July 2019 Transactions Date Description of the Transaction July 1 Borrow $35,000.00 from 1st Bank by signing a 24 month note. (As an example of how to journalize and post a transaction -- this transaction has already been entered into the General Journal and posted to the General Ledger.) July 1 Receive $77,850.00 cash from new investors, and issue $77,850.00 of Common Stock to them. July 1 Purchase $42,000.00 of new mowing equipment, paying cash to the mower dealer. July 1 Pay $500.00 cash for the July truck rental. July 3 Invoice a new customer $2,475.00 for a completed mowing job -- customer will pay in 10 days. July 5 The Board of Directors declares a cash dividend. The total amount of the dividend is $22,500.00 The Date of Record is set as July 15. The Date of Payment is set as July 31. July 7 Pay the employees $6,000.00 for work performed during the 1st week of July. July 10 Complete a mowing job for a new customer -- customer pays $6,500.00 cash for the job. July 12 Collect $3,500.00 cash from the golf course for special rush mowing job completed on May 31. July 14 Pay the employees $7,500.00 for work performed during the 2nd week of July. July 15 Purchase $1,180.00 of supplies from the mower dealer. The supplies are consumed immediately. Lenny's will pay the mower dealer for the supplies in about 2 weeks. U July 15 Collect $2,475.00 on account. The cash that is received is from the new customer for the job that was completed on July 3. U July 17 One of the original mowers purchased in January of 2018 broke down and is repaired by the mower dealer. The cost of the Mower Repair job is $685.00. Lenny's will pay the mower dealer in 30 days July 19 Purchase for cash $21,000.00 of supplies. These supplies will be consumed over the next 12 months. July 20 Collect $30,000.00 from the property management company for work performed in June. OOOO July 21 Pay the employees $6,850.00 for work performed during the 3rd week of July. July 23 Receive a $27,000.00 advance payment from the university. The advance payment is for 6 months of work which will be performed from August 1, 2019 to January 31, 2020. July 25 Complete a special mowing job for the golf course. The total price for the mowing job is $3,700.00. The golf course pays $500.00 cash on this date and will pay the remainder on August 25. July 27 Complete a mowing job for a new customer -- customer pays $3,800.00 cash for the job. July 27 Pay $1,180.00 cash to the mower dealer for the supplies purchased on account on July 15. July 28 Pay the employees $5,300.00 for work performed during the 4th week of July. July 31 Invoice the property management company $16,300.00 for July mowing work. The property management company will pay the invoice on the 20th of next month. July 31 Pay the cash dividend which was declared on July 5. Additional Information Equipment: The $48,000.00 beginning balance in the Equipment account relates to the mowing equipment which was purchased on January 2, 2018. For information related to this mowing equipment see Page 70 in the Solid Footing book. This equipment continues to be used and should be depreciated for the month of July. The following information relates to the new equipment which was purchased on July 1, 2019: The new equipment was placed into service on July 1, 2019 and should be depreciated for the month of July. The estimated useful life of the new equipment is 5 years. At the end of 5 years, the new equipment will have no future value and will be scrapped. The new equipment will be depreciated using the straight-line method. Supplies: At the end of July there are $21,600.00 supplies on-hand. Mowing Service at the University: The monthly mowing service was provided to the university per the contract signed on April 1, 2019. For information on the contract with the university and the related advance payment, see Pages 95 and 98 in the Solid Footing book. Wages Due the Employees: The last wage payment was made to the employees on July 28, 2019. The employees worked on July 29, 30, and 31. For these three days of work the employees earned $2,375.00 of wages. These three days of wages will be paid to the workers during the first week of August. Bank Loan: The interest on the loan from 1st Bank will be paid every three months. The first interest payment to the bank will be made on September 30, 2019. Lenny's calls the bank on July 31 and the bank indicates that the interest on the loan for July is $725.00. Lenny's Lawn Service, Inc. - Chart of Accounts Account # Account Name 100 105 110 150 155 200 205 210 215 220 250 Assets: Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Liabilities: Accounts Payable Wages Payable