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 Cash Accounts receivable Supplies Utility Expense Payable Unearned service revenue Common stock Retained earnings Date Transaction/Events August 1 2 $ 3 3 $ 35,600 $ The company engaged in the following transactions during August 2020, and adjusts its accounts monthly: 6 9 Debit 23 26,150 6,000 3,450 $ Credit 2,000 5,600 18,000 10,000 35,600 Paid $18,000 cash for a 12-month insurance policy effective August 1. Paid two months' rent for August and September at an annual lease of office space for $20,000 per month. Paid $19,000 for supplies. 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 $ 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. 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 Purchased Equipment, paying $20,000 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. Issued 20,000 shares of common stock for $250,000 cash.

Comprehensive Problem On July 31, 2020, the end of its most recent fiscal year, Elizabeth River Business Consultants' postclosing trial balance was as follows: The company engaged in the following transactions during August 2020 , and adjusts its accounts monthly: 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 $6,250. 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 $55,000, 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, $6,000, will be paid in September. The chart of accounts for Elizabeth River Business Consultants contains the following accounts: Required: Part 1: Enter the August 1 balances in the ledger accounts; journalize the August transactions and events, post the journals into ledger accounts, and prepare an unadjusted trial balance at August 31 Part 2: Joumalize and post the adjusting entries for the month ending August 31. Also, prepare an adjusted trial balance (use Worksheet to populate the adjustments). Part 3: Use the Work Sheet prepared in Part 2 to the extend to Income Statement and Balance Sheet and prepare an appropriately formatted income statement, retained earnings statement, and a classified Balance Sheet at August 31 . Also, journalize and post-closing entries and complete the closing process and prepare a post-closing trial balance on August 31 . Part 4: Prepare a Statement of Cash Flows for August from the other financial statements prepared in Part 3. STEPS TO SOLVE THE COMPREHENSIVE PROBLEM Part 1: Step : 1. Prepare the general journal entries for the month in the proper format (Use JF-01 for the first page of the journal) Step : 2. Post the balances into the ledger accounts given in the trial balance in the problem and post the general journals into the Ledgers while calculating the runing balances. Step : 3. Prepare an unadjusted Trial Balance with the final balances computed in step 2 Part 2: Step : 4. Transfer the unadjusted Trial Balance from Step 3 into a 10 -column Worksheet and populate the adjustments using the Worksheet. Prepare the adjusting entries in the proper journal format (Use appropriate IF page to start on a new page). Step : 5. Post the adjusting entries prepared in Step 4 in the Ledgers prepared in Step 2, open new accounts, clearly marking them as adj. entries in the description or item column and compute the new balances Step : 6. Complete the Adjusted Trial Balance columns in the Worksheet. The balances should be the same as computed in step 5. Prepare an Adjusted Trial Balance, based on the information in the Worksheet. Part 3: Step : 7. Extend the Worksheet prepared in Step 6 and extend items to Income Statement \& Balance Sheet columns and foot the net income. Step : 8. Prepare the financial statements in the following order (Note: that the Income statement and Balance sheet columns as shown in the Worksheet is not enough): a. Income Statement (Revenues and expenses) b. Statement of Owners Equity (Balances, Net Income, and Drawings) c. Balance Sheet (Assets, Liabilities, Stockholder's equity) Step : 9. Prepare the closing entries in the proper journal format Comprehensive Problem Direction and Steps 21P age Step : 10. Post the closing entries into the ledgers prepared in Step 2, clearly marking them as closing entries in the description or item column and compute the new balances. Step : 11. Prepare the post-closing Trial Balance based on the balances computed in step 10. Part 4: Step : 12. Use the financial statements (Income Statement, Retained Earnings Statement, and Balance Sheet) prepared in Step 8 to prepare a Statement of Cash Flows in a proper format