KC Inc. began operations on May 1, 2018. The transactions for the first month in business are shown below: $ 250,000 Chart of accounts Assets: Cash Accounts receivable Prepaid insurance Office supplies Equipment Accumulated depreciation, equipment Building Accumulated depreciation, building $ The following transaction occurred in May |(1) On May 1 our company issued shares common stock exchange for cash. The cash received totaled : Par value for common stock $ Shares of common stock issued 100,000 |(2) On May 2, we purchased equipment for cash. The equipment cost: $ 50,000 The estimated useful life of the property is five years. The estimated residual value of the property is: $ 5,000 KC Inc. uses the Double-declining balance method for depreciation of equipment. (3) On May 3 we purchased a building. We financing the purchase by signing a fifteen year note: The estimated useful life of the building is twenty five years. The estimated residual value of the property is: $ 16,000 KC Inc. uses the Double-declining balance method for depreciation of the building The annual interest rate on the note payable is: 5.0% |(4) On May 4, we received cash from a customer (ABD inc.) for work to be completed in May and June: |(5) On May 9 we purchased office supplies on account for: $ 2,200 (6) On May 15 we provided service for a client (XYZ inc.) on account: $ 10,000 (7) On May 20, we paid salaries for our staff which totaled: $ 7,500 (8) On May 31, we paid for a twelve month insurance policy in advance: $ 1,500 160,000 $ 25,000 Liabilities: Accounts payable Interest payable Unearned revenue Notes payable Stockholders' equity: Common stock Paid in capital in excess of par value Retained earnings The following information is available on May 31 Revenue earned from the May 4 transaction totaled: $ 15,000 Office supplies on hand totaled: $ 1,200 Revenue: Service revenue Round all calculations to two decimal places Expenses: Salaries expense Depreciation expense, equipment Depreciation expense, building Interest expense Office supplies expense 504 505 Instructions: 1. Record the transactions for May 1 through May 31 in a general Journal using the account names listed in the chart of accounts (red tab) 2. Post the entries to general ledger (orange tab). 3. Prepare an unadjusted trial balance on May 31, 2018 (green tab). 4. Record all necessary adjusting entries in the general journal (red tab). 5. Post the adjusting entries to the general ledger (orange tab). 6. Prepare an adjusted trial balance on May 31, 2018 (blue tab). 7. Prepare and income statement and statement of retained earnings in good form with a proper heading. 8. Prepare a balance sheet in good form with a proper heading. 9. Record the closing entries on May 31, 2018 in the general journal (red tab). 10. Post the closing entries to the general ledger (orange tab) 11. Prepare a post closing trial balance on May 31, 2018 (gray tab)
