On December 1, XXX1, Penelope opens her own dental hygiene practice with an investment of $20,000. During the month of December, she has the following transactions:

December 2 Penelope pays $4,500 for 3 months' rent (December XXX1 through February XXX2) in advance for a fully equipped office with telephone service.

December 3 Penelope purchases uniforms for $150 in cash (Uniform Expense).

December 4 She pays $2,400 in cash for one year's liability insurance (December XXX1 through November XXX2).

December 5 She purchases medical supplies for $1,500 in cash (Medical Supplies).

December 6 Income from fees received in cash for the week totals $100.

December 9 Penelope purchases $300 worth of office supplies (billing forms and calling cards) for cash from Office Max (Office Supplies).

December 13 Penelope pays her bookkeeper/secretary $200 salary in cash.

December 13 She bills the Beverly School (Beverly) $400 for services rendered (4 lectures and demonstrations on oral hygiene).

December 13 Income from fees received during the week in cash totals $300.

December 16 Penelope pays $85 in cash for telephone expense.

December 17 She pays an accountant $500 to design an accounting system for her business (Accounting and Legal Expense).

December 18 She purchases embossed toothbrushes to give away to patients for $100 (Promotion Expense).

December 20 She pays the bookkeeper/secretary $200 salary in cash.

December 20 She withdraws $1,000 in cash for personal expenses.

December 20 Income from fees received in cash for the week totals $400.

December 24 Penelope pays the monthly maintenance charge of $500 in cash.

December 27 She pays her bookkeeper/secretary $200 salary in cash.

December 27 Income from fees received in cash for the week totals $400.

The following adjustment information is provided on December 31st:

1. An inventory shows $1,300 worth of medical supplies in house.
2. One month's prepaid rent (for January) has expired.
3. One month's insurance coverage (for January) has expired.
4. $30 worth of office supplies has been used in January.
5. $80 in salaries payable has accrued, although the salary will actually be paid in February.

Steps in Accounting Cycle:

1. Journalize and post daily transactions.
2. Prepare trial balance.
3. Prepare worksheet.
4. Prepare financial statements.
5. Journalize and post adjusting entries.
6. Journalize and post closing entries.
7. Prepare post-closing trial balance.
8. Journalize and post reversing entries.