Question
Comprehensive Problem Set On July 1, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during the companies first month.
Comprehensive Problem Set
On July 1, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during the companies first month.
July 2 | Plume invested $30,000 cash and buildings worth $80,000 in the company in exchange for its common stock. |
July 3 | The company rented equipment by paying $2,500 cash for the first months (July) rent. |
July 5 | The company purchased $2,300 of office supplies for cash. |
July 10 | The company paid $5,500 cash for a 12-month insurance policy. Coverage begins on July 11. |
July 14 | The company paid $1,700 cash for two weeks' salaries earned by employees. |
July 24 | The company collected $15,000 cash for storage revenue from customers. |
July 28 | The company paid $1,700 cash for two weeks' salaries earned by employees. |
July 29 | The company paid $800 cash for minor repairs to buildings. |
July 30 | The company paid $300 cash for this month's telephone bill. |
July 30 | The company paid $1,000 cash in dividends. |
The company's chart of accounts follows:
101 | Cash | 403 | Storage Revenue |
106 | Accounts Receivable | 612 | Depreciation ExpenseBuildings |
124 | Office Supplies | 622 | Salaries Expense |
128 | Prepaid Insurance | 637 | Insurance Expense |
167 | Buildings | 640 | Rent Expense |
168 | Accumulated DepreciationBuildings | 650 | Office Supplies Expense |
209 | Salaries Payable | 684 | Repairs Expense |
307 | Common Stock | 688 | Telephone Expense |
318 | Retained Earnings | 901 | Income Summary |
319 | Dividends |
Required: 1. Use the balance column format to set up each ledger account listed in its chart of accounts
2. Prepare journal entries to record the transactions for July and post them to ledger accounts. 3. Prepare an unadjusted trial balance as of July 31. 4. Use the following information to prepare adjusting entries:
- Prepaid insurance of $400 expired this month.
- At the end of the month, $1,300 of office supplies are still available.
- This months depreciation on buildings is $1,350.
- Employees earned $400 of unpaid and unrecorded salaries as of month-end.
- The company earned $2,750 of storage revenue that is not yet recorded at month-end.
5a. Using adjusted account balances, prepare an adjusted trial balance as of July 31. 5b. Prepare the income statement for the month of July 31. 5c. Prepare the statement of retained earnings for the month of July 31. 5d. Prepare the balance sheet at July 31. 6a. Prepare journal entries to close the temporary accounts.
6b. Post these entries to the ledger. 7. Prepare a post-closing trial balance.
- Use the balance column format to set up each ledger account listed in its chart of accounts.
You may also use these to complete6b. Post these entries to the ledger.
General Ledger accounts | ||||||||
Date | Debit | Credit | Balance | Date | Debit | Credit | Balance | |
Date | Debit | Credit | Balance | Date | Debit | Credit | Balance | |
Date | Debit | Credit | Balance | Date | Debit | Credit | Balance | |
Date | Debit | Credit | Balance | Date | Debit | Credit | Balance | |
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