Part (B) Accounting Cycle Comprehensive Problem

[75 marks in total]

Best solutions, Inc. completed the following transactions during January 2019:

1. Shareholders invested in the business $60,000 cash and a delivery truck valued at $72,000 in exchange for common stock.
2. Purchased supplies for $3000 cash.
3. Paid $5,500 for a one-year insurance policy, effective January1.
4. Performed delivery services for a customer and received $4,000 cash.
5. Completed a large delivery job for a customer on account for $15,000.
6. Paid $10,000 for employee salaries.
7. Performed delivery services for customers and received $110,000 cash.
8. Collected $5,000 in advance for delivery service to be performed later.
9. Collected $7,000 cash from a customer on account.
10. Purchased fuel for the truck, paying $3,600 with a company credit card (Credit accounts payable).
11. Performed delivery services on account, $9,500.
12. Paid office rent $2,400.
13. Paid $2,000 for accounts payable.
14. Paid cash dividends of $18,000.

Requirements:

1. Record each transaction in the journal. Key each transaction by its letter (Explanations are not required).

[28 marks]

2. Post the transactions that you recorded in requirement 1 to the ledger accounts using T-accounts. The ledger for Best solutions contains the following accounts:

Cash Service revenue

Accounts receivable Salaries expense

Supplies Depreciation expense

Prepaid insurance Insurance expense

Delivery truck Fuel expense

Accumulated depreciation rent expense

Accounts payable supplies expense

Salaries payable

Unearned service revenue

Common stock

Retained earnings

Dividends

[12 marks]

3. Prepare a trial balance at January 31 on a worksheet 10 marks
4. Enter the following adjustments on the worksheet.
   1. Accrued but unpaid employee salaries were $3,500.
   2. Depreciation expense for the month was $250.
   3. Prepaid insurance expired, $500.
   4. An inventory count shows $750 of supplies on hand at January 31.
   5. Unearned service revenue earned during January, $1,750.

[5 marks]

5. Complete the worksheet showing:

• The adjusted trial balance 10 marks
• The income statement for the month ended January 31, 2019 5 marks
• The balance sheet on the same date. [ 5 marks]

• note: write there and i need explain to copy .. dont write on paper belize thanks