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, $13,000; accounts receivable, $20,800; supplies, $3,000; and office equipment, $7,000. 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, $4,500. |
| | 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, $1,800. |
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, $6,650. |
| | 24 | Recorded cash from cash clients for fees earned for the period July 1724, $5,000. |
| | 26 | Received cash from clients on account, $12,000. |
| | 27 | Paid receptionist for two weeks salary, $1,800. |
| | 29 | Paid telephone bill for July, $300. |
| | 31 | Paid electricity bill for July, $675. |
| | 31 | Recorded cash from cash clients for fees earned for the period July 2531, $5,000. |
| | 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, referring to the chart of accounts in selecting the accounts to be debited and credited. (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 $375. | | B. | Supplies on hand on July 31 are $1,500. | | C. | Depreciation of office equipment for July is $750. | | D. | Accrued receptionist salary on July 31 is $180. | | E. | Rent expired during July is $2,400. | | F. | Unearned fees earned on July 31, $3,000. | |
| 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. Refer to the Chart of Accounts for exact wording of account titles. | | 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. Be sure to complete the statement heading. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. You will not need to enter colons (:) on the income statement. | | B. | Prepare a statement of stockholders equity for the month ended July 31, 20Y2. Be sure to complete the statement heading. Negative amount should be indicated by the minus sign. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. If an amount is zero, enter "0". | | C. | Prepare a balance sheet as of July 31, 20Y2. Be sure to complete the statement heading. Fixed assets must be entered in order according to account number. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary. Negative amount should be indicated by the minus sign. | |
| 9. | | A. | Journalize the closing entries on page 4 of the journal. Refer to the Chart of Accounts for exact wording of account titles. | | B. | Post the closing entries, inserting balances in the accounts affected. Leave the ITEM column BLANK for each row. If the account balance is zero (0) after closing entries are posted, enter a zero (0) in the account's normal balance column. | |
| 10. | Prepare a post-closing trial balance. |
CHART OF ACCOUNTS Diamond Consulting General Ledger ASSETS REVENUE 41 Fees Earned 11 Cash 12 Accounts Receivable 14 Supplies 15 Prepaid Rent 16 Prepaid Insurance 18 Office Equipment 19 Accumulated Depreciation EXPENSES 51 Salary Expense 52 Rent Expense 53 Supplies Expense 54 Depreciation Expense 55 Insurance Expense 59 Miscellaneous Expense LIABILITIES 21 Accounts Payable 22 Salaries Payable 23 Unearned Fees EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends 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 1. Journalize each transaction in a two-column journal starting on Page 1, referring to the chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Note: Scroll down to access pages 2 through 4 of the journal. How does grading work? PAGE 1 JOURNAL Score: 270/310 ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 Jul. 1 Cash GL1 13,000.00 f 2 Accounts Receivable GL1 20,800.00 1 3 Supplies GL1 3,000.00 1 4 4 Office Equipment GL1 7,000.00 1 5 Common Stock GL1 43,800.00 1 6 Prepaid Rent GL1 4,800.00 1 7 Cash GL1 4,800.00 1 8 Jul.2' Prepaid Insurance GL1 4,500.00 1 Cash GL1 4,500.00 + M 10 Jul. 4 Cash GL1 5,000.00 f 11 Unearned Fees GL1 5,000.00 1 12 GL1 6,500.00 1 Jul. 5 Office Equipment Accounts Payable 13 GL1 6,500.00 1 14 Jul. 6 Cash GL1 15,100.00 1 14 Jul. 6 Cash GL1 15,100.00 1 15 GL1 15,100.00 + 16 Accounts Receivable Jul. 10 Advertising Expense Cash GL1 400.00 17 GL1 400.00 18 GL1 5,200.00 19 Jul. 12' Accounts Payable Cash Accounts