Interest Payable Unearned Revenue Dividends Payable Note Payable Equity: Common Stock Retained Earnings Revenues: Service Revenue Expenses: Supplies Expense Mower Repair Expense Wages Expense Truck Rental Expense Depreciation Expense Interest Expense 300 305 400 500 505 510 515 520 550 Lenny's Lawn Service, Inc. General Journal Page # 1 Account Name Posted Debit Credit 2019 Month-Day 7-1 Account Number 100 250 35,000.00 Cash Notes Payable Borrowed on Note Payable 35,000.00 Account # 100 Cash Journal Debit Credit Balance Page # 2019 Month-Day 7-1 7-1 Beginning Balance 38,250.00 35,000.00 38,250.00 Dr 73,250.00 Dr 1 Account # 105 Accounts Receivable Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 33,500.00 33,500.00 Dr Account # 110 Supplies Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 4,375.00 4,375.00 Dr Account # 150 Equipment Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 48,000.00 48,000.00 Dr Account # 155 Accumulated Depreciation Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 18,000.00 18,000.00 Cr Account # 200 Accounts Payable Journal Debit Credit Balance 2019 Month-Day 7-1 Page # Beginning Balance 0.00 0.00 Cr Account # 205 Wages Payable 2019 Month-Day Journal Page # Debit Credit Balance 7-1 Beginning Balance 0.00 0.00 Cr Account # 210 Interest Payable Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.00 Cr Account # 215 Unearned Revenue Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 8,000.00 8,000.00 Cr Account # 220 Dividends Payable Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.00 Cr Account # 250 Note Payable Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 35,000.00 0.00 Cr 35,000.00 Cr 7-1 1 Account # 300 Common Stock Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 50,000.00 50,000.00 Cr Account # 305 Retained Earnings Journal Debit Credit Balance 2019 Month-Day 7-1 Page # Beginning Balance 48,125.00 48,125.00 Cr Account # 400 Service Revenue Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.00 Cr Account # 500 Supplies Expense Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.00 Dr Account # 505 Mower Repair Expense Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.001 Dr Account # 510 Wages Expense Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.001 0.001 Dr Account # 515 Truck Rental Expense Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.00) Dr Account # 520 Depreciation Expense Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.00 Dr Account # 550 Interest Expense Journal Debit Credit Balance 2019 Month-Day 7-1 Page # Beginning Balance 0.00 0.00 Dr Lenny's - July 31, 2019 Pre-Closing Trial Balance Account # Account Name Debit Credit 100 105 110 150 155 200 205 210 215 220 250 Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Accounts Payable Wages Payable Interest Payable Unearned Revenue Dividends Payable Note Payable Common Stock Retained Earnings Service Revenue Supplies Expense Mower Repair Expense Wages Expense Truck Rental Expense Depreciation Expense Interest Expense Totals 300 305 400 500 505 510 515 520 550 0.00 0.00 Lenny's Lawn Service, Inc. Income Statement for the Month Ended July 31, 2019 CAUTION Enter amounts into the Financial Statements by typing in the amounts. Do NOT copy cells from the General Ledger or Pre-Closing Trial Balance. Service Revenue Operating Expenses: Supplies Mower Repair Wages Truck Rental Depreciation Total Operating Expenses Income from Operations Interest Expense Net Income Note the new line item on Lenny's Income Statement Income from Operations. This is Lenny's income from the normal operations of the lawn mowing business. Interest Expense, which is not a cost of operating the business but rather a cost of financing the business, is shown below Income from Operations. Interest Expense is subtracted from Income from Operations to arrive at Net Income. 0.00 0.00 $0.00 Lenny's Lawn Service, Inc. Statement of Stockholders' Equity for the Month Ended July 31, 2019 This is the first time you have prepared a formal Statement of Stockholders' Equity for Lenny's. This statement shows what caused the change in Common Stock and in Retained Earnings from July 1, 2019 to July 31, 2019. Note that the Retained Earnings column on the statement looks different than the calculation you have been doing each month to determine the Retained Earnings amount needed for the Balance Sheet. Beginning Balance is the starting amount. In previous Retained Earnings calculations, you used Current Balance as the starting amount. Beginning Balance is the starting point for this calculation, because Dividends is shown as a line item (a deduction) in the Retained Earnings column. Retained Common Stock Earnings