phy Studio (P O You have reached the end of the first section of this book. The following problem is designed to review and reinforce your knowledge of accounting for a service business. Tim Arnold has been a photographer since his graduation from high school several vears ago. On July 1, 20X1, he decided to open his own photography firm, called Armold's Photos. To start his accounting system, Jim developed the chart of accounts shown below Arnold's Photos Chart of Accounts Assets Owner's Equity Jim Arnold, Capital Jim Arnold, Drawing Cash Accounts Receivable 111 311 112 Office Supplies 312 113 313 Income Summary Photography Supplies Prepaid Insurance Office Equipment 114 115 Revenue 121 121,1 Accumulated Depreciation-Office Equipment 122 Photography Equipment 411 Photography Revenue Vending Machine Revenue 412 Expenses Salaries Expense Advertising Expense 513 511 122.1 Accumulated Depreciation Photography Equipment Furniture and Fixtures 123.1 Accumulated Depreciation-Furniture and Fixtures 512 Rent Expense Repairs Expense Insurance Expense Office Supplies Expense Photography Suppliles Expense 123 514 515 516 517 Liabilities Accounts Payable Notes Payable Salaries Payable Depreciation Expense-Office Equipment 519 518 211 Depreciation Expense-Photography Equipment Depreciation Expense-Furniture and 212 213 520 Fixtures 521 Utilities Expense Miscellaneous Expense 522 Jim completed the following transactions during the first month of operations: 20X1 1 Jim invested $40,000 cash and photography equipment valued at $20,000 in the business. 1 Purchased office supplies for cash, $1,300. I Purchased photography supplies on account, $6,700. 1 Paid July rent, $1,700. 1 Paid for a newspaper ad, $500. 2 Purchased office equipment on account, $6,750. 2 Paid property insurance for the upcoming year, $3,600. 3 Purchased a computer system and software, $3,200, by issuing a note payable 5 Paid for promotional handouts, $150. 6 Paid miscellaneous expenses, $175. 7 Paid salaries of employees, $1,400. 7 Recorded week's cash receipts for photo work, $1,350. Jul. Jul. 8 Paid for carpet cleaning (a miscellaneous expense), $75. 9 Recorded photo work done for a customer on account, $855. 9 Purchased additional photography supplies on account, $3,200. 10 Purchased additional photography equipment for cash, $3,500. 10 Entered into a contract with Southside Food Vendors to place vending machines in the waiting room. Jim is to receive 10% of all sales, with a minimum of $200 monthly. Received $200 as an advance payment. 11 Purchased furniture for the lobby arca, $1,700. Paid cash in full. 12 Paid cash for the installation of overhead lighting fixtures, $900. 15 Recorded second week's cash receipts for photo work, $2,170. 15 Paid weekly salaries, $1,400. 17 Jim withdrew cash for personal use, $800. 18 Paid for TV ad, $710. 19 Paid for repair to equipment, $80. Collected $500 for the photo work done on account on July 9. 22 Recorded third week's cash receipts for photo work, $2,045. 22 Paid weekly salaries, $1,400. 23 Did a special wedding photo session for a customer on credit, $550. 28 Recorded fourth week's cash receipts for photo work, $1,995. 29 Paid salaries of employees, $1,400. 30 Paid water bill for July, $75. 30 Paid electric bill for July, $1,095. Made a $500 payment on the note for the computer purchased on July 3. 31 Made a payment for the office equipment purchased on account, $2,000. 31 19 31 Made a payment on the photography supplies purchased on account, $1,000. Wrote a business check to pay for Jim's home phone bill, $310. Southside Food Vendors reported a total of $2,800 of vending machine sales for July. Ten percent of these sales is $280. Since $200 had already been received and recorded in July, Jim was owed $80. Received the $80 check. 31 31 Directions: 1. Open an account in the ledger for each account shown in the chart of accounts. 2. Journalize each of the transactions for July, beginning on page 1 of the general journal. 3. Post the journal entries to the ledger. 4. Prepare a trial balance of the ledger in the first two columns of a 10-column work sheet 5. Complete the 10-column work sheet. Assume for the purposes of this problem that Jim has a one-month accounting period, Data for adiustments are as follows: 19 Paid for repair to equipment, $80. 19 Collected $500 for the photo work done on account on July 9. 22 Recorded third week's cash receipts for photo work, $2,045. 22 Paid weekly salaries, $1,400. Did a special wedding photo session for a customer on credit, $550, 25 Recorded fourth week's cash receipts for photo work, $1,995. Paid salaries of employees, $1,400. 30 Paid water bill for July, $75. 30 Paid electric bill for July, $1,095. 28 29 31 Made a $500 payment on the note for the computer purchased on July 3, 31 Made a payment for the office equipment purchased on account, $2,000, 31 Made a payment on the photography supplies purchased on account, $1,000 31 Wrote a business check to pay for Jim's home phone bill, $310. Southside Food Vendors reported a total of $2,800 of vending machine sales for July. Ten percent of these sales is $280. Since $200 had already been received and recorded in July, Jim was owed $80. Received the $80 check 31 Directions: 1. Open an account in the ledger for each account shown in the chart of accounts, 2. Journalize each of the transactions for July, beginning on page 1 of the general journal. 3. Post the journal entries to the ledger. 4. Prepare a trial balance of the ledger in the first two columns of a 10-column work sheet. 