Receivable GL1 5,200.00 20 GL1 13,300.00 f 21 GL1 13,300.00 1 22 Fees Earned Jul. 14" Salaries Expense Cash GL1 1,800.00 23 GL1 1,800.00 + How does grading work? PAGE 2 JOURNAL Score: 253/298 ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY > 1 Jul. 17 Cash GL2 9,450.00 1 2 Fees Earned GL2 9,450.00 1 3 Jul. 18 Supplies GL2 600.00 1 4 Cash GL2 600.00 + 5 Jul. 20 Accounts Receivable GL2 6,650.00 f > 5 Jul. 20 Accounts Receivable GL2 6,650.00 1 6 Fees Earned GL2 6,650.00 1 7 Jul. 24 Cash GL2 5,000.00 1 8 Fees Earned GL2 5,000.00 1 9 Jul. 26 Cash GL2 12,000.00 1 10 Accounts Receivable GL2 12,000.00 1 11 Jul. 27 Salaries Expense GL2 1,800.00 12 Cash GL2 1,800.00 + 13 Jul. 29 Telephone expense GL2 300.00 14 Cash GL2 300.00 + 15 Jul. 31 Electricity expense GL2 675.00 16 Cash GL2 675.00 + 17 Jul. 31 Cash GL2 5,000.00 1 18 Fees Earned GL2 5,000.00 t 19 Accounts Receivable GL2 3,000.00 1 > 20 Fees Earned GL2 3,000.00 1 21 Dividends GL2 12,500.00 22 Cash GL2 12,500.00 1 6. a. Journalize the adjusting entries on page 3 of the journal. Adjusting entries are recorded on July 31. How does grading work? PAGE 3 JOURNAL Score: 122/163 ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 Adjusting Entries 2 Jul. 31 Insurance Expense GL3 375.00 1 3 Prepaid Insurance GL3 375.00 + 4 Supplies Expense GL3 2,275.00 5 GL3 2,275.00 + 6 Supplies Depreciation Expense Accumulated Depreciation GL3 750.00 7 GL3 750.00 + 8 Rent Expense GL3 2,400.00 + 9 Prepaid Rent GL3 2,400.00 + 10 Salaries Expense GL3 175.00 11 Salaries Payable GL3 175.00 1 12 Unearned Fees GL3 2,750.00 + 13 Fees Earned GL3 2,750.00 1 9. a. Journalize the closing entries on page 4 of the journal. All transactions on this page must be entered (except for post ref(s)) before you will receive Check My Work feedback. PAGE 4 JOURNAL Score: 43/133 ACCOUNTING EQUATION DATE POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY DESCRIPTION Closing Entries 1 1 2 3 Jul 31 Fees Earned GL4 44,350.00 + 4 Income Summary GL4 44,350.00 5 Income Summary GL4 10,875.00 6 Expenses GL4 10,875.00 7 Income Summary GL4 33,475.00 8 Retained Earnings GL4 33,475.00 1 9 Retained Earnings GL4 12,500.00 + 10 Dividends GL4 12,500.00 1 11 2. Post the journal to a ledger of four-column accounts. Add the appropriate posting reference to the journal. 6. b. Post the adjusting entries, inserting balances in the accounts affected. 9. b. Post the closing entries, inserting balances in the accounts affected. Leave the ITEM column BLANK for each row. If the account balance is zero (O) after closing entries are posted, enter a zero (0) in the account's normal balance column. How does grading work? LEDGER Score: 21/821 Account: Cash Account No. 11 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 Jul. 1 Balance 2 Jul 1 Common Stock GL1 13,000.00 13,000.00 3 Jul. 1 Prepaid Rent GL1 4,800.00 8.700.00 4 Jul. 2 Prepaid Insurance GL1 4,500.00 4.500.00 5 7 8 9 10 11 12 13 8 9 10 11 12 14 15 16 17 Account: Accounts Receivable Account No. 12 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 3 4 5 6 Account: Supplies Account No. 14 Account: Supplies Account No. 14 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 3 Account: Prepaid Rent Account No. 15 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 Account: Prepaid Insurance Account No. 16 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 Account: Office Equipment Account No. 18 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 Account: Accumulated Depreciation Account No. 19 Account: Accumulated Depreciation Account No. 19 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 Account: Accounts Payable Account No. 21 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 Account: Salaries Payable Account No. 22 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 Account: Unearned Fees Account No. 23 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 Account: Common Stock Account No. 31 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT Account: Retained Earnings Account