Tota! Beginning Balance July 1, 2019 Issue Common Stock Net Income Dividends Ending Balance July 31, 2019 $0.00 0.00 0.00 0.00 $0.00 204 The Ending Balance in the Retained Earnings column is the balance needed for the Balance Sheet. $0.00 $0.00 Lenny's Lawn Service, Inc. Balance Sheet as of July 31, 2019 CAUTION Enter amounts into the Balance Sheet by typing in the amounts. Do NOT copy cells from the General Ledger or Pre-Closing Trial Balance. Assets Current Assets: Cash Accounts Receivable Supplies Note the following three new sub-totals appearing on Lenny's Balance Sheet: Total Current Assets 0.00 Property & Equipment: Equipment Accumulated Depreciation Property & Equipment, net Total Assets 0.00 $0.00 Total Current Assets is a total of those assets, which will turn-into cash during the next 12 months or be consumed during the next 12 months. The comparison of Total Current Assets to Total Current Liabilities gives some indication of Lenny's liquidity -- that is, its ability to pay its bills in the short-term. Property & Equipment, net is the amount of Fixed Asset cost, which remains to be depreciated in future accounting periods. Total Current Liabilities is a total of those liabilities that will require payment in the next 12 months. In the case of Unearned Revenue, this current liability will be "paid-off" by Lenny's delivering mowing services to the university. Liabilities & Stockholders' Equity Current Liabilities: Accounts Payable Wages Payable Interest Payable Unearned Revenue Total Current Liabilities Long-Term Liabilities: Note Payable Total Liabilities 0.00 0.00 Stockholders' Equity: Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities & Stockholders' Equity 0.00 $0.00 = Lenny's - July 31, 2019 Post-Closing Trial Balance Account # Account Name Debit Credit CAUTION Enter amounts into the Post-Closing Trial Balance by typing in the amounts. Do NOT copy cells from the General Ledger. 100 105 110 150 155 200 205 210 215 220 250 300 Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Accounts Payable Wages Payable Interest Payable Uneared Revenue Dividends Payable Note Payable Common Stock Retained Earnings Service Revenue Supplies Expense Mower Repair Expense Wages Expense Truck Rental Expense Depreciation Expense Interest Expense Totals 305 400 500 505 510 515 520 550 0.00 0.00 July 2019 Transactions Date Description of the Transaction July 1 Borrow $35,000.00 from 1st Bank by signing a 24 month note. (As an example of how to journalize and post a transaction -- this transaction has already been entered into the General Journal and posted to the General Ledger.) July 1 Receive $77,850.00 cash from new investors, and issue $77,850.00 of Common Stock to them. July 1 Purchase $42,000.00 of new mowing equipment, paying cash to the mower dealer. July 1 Pay $500.00 cash for the July truck rental. July 3 Invoice a new customer $2,475.00 for a completed mowing job -- customer will pay in 10 days. July 5 The Board of Directors declares a cash dividend. The total amount of the dividend is $22,500.00 The Date of Record is set as July 15. The Date of Payment is set as July 31. July 7 Pay the employees $6,000.00 for work performed during the 1st week of July. July 10 Complete a mowing job for a new customer -- customer pays $6,500.00 cash for the job. July 12 Collect $3,500.00 cash from the golf course for special rush mowing job completed on May 31. July 14 Pay the employees $7,500.00 for work performed during the 2nd week of July. July 15 Purchase $1,180.00 of supplies from the mower dealer. The supplies are consumed immediately. Lenny's will pay the mower dealer for the supplies in about 2 weeks. U July 15 Collect $2,475.00 on account. The cash that is received is from the new customer for the job that was completed on July 3. U July 17 One of the original mowers purchased in January of 2018 broke down and is repaired by the mower dealer. The cost of the Mower Repair job is $685.00. Lenny's will pay the mower dealer in 30 days July 19 Purchase for cash $21,000.00 of supplies. These supplies will be consumed over the next 12 months. July 20 Collect $30,000.00 from the property management company for work performed in June. OOOO July 21 Pay the employees $6,850.00 for work performed during the 3rd week of July. July 23 Receive a $27,000.00 advance payment from the university. The advance payment is for 6 months of work which will be performed from August 1, 2019 to January 31, 2020. July 25 Complete a special mowing job for the golf course. The total price for the mowing job is $3,700.00. The golf course pays $500.00 cash on this date and will pay the remainder on August 25. July 27 Complete a mowing job