Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 20Y5. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into transactions. In Part 1 of this problem, the accounting cycle was completed up through the preparation of the adjusted trial balance.

Required:

8. If you completed the end-of-period work sheet in Part 1, use the adjusted trial balance figures to prepare an income statement, a statement of owner’s equity, and a balance sheet. If you didn’t complete the end-of-period work sheet in Part 1, use the ledger (the Excel spreadsheet) to prepare an income statement, a statement of owner’s equity, and a balance sheet. Be sure to read the instructions above each statement carefully.

9.

A.	Prepare the closing entries on Page 8 of the journal. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
B.	Use the spreadsheet to post the closing entries to the ledger of four-column accounts. Add the appropriate posting reference to the journal in CengageNOW.

10. Prepare a post-closing trial balance.

CHART OF ACCOUNTS

Kelly Consulting

General Ledger

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

	LIABILITIES
21	Accounts Payable
22	Salaries Payable
23	Unearned Fees

	EQUITY
31	Kelly Pitney, Capital
32	Kelly Pitney, Drawing

	REVENUE
41	Fees Earned

CHART OF ACCOUNTS

Kelly Consulting

General Ledger

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

	LIABILITIES
21	Accounts Payable
22	Salaries Payable
23	Unearned Fees

	EQUITY
31	Kelly Pitney, Capital
32	Kelly Pitney, Drawing

	REVENUE
41	Fees Earned

9. A.	Prepare the closing entries on Page 8 of the journal. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
9. B.	Add the appropriate posting reference to the closing entries in the journal in CengageNOW.

8. If you completed the end-of-period work sheet in Part 1, use the adjusted trial balance figures to prepare an income statement. If you didn’t complete the end-of-period work sheet in Part 1, use the ledger (the Excel spreadsheet) to prepare an income statement. Be sure to complete the statement heading. Refer to the Chart of Accounts and the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive. You will not need to enter colons (:) on the income statement.

8. If you completed the end-of-period work sheet in Part 1, use the adjusted trial balance figures to prepare a statement of owner’s equity. If you didn’t complete the end-of-period work sheet in Part 1, use the ledger (the Excel spreadsheet) to prepare a statement of owner’s equity. Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

8. If you completed the end-of-period work sheet in Part 1, use the adjusted trial balance figures to prepare a balance sheet. If you didn’t complete the end-of-period work sheet in Part 1, use the ledger (the Excel spreadsheet) to prepare a balance sheet. Be sure to complete the statement heading. Refer to the Chart of Accounts and the list of Labels and Amount Descriptions 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. Enter all values as positive amounts. When entering assets, enter them in order of liquidity.

Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 20Y5. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions:

May	3	Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $4,500.
	5	Received cash from clients on account, $2,450.
	9	Paid cash for a newspaper advertisement, $225.
	13	Paid Office Station Co. for part of the debt incurred on April 5, $640.
	15	Provided services on account for the period May 1–15, $9,180.
	16	Paid part-time receptionist for two weeks’ salary including the amount owed on April 30, $750.
	17	Received cash from cash clients for fees earned during the period May 1–16, $8,360.

Record the following transactions on Page 6 of the journal:

May	20	Purchased supplies on account, $735.
	21	Provided services on account for the period May 16–20, $4,820.
	25	Received cash from cash clients for fees earned for the period May 17–23, $7,900.
	27	Received cash from clients on account, $9,520.
	28	Paid part-time receptionist for two weeks’ salary, $750.
	30	Paid telephone bill for May, $260.
	31	Paid electricity bill for May, $810.
	31	Received cash from cash clients for fees earned for the period May 26–31, $3,300.
	31	Provided services on account for the remainder of May, $2,650.
	31	Kelly withdrew $10,500 for personal use.

Required:

1.

The chart of accounts is shown in a separate panel and the post-closing trial balance as of April 30, 20Y5, is shown below.

A.	Download the spreadsheet in the Ledger panel and save the Excel file to your computer. Be sure to save your work in Excel as it will be used to complete the following steps in Part 1 of this problem as well as steps in Part 2 of this problem. Your input into the spreadsheet will not be included in your grade in CengageNOW on this problem.
B.	For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 20Y5, enter Balance in the Item column and enter ‘X’ in the Posting Reference column.
C.	Journalize each of the May transactions in a two-column journal starting on Page 5 of the journal. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. (Do not insert the account numbers in the journal at this time.)

2.

Post the journal entries on pages 5 and 6 of the journal to the ledger of four-column accounts.

A.	Use the spreadsheet to post the May transactions from the journal to a ledger of four-column accounts.
B.	Add the appropriate posting reference to the journal.

3.

Prepare an unadjusted trial balance. Accounts with zero balances can be left blank.

4.

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

•	Insurance expired during May is $275.
•	Supplies on hand on May 31 are $715.
•	Depreciation of office equipment for May is $330.
•	Accrued receptionist salary on May 31 is $325.
•	Rent expired during May is $1,600.
•	Unearned fees on May 31 are $3,210.

5.

(Optional) On your own paper or spreadsheet, enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet. Find a blank end-of-period work sheet in the Excel spreadsheet you previously downloaded.

6.

A.	Journalize the adjusting entries on Page 7 of the journal. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
B.	Post the adjusting entries to the ledger, inserting balances in the accounts affected.
C.	Add the appropriate posting reference to the adjusting entries in the journal in CengageNOW.

7.

Prepare an adjusted trial balance. Accounts with zero balances can be left blank.

Kelly Consulting

POST-CLOSING TRIAL BALANCE

April 30, 20Y5

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	22,100.00
2	Accounts Receivable	3,400.00
3	Supplies	1,350.00
4	Prepaid Rent	3,200.00
5	Prepaid Insurance	1,500.00
6	Office Equipment	14,500.00
7	Accumulated Depreciation		330.00
8	Accounts Payable		800.00
9	Salaries Payable		120.00
10	Unearned Fees		2,500.00
11	Kelly Pitney, Capital		42,300.00
12	Totals	46,050.00	46,050.00

Instructions Chart of Accounts Labels and Amount Descriptions Journal ournal 2 3 4 5 6 10 11