Comprehensive Problem On July 31, 2020, the end of its most recent fiscal year, Elizabeth River Business Consultants' post-closing trial balance was as follows: $ Accounts Debit Credit Cash 26,150 Accounts receivable 6,000 Supplies 3,450 Utility Expense Payable $ 2,000 Uneamed service revenue 5,600 Common stock 18,000 Retained earnings 10,000 35,600 $ 35,600 The company engaged in the following transactions during August 2020, and adjusts its accounts monthly Date Transaction Events August 1 Purchased Equipment, paying S20,000 cash, and signing a 2-year note payable for $100,000. The Equipment has a 4-year useful life. The note has a 6% interest rate, which is payable on the first day of each following month. 2 Issued 20,000 shares of common stock for $250,000 cash. 3 Paid $18,000 cash for a 12-month insurance policy effective August 1. 3 Paid two months' rent for August and September at an annual lease of office space for $20,000 per month. 6 Paid $19,000 for supplies. 9 Visited client offices and agreed on the terms of a consulting project. Elizabeth River will bill the client every month on the 20th of each month for services performed 10 Collected $6,000 cash on account from Niki Brothers. This client was billed in July when Elizabeth River performed the service. 13 Performed services for Jedai Enterprises. This client paid $5,600 in advance last month. All services relating to this payment are now complete. 14 Paid $2,000 cash for a utility bill. This related to July utilities that were accrued at the end of July. 16 Signed a contract with a new client, Tina Technologies. Received $60,000 cash in advance for future services to be performed. 18 Paid semi-monthly salaries for S 55,000 20 Performed services worth $ 140,000 on the account, and customers were billed. 20 Received a bill for $11,000 for advertising services received during August, but the amount is not due until September 15. 23 Completed the part of the project for Tina Technologies. Recognized $50,000 of revenue from the cash advance received on August 16. 27 Received $75,000 in cash from customers who were billed on August 20 31 Declared and paid dividends of $2,000 1 Adjustment data: 1. Adjustment of prepaid insurance for the expired portion 2. Adjustment of prepaid rent for the expired portion 3. Supplies used during the month were 56,250 4. Depreciate Equipment for the month of August. 5. Accrual of interest on the note payable. (Hint: Principal x Rate x Time to compute interest.) 6. Salaries for the second half of August accrued 855,000, to be paid on September 1 7. Estimated utility expense for August accrued, $ 4,000 (invoice will be received next month). 8. Income tax expense for August, 56,000, will be paid in September The chart of accounts for Elizabeth River Business Consultants contains the following accounts: Code Account Head 101 Cash 102 Accounts Receivable 103 Supplies 104 Prepaid Insurance 105 Prepaid Rent Equipment Accumulated Depreciation--Equipment Advertising Expense Payable Notes Payable 203 Interest Payable 204 Income Taxes Payable 205 Salaries and Wages Payable 206 Unearned Service Revenue 207 Utility Expense Payable 301 Common Stock 302 Retained Earnings Dividends Income Summary Service Revenue 501 Supplies Expense 502 Depreciation Expense 503 Insurance Expense 504 Salaries and Wages Experise Advertising Expense Income Tax Expense Interest Expense 508 Rent Expense 509 Utility Expense Comprehensive Problem Financial Accounting 2 l Page 106 107 201 202 303 304 401 505 506 507 Part 1: In Part 1 (CP 01), students are required to journalize, post them into ledgers, draw-up unadjusted trial balance Part 2: Students continue to work on the initial problem. In Part 2 (CP 02), students will use the Worksheet to populate the adjustments, post the adjustments into ledgers opened in Part 1, and prepare an adjusted trial balance. Part 3: Students continue to work on the initial problem. In Part 3 (CP03), students will use the Worksheet prepared in Part 2 to extend to the Income Statement and Balance Sheet columns. Based on the Worksheet, students will prepare the financial statements (Income Statement, Retained Earnings Statement, and Balance Sheet) in the proper format. Also, joumalize and post-closing entries and complete the closing process and prepare a post-closing trial balance Part 4: Students continue to work on the initial problem. In Part 4 (CP04), students will use the financial statements (Income Statement, Retained Earnings Statement, and Balance Sheet) prepared in Part 03 to prepare a Statement of Cash Flows in a proper format