for a new customer -- customer pays $3,800.00 cash for the job. July 27 Pay $1,180.00 cash to the mower dealer for the supplies purchased on account on July 15. July 28 Pay the employees $5,300.00 for work performed during the 4th week of July. July 31 Invoice the property management company $16,300.00 for July mowing work. The property management company will pay the invoice on the 20th of next month. July 31 Pay the cash dividend which was declared on July 5. Additional Information Equipment: The $48,000.00 beginning balance in the Equipment account relates to the mowing equipment which was purchased on January 2, 2018. For information related to this mowing equipment see Page 70 in the Solid Footing book. This equipment continues to be used and should be depreciated for the month of July. The following information relates to the new equipment which was purchased on July 1, 2019: The new equipment was placed into service on July 1, 2019 and should be depreciated for the month of July. The estimated useful life of the new equipment is 5 years. At the end of 5 years, the new equipment will have no future value and will be scrapped. The new equipment will be depreciated using the straight-line method. Supplies: At the end of July there are $21,600.00 supplies on-hand. Mowing Service at the University: The monthly mowing service was provided to the university per the contract signed on April 1, 2019. For information on the contract with the university and the related advance payment, see Pages 95 and 98 in the Solid Footing book. Wages Due the Employees: The last wage payment was made to the employees on July 28, 2019. The employees worked on July 29, 30, and 31. For these three days of work the employees earned $2,375.00 of wages. These three days of wages will be paid to the workers during the first week of August. Bank Loan: The interest on the loan from 1st Bank will be paid every three months. The first interest payment to the bank will be made on September 30, 2019. Lenny's calls the bank on July 31 and the bank indicates that the interest on the loan for July is $725.00. Lenny's Lawn Service, Inc. - Chart of Accounts Account # Account Name 100 105 110 150 155 200 205 210 215 220 250 Assets: Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Liabilities: Accounts Payable Wages Payable Interest Payable Unearned Revenue Dividends Payable Note Payable Equity: Common Stock Retained Earnings Revenues: Service Revenue Expenses: Supplies Expense Mower Repair Expense Wages Expense Truck Rental Expense Depreciation Expense Interest Expense 300 305 400 500 505 510 515 520 550 Lenny's Lawn Service, Inc. General Journal Page # 1 Account Name Posted Debit Credit 2019 Month-Day 7-1 Account Number 100 250 35,000.00 Cash Notes Payable Borrowed on Note Payable 35,000.00 Account # 100 Cash Journal Debit Credit Balance Page # 2019 Month-Day 7-1 7-1 Beginning Balance 38,250.00 35,000.00 38,250.00 Dr 73,250.00 Dr 1 Account # 105 Accounts Receivable Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 33,500.00 33,500.00 Dr Account # 110 Supplies Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 4,375.00 4,375.00 Dr Account # 150 Equipment Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 48,000.00 48,000.00 Dr Account # 155 Accumulated Depreciation Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 18,000.00 18,000.00 Cr Account # 200 Accounts Payable Journal Debit Credit Balance 2019 Month-Day 7-1 Page # Beginning Balance 0.00 0.00 Cr Account # 205 Wages Payable 2019 Month-Day Journal Page # Debit Credit Balance 7-1 Beginning Balance 0.00 0.00 Cr Account # 210 Interest Payable Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.00 Cr Account # 215 Unearned Revenue Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 8,000.00 8,000.00 Cr Account # 220 Dividends Payable Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.00 Cr Account # 250 Note Payable Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 35,000.00 0.00 Cr 35,000.00 Cr 7-1 1 Account # 300 Common Stock Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 50,000.00 50,000.00 Cr Account # 305 Retained Earnings Journal Debit Credit Balance 2019 Month-Day 7-1 Page # Beginning Balance 48,125.00 48,125.00 Cr Account # 400 Service Revenue Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.00 Cr Account # 500 Supplies Expense Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.00 Dr Account # 505 Mower Repair Expense Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.001 Dr Account # 510 Wages Expense Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.001 0.001 Dr Account # 515 Truck Rental Expense Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.00) Dr