Part XXX Accounting Cycle

Grindstone Paving provides residential and commercial paving services. Their balance sheet at the end of June 2020 is shown below, along with their chart of accounts.

Grindstone Paving

Balance Sheet

As at June 30, 2020

Assets

Cash $7,600

Accounts Receivable $5,800

Prepaid Insurance $996

Equipment$57,600 Less: Accum. Depreciation(5,200) = $52,400

Total Assets $66,796

Liabilities

Accounts Payable $14,300

Unearned Revenue $7,400

Bank Loan $28,000

Total Liabilities $49,700

Stone, Capital $17,096

Total Liabilities & Owners' Equity $66,796

NOTE:The bank loan has monthly payments of $1,000.

Account Description Account #

ASSETS

Cash 101

Accounts Receivable 105

Prepaid Insurance 110

Equipment 120

Accumulated Depreciation 125

LIABILITIES

Accounts Payable 200

Interest Payable 205

Salary Payable 210

Unearned Revenue 215

Bank Loan 220

OWNER'S EQUITY

Rocky Stone, Capital 300

Rocky Stone, Withdrawals 310

Income Summary 315

REVENUE

Service Revenue 400

EXPENSES

Advertising Expense 500

Depreciation Expense 510

Insurance Expense 515

Interest Expense 520

Salaries Expense 545

Telephone Expense 550

For the month of July 2020, Grindstone Paving had the following transactions:

Jul 1 The owner invested $9,200 cash into the business.

Jul 2 Received $2,200 cash for work that will be provided in August.

Jul 5 Received an advertising bill for $710 which will be paid next month.

Jul 8 Paid the July telephone bill for $110 cash.

Jul 10 Provided $8,800 worth of services to customers who will pay later.

Jul 14 Purchased equipment with $7,600 cash.

Jul 20 Received $2,290 in payment from customers paying their accounts.

Jul 22 Paid $1,710 towards accounts payable.

Jul 24 Paid $1,000 toward principal of the bank loan.

Jul 28 Paid $2,500 cash for an employee's salary (all of this salary was earned in July).

Jul 30 The owner withdrew $2,100 cash for personal use.

At the end of July, the following adjustment had to be journalized to properly report the balances of the company's accounts:

Jul 31 One month of prepaid insurance worth $83 has been used.

Jul 31 Monthly depreciation on the equipment was $800

Jul 31 Unearned revenue worth $480 has now been earned.

Jul 31 Interest of $110 has accrued on the bank loan.

Jul 31 Accrued salary expense of $440 for an employee.

Required:

a) Enter the opening balances from the June 2020 balance sheet into the general ledger accounts.

b) Make the journal entries for the month of July and post them to the appropriate general ledger accounts.

c) Create the trial balance in the worksheet, enter the adjustments, and then complete the remaining section of the worksheet.

d) Create the income statement, statement of owner's equity and the classified balance sheet.

e) Make the journal entries for the adjustments and post them to the appropriate general ledger accounts.

f) Make the journal entries to close the books for the month of July 2020 (use the income summary account), and post the journal entries to the appropriate general ledger accounts.

g) Create the post-closing trial balance.