 Sold services for $7,600 in cash and $1,620 on credit on January 31