Account # 520 Depreciation Expense Journal Page # Debit Credit 2019 Month-Day 7-1 Balance Beginning Balance 0.00 0.00 Dr Account # 550 Interest Expense Journal Debit Credit Balance 2019 Month-Day 7-1 Page # Beginning Balance 0.00 0.00 Dr Lenny's - July 31, 2019 Pre-Closing Trial Balance Account # Account Name Debit Credit 100 105 110 150 155 200 205 210 215 220 250 Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Accounts Payable Wages Payable Interest Payable Unearned Revenue Dividends Payable Note Payable Common Stock Retained Earnings Service Revenue Supplies Expense Mower Repair Expense Wages Expense Truck Rental Expense Depreciation Expense Interest Expense Totals 300 305 400 500 505 510 515 520 550 0.00 0.00 Lenny's Lawn Service, Inc. Income Statement for the Month Ended July 31, 2019 CAUTION Enter amounts into the Financial Statements by typing in the amounts. Do NOT copy cells from the General Ledger or Pre-Closing Trial Balance. Service Revenue Operating Expenses: Supplies Mower Repair Wages Truck Rental Depreciation Total Operating Expenses Income from Operations Interest Expense Net Income Note the new line item on Lenny's Income Statement Income from Operations. This is Lenny's income from the normal operations of the lawn mowing business. Interest Expense, which is not a cost of operating the business but rather a cost of financing the business, is shown below Income from Operations. Interest Expense is subtracted from Income from Operations to arrive at Net Income. 0.00 0.00 $0.00 Lenny's Lawn Service, Inc. Statement of Stockholders' Equity for the Month Ended July 31, 2019 This is the first time you have prepared a formal Statement of Stockholders' Equity for Lenny's. This statement shows what caused the change in Common Stock and in Retained Earnings from July 1, 2019 to July 31, 2019. Note that the Retained Earnings column on the statement looks different than the calculation you have been doing each month to determine the Retained Earnings amount needed for the Balance Sheet. Beginning Balance is the starting amount. In previous Retained Earnings calculations, you used Current Balance as the starting amount. Beginning Balance is the starting point for this calculation, because Dividends is shown as a line item (a deduction) in the Retained Earnings column. Retained Common Stock Earnings Tota! Beginning Balance July 1, 2019 Issue Common Stock Net Income Dividends Ending Balance July 31, 2019 $0.00 0.00 0.00 0.00 $0.00 204 The Ending Balance in the Retained Earnings column is the balance needed for the Balance Sheet. $0.00 $0.00 Lenny's Lawn Service, Inc. Balance Sheet as of July 31, 2019 CAUTION Enter amounts into the Balance Sheet by typing in the amounts. Do NOT copy cells from the General Ledger or Pre-Closing Trial Balance. Assets Current Assets: Cash Accounts Receivable Supplies Note the following three new sub-totals appearing on Lenny's Balance Sheet: Total Current Assets 0.00 Property & Equipment: Equipment Accumulated Depreciation Property & Equipment, net Total Assets 0.00 $0.00 Total Current Assets is a total of those assets, which will turn-into cash during the next 12 months or be consumed during the next 12 months. The comparison of Total Current Assets to Total Current Liabilities gives some indication of Lenny's liquidity -- that is, its ability to pay its bills in the short-term. Property & Equipment, net is the amount of Fixed Asset cost, which remains to be depreciated in future accounting periods. Total Current Liabilities is a total of those liabilities that will require payment in the next 12 months. In the case of Unearned Revenue, this current liability will be "paid-off" by Lenny's delivering mowing services to the university. Liabilities & Stockholders' Equity Current Liabilities: Accounts Payable Wages Payable Interest Payable Unearned Revenue Total Current Liabilities Long-Term Liabilities: Note Payable Total Liabilities 0.00 0.00 Stockholders' Equity: Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities & Stockholders' Equity 0.00 $0.00 = Lenny's - July 31, 2019 Post-Closing Trial Balance Account # Account Name Debit Credit CAUTION Enter amounts into the Post-Closing Trial Balance by typing in the amounts. Do NOT copy cells from the General Ledger. 100 105 110 150 155 200 205 210 215 220 250 300 Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Accounts Payable Wages Payable Interest Payable Uneared Revenue Dividends Payable Note Payable Common Stock Retained Earnings Service Revenue Supplies Expense Mower Repair Expense Wages Expense Truck Rental Expense Depreciation Expense Interest Expense Totals 305 400 500 505 510 515 520 550 0.00 0.00