No. 32 BALANCE DATE ITEM POST. REF DEBIT CREDIT DEBIT CREDIT 1 2 Account: Dividends Account No. 33 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 Account: Fees Earned Account No. 41 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 3 4 5 6 7 8 Account: Salary Expense Account No. 51 Account: Salary Expense Account No. 51 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 3 4 Account: Rent Expense Account No. 52 BALANCE DATE ITEM POST. REF DEBIT CREDIT DEBIT CREDIT 1 2 Account: Supplies Expense Account No. 53 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 Account: Depreciation Expense Account No. 54 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 Account: Insurance Expense Account No. 55 Account: Depreciation Expense Account No. 54 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 Account: Insurance Expense Account No. 55 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 Account: Miscellaneous Expense Account No. 59 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 1 2 3 4 3. Prepare an unadjusted trial balance. How does grading work? Score: 39762 Diamond Consulting UNADJUSTED TRIAL BALANCE July 31, 20Y2 ACCOUNT TITLE DEBIT CREDIT 1 Cash 34,200.00 2 Accounts Receivable 20,800.00 3 Supplies 3,000.00 4 Prepaid Rent 4,800.00 4,500.00 13,500.00 5 Prepaid Insurance 6 Office Equipment 1 Accumulated Depreciation 8 Accounts Payable 1,300.00 9 Salaries Payable 1,800.00 10 Unearned Fees 11 Common Stock 45,000.00 12 Retained Earnings 13 Dividends 12,500.00 14 Fees Earned 41,600.00 15 Salary Expense 3,500.00 13 Dividends 12,500.00 14 Fees Earned 41,600.00 3,500.00 15 Salary Expense 16 Rent Expense 17 Supplies Expense 18 Depreciation Expense 19 Insurance Expense 20 Miscellaneous Expense 21 Totals 93,400.00 93,400.00 7. Prepare an adjusted trial balance. Question not attempted. Score: 0/80 Diamond Consulting ADJUSTED TRIAL BALANCE July 31, 20Y2 ACCOUNT TITLE DEBIT CREDIT 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Rent 5 Prepaid Insurance 6 Office Equipment 7 Accumulated Depreciation 8 Accounts Payable 9 Salaries Payable 10 Unearned Fees 11 Common Stock 12 Retained Earnings 13 Dividends 12 Retained Earnings 13 Dividends 14 Fees Earned 15 Salary Expense 16 Rent Expense 17 Supplies Expense 18 Depreciation Expense 19 Insurance Expense 20 Miscellaneous Expense 21 Totals 8a. Prepare an income statement for the month ended July 31, 20Y2. Be sure to complete the statement heading. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. You will not need enter colons (:) on the income statement Question not attempted. Diamond Consulting Score: 0/85 Income Statement (Label) 1 2 (Label) 5 10 8b. Prepare a statement of stockholders' equity for the month ended July 31, 2072. Be sure to complete the statement heading. Negative amount should be indicated by the minus sign. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. If an amount is zero, enter "O". Question not attempted. Diamond Consulting Score: 0/80 Statement of Stockholders' Equity (Label) Retained 1 Common Stock Total Earnings 2 5 8c. Prepare a balance sheet as of July 31, 20Y2. Be sure to complete the statement heading. Fixed assets must be entered in order according to account number. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. You will not need to enter colons (c) or the word "Less" on the balance sheet; they will automatically insert where necessary. Negative amount should be indicated by the minus sign. Question not attempted. Diamond Consulting Score: 0/160 Balance Sheet (Label) 1 Assets 2 (Label) 4 5 6 7 8 (Label) 10 11 12 13 11 12 13 14 Liabilities 15 (Label) 16 17 18 19 20 Stockholders' Equity 21 22 23 24 Question not attempted. Score: 0/51 Diamond Consulting POST-CLOSING TRIAL BALANCE July 31, 20Y2 ACCOUNT TITLE DEBIT CREDIT 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Rent 5 Prepaid Insurance 6 Office Equipment 7 Accumulated Depreciation 8 Accounts Payable 9 Salaries Payable 10 Unearned Fees 11 Common Stock 12 Retained Earnings 13 Totals
