For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 20Y2, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond entered into the following transactions during July:

Jul.	1	The following assets were received from Steffy Lopez in exchange for common stock: cash, $14,000; accounts receivable, $20,800; supplies, $3,100; and office equipment, $7,500. There were no liabilities received.
	1	Paid two months rent on a lease rental contract, $4,800.
	2	Paid the premiums on property and casualty insurance policies, $4,620.
	4	Received cash from clients as an advance payment for services to be provided, and recorded it as unearned fees, $5,000.
	5	Purchased additional office equipment on account from Office Station Co., $6,500.
	6	Received cash from clients on account, $15,100.
	10	Paid cash for a newspaper advertisement, $400.
	12	Paid Office Station Co. for part of the debt incurred on July 5, $5,200.
	12	Recorded services provided on account for the period July 112, $13,300.
	14	Paid receptionist for two weeks salary, $1,700.

Record the following transactions on Page 2 of the journal:

Jul.	17	Recorded cash from cash clients for fees earned during the period July 117, $9,450.
	18	Paid cash for supplies, $600.
	20	Recorded services provided on account for the period July 1320, $6,750.
	24	Recorded cash from cash clients for fees earned for the period July 1724, $4,000.
	26	Received cash from clients on account, $12,000.
	27	Paid receptionist for two weeks salary, $1,700.
	29	Paid telephone bill for July, $325.
	31	Paid electricity bill for July, $675.
	31	Recorded cash from cash clients for fees earned for the period July 2531, $5,400.
	31	Recorded services provided on account for the remainder of July, $3,000.
	31	Paid dividends, $12,500.

Required:

1.

Journalize each transaction in a two-column journal starting on Page 1. (Do not insert the account numbers in the journal at this time.)

2.

Post the journal to a ledger of four-column accounts. Add the appropriate posting reference to the journal.

3.

Prepare an unadjusted trial balance.

4.

At the end of July, the following adjustment data were assembled. Analyze and use these data to complete requirements (5) and (6).

(a)	Insurance expired during July is $385.
(b)	Supplies on hand on July 31 are $1,525.
(c)	Depreciation of office equipment for July is $750.
(d)	Accrued receptionist salary on July 31 is $170.
(e)	Rent expired during July is $2,400.
(f)	Unearned fees on July 31 are $2,500.

5.

(Optional) On your own paper or spreadsheet, enter the unadjusted trial balance on an end-of-period work sheet and complete the work sheet.

6.

A.	Journalize the adjusting entries on page 3 of the journal. Adjusting entries are recorded on July 31.
B.	Post the adjusting entries, inserting balances in the accounts affected.

7.

Prepare an adjusted trial balance.

8.

A.	Prepare an income statement for the month ended July 31, 20Y2.
B.	Prepare a statement of stockholders equity for the month ended July 31, 20Y2.
C.	Prepare a balance sheet as of July 31, 20Y2.

9.

A.	Journalize the closing entries on page 4 of the journal.
B.	Post the closing entries, inserting balances in the accounts affected.

10.

Prepare a post-closing trial balance.

Chart of Accounts

CHART OF ACCOUNTS

Diamond Consulting

General Ledger

	ASSETS
11	Cash
12	Accounts Receivable
14	Supplies
15	Prepaid Rent
16	Prepaid Insurance
18	Office Equipment
19	Accumulated Depreciation

	LIABILITIES
21	Accounts Payable
22	Salaries Payable
23	Unearned Fees

	EQUITY
31	Common Stock
32	Retained Earnings
33	Dividends

	REVENUE
41	Fees Earned

	EXPENSES
51	Salary Expense
52	Rent Expense
53	Supplies Expense
54	Depreciation Expense
55	Insurance Expense
59	Miscellaneous Expense

Labels and Amount Descriptions

Labels
Current assets
Current liabilities
Expenses
For the Month Ended July 31, 20Y2
July 31, 20Y2
Property, plant, and equipment
Revenues
Amount Descriptions
Balances, July 1, 20Y2
Balances, July 31, 20Y2
Dividends
Issued common stock
Net income
Net loss
Total assets
Total current assets
Total expenses
Total liabilities
Total liabilities and stockholders equity
Total property, plant, and equipment
Total stockholders equity