PART 1:

The following transactions occurred for Murphy Delivery Service during December 2020

Dec. 1: Murphy Delivery Service began operations by receiving $22,000 cash and a truck with a fair value of $15,000 from Russ Murphy. The business issued Murphy shares of common stock in exchange for this contribution.

Dec. 1: Paid $4,080 cash for a one-year insurance policy. The policy begins on December 1.

Dec. 4: Paid $1,400 cash for office supplies

Dec. 12: Performed delivery services for a customer and received $4,800 cash.

Dec. 15: Completed a large delivery job, billed the customer, $11,400, and received a promise to collect the $11,400 within one week.

Dec. 18: Paid employee salary, $3,600.

Dec. 20: Received $7,850 cash for performing delivery services.

Dec. 22: Collected $6,400 in advance for delivery service to be performed later.

Dec. 25: Collected $11,400 cash from a customer on account.

Dec. 27: Purchased fuel for the truck, paying $750 on the account. (Credit Accounts Payable)

Dec. 28: Performed delivery services on account, $5,750.

Dec. 29: Paid office rent, $2,550, for the month of December.

Dec. 30: Paid $460 on the account.

Dec. 31: Cash dividends of $3,450 were paid to stockholders.

Assume that Murphy Delivery Service started its operations in December 2020 and the beginning balance in all accounts is zero.

Requirements:

1: Record each transaction in the journal using the following chart of accounts. Explanations are not required.

2: Post the transactions in the T-accounts.

3: Prepare an unadjusted trial balance as of December 31, 2020.

4: Journalize the adjusting entries using the following adjustment data and also by reviewing the journal entries prepared in Requirement 1. Post adjusting entries to the T-accounts.

a. Depreciation was recorded on the truck using the straight-line method. Assume a useful life of seven years and a residual value of $2,400.

b. Office Supplies on hand, $890.

c. Accrued Service Revenue, $3,250.

d. Accrued Salaries Expense, $1,500.

e. Prepaid Insurance for the month has expired.

f. Unearned Revenue earned during the month, $4,350.

5: Prepare Murphy Delivery Services income statement and statement of retained earnings for the month ended December 31, 2020, and the classified balance sheet on that date.

6: Journalize the closing entries, and post to the T-accounts.

7: Prepare a post-closing trial balance as of December 31, 2020.

PART 2:

Murphy Delivery Service has completed closing entries and the accounting cycle for 2020. The business is now ready to record January 2021 transactions.

Jan. 3: Collected $1,700 cash from customer on account.

Jan. 5: Purchased office supplies on account, $1,450.

Jan. 12: Performed delivery services for a customer and received $4,150 cash.

Jan. 15: Paid employee salary, including the amount owed on December 31, $6,900.

Jan. 18: Performed delivery services on account, $2,850.

Jan. 20: Paid $950 on account.

Jan. 24: Purchased fuel for the truck, paying $550 cash

Jan. 27: Completed the remaining work due for Unearned Revenue.

Jan. 28: Paid office rent, $2,550, for the month of January.

Jan. 30: Collected $4,500 in advance for delivery service to be performed later.

31: Cash dividends of $1,850 were paid to stockholders.

Requirements:

1: Record each transaction in the journal. Explanations are not required.

2: Post the transactions in the T-accounts. Don't forget to use the December 31, 2020, ending balances as appropriate.

3: Prepare an unadjusted trial balance as of January 31, 2021.

4: Journalize the adjusting entries using the following adjustment data and also by reviewing the journal entries prepared in Requirement 1. Post adjusting entries to the T-accounts.

a. Depreciation was recorded on the truck for the month.

b. Office Supplies on hand, $350.

c. Accrued Service Revenue, $2,800.

d. Accrued Salaries Expense, $1,200.

e. Prepaid Insurance for the month has expired.

5: Prepare Murphy Delivery Service's income statement and statement of retained earnings for the month ended January 31, 2021, and the classified balance sheet on that date.