On July 1, 2011, Lula Plume created a new self-storage business, Safe Storage Co.

The following transactions occurred during the company's first month.

July 1 Plume invested $30,000 cash and buildings worth $150,000 in the business.

2 Rented equipment by paying $2,000 cash for the first month's (July) rent.

5 Purchased $2,400 of office supplies for cash.

10 Paid $7,200 cash for the premium on a 12-month insurance policy. Coverage

begins on July 11.

14 Paid an employee $1,000 cash for two weeks' salary earned.

24 Collected $9,800 cash for storage fees from customers.

28 Paid another $1,000 cash for two weeks' salary earned by an employee.

29 Paid $950 cash for minor repairs to a leaking roof.

30 Paid $400 cash for this month's telephone bill.

31 Plume withdrew $2,000 cash for personal use.

The company's chart of accounts follows:

101 Cash

401 Storage Fees Earned

106 Accounts Receivable

606 Depreciation ExpenseBuildings

124 Office Supplies

622 Salaries Expense

128 Prepaid Insurance

637 Insurance Expense

173 Buildings

640 Rent Expense

174 Accumulated DepreciationBuildings

650 Office Supplies Expense

209 Salaries Payable

684 Repairs Expense

301 L. Plume, Capital

688 Telephone Expense

302 L. Plume,Withdrawals

901 Income Summary

Required

1. Prepare journal entries to record the transactions for July. Record prepaid and

unearned items in balance sheet accounts.

2.

Use T-account to set up each ledger account and post above journal entries to the

ledger accounts.

3.

Use the following information to journalize and post adjusting entries for the

month:

a.

Two-thirds of one month's insurance coverage has expired.

b.

At the end of the month, $1,525 of office supplies are still available.

c.

This month's depreciation on the buildings is $1,500.

d.

An employee earned $100 of unpaid and unrecorded salary as of month-end.

e.

The company earned $1,150 of storage fees that are not yet billed at month-end.

4.

make an adjusted trial balance as of July 31.

5.

Prepare the income statement and the statement of owner's equity for the month of

July and the balance sheet at July 31, 2011.

6.

Prepare journal entries to close the temporary accounts and post these entries to the

ledger.

7.

make a post-closing trial balance.