5. Complete the 10-column work sheet. Assume for the purposes of this problem that Jim has a one-month accounting period. Data for adjustments are as follows: (a) Office supplies on hand, $850. (b) Photography supplies on hand, $5,550. (c) Insurance expired, $300. (d) Salaries unpaid, two days of a five-day week; weekly salaries are $1,400. (e) Depreciation of office equipment, $190. ( Depreciation of photography equipment, $275. (g) Depreciation of furniture and fixtures, $75. 6. Prepare an income statement for the month ended July 31, 7. Prepare a statement of owner's equity for the month ended July 31. 8. Prepare a balance sheet as of July 31. 9. Journalize adjusting entries from the completed work sheet. 10. Journalize closing entries. 11. Post adjusting and closing entries to the ledger. 12. Prepare a post-closing trial balance. Accounting for the Service Business PARTI phy Studio (P O You have reached the end of the first section of this book. The following problem is designed to review and reinforce your knowledge of accounting for a service business. Tim Arnold has been a photographer since his graduation from high school several vears ago. On July 1, 20X1, he decided to open his own photography firm, called Armold's Photos. To start his accounting system, Jim developed the chart of accounts shown below Arnold's Photos Chart of Accounts Assets Owner's Equity Jim Arnold, Capital Jim Arnold, Drawing Cash Accounts Receivable 111 311 112 Office Supplies 312 113 313 Income Summary Photography Supplies Prepaid Insurance Office Equipment 114 115 Revenue 121 121,1 Accumulated Depreciation-Office Equipment 122 Photography Equipment 411 Photography Revenue Vending Machine Revenue 412 Expenses Salaries Expense Advertising Expense 513 511 122.1 Accumulated Depreciation Photography Equipment Furniture and Fixtures 123.1 Accumulated Depreciation-Furniture and Fixtures 512 Rent Expense Repairs Expense Insurance Expense Office Supplies Expense Photography Suppliles Expense 123 514 515 516 517 Liabilities Accounts Payable Notes Payable Salaries Payable Depreciation Expense-Office Equipment 519 518 211 Depreciation Expense-Photography Equipment Depreciation Expense-Furniture and 212 213 520 Fixtures 521 Utilities Expense Miscellaneous Expense 522 Jim completed the following transactions during the first month of operations: 20X1 1 Jim invested $40,000 cash and photography equipment valued at $20,000 in the business. 1 Purchased office supplies for cash, $1,300. I Purchased photography supplies on account, $6,700. 1 Paid July rent, $1,700. 1 Paid for a newspaper ad, $500. 2 Purchased office equipment on account, $6,750. 2 Paid property insurance for the upcoming year, $3,600. 3 Purchased a computer system and software, $3,200, by issuing a note payable 5 Paid for promotional handouts, $150. 6 Paid miscellaneous expenses, $175. 7 Paid salaries of employees, $1,400. 7 Recorded week's cash receipts for photo work, $1,350. Jul. Jul. 8 Paid for carpet cleaning (a miscellaneous expense), $75. 9 Recorded photo work done for a customer on account, $855. 9 Purchased additional photography supplies on account, $3,200. 10 Purchased additional photography equipment for cash, $3,500. 10 Entered into a contract with Southside Food Vendors to place vending machines in the waiting room. Jim is to receive 10% of all sales, with a minimum of $200 monthly. Received $200 as an advance payment. 11 Purchased furniture for the lobby arca, $1,700. Paid cash in full. 12 Paid cash for the installation of overhead lighting fixtures, $900. 15 Recorded second week's cash receipts for photo work, $2,170. 15 Paid weekly salaries, $1,400. 17 Jim withdrew cash for personal use, $800. 18 Paid for TV ad, $710. 19 Paid for repair to equipment, $80. Collected $500 for the photo work done on account on July 9. 22 Recorded third week's cash receipts for photo work, $2,045. 22 Paid weekly salaries, $1,400. 23 Did a special wedding photo session for a customer on credit, $550. 28 Recorded fourth week's cash receipts for photo work, $1,995. 29 Paid salaries of employees, $1,400. 30 Paid water bill for July, $75. 30 Paid electric bill for July, $1,095. Made a $500 payment on the note for the computer purchased on July 3. 31 Made a payment for the office equipment purchased on account, $2,000. 31 19 31 Made a payment on the photography supplies purchased on account, $1,000. Wrote a business check to pay for Jim's home phone bill, $310. Southside Food Vendors reported a total of $2,800 of vending machine sales for July. Ten percent of these sales is $280. Since $200 had already been received and recorded in July, Jim was owed $80. Received the $80 check. 31 31 Directions: 1. Open an account in the ledger for each account shown in the chart of accounts. 2. Journalize each of the transactions for July, beginning on page 1 of the general journal. 3. Post the journal entries to the ledger. 4. Prepare a trial balance of the ledger in the first two columns of a 10-column work sheet 5. Complete the 10-column work sheet. Assume for the purposes of this problem that Jim has a one-month accounting period, Data for adiustments are as follows: 19 Paid for repair to equipment, $80. 19 Collected $500 for the photo work done on account on July 9. 22 Recorded third week's cash receipts for photo work, $2,045. 22 Paid weekly salaries, $1,400. Did a special wedding photo session for a customer on credit, $550, 25 Recorded fourth week's cash receipts for photo work, $1,995. Paid salaries of employees, $1,400. 30 Paid water bill for July, $75. 30 Paid electric bill for July, $1,095. 28 29 31 Made a $500 payment on the note for the computer purchased on July 3, 31 Made a payment for the office equipment purchased on account, $2,000, 31 Made a payment on the photography supplies purchased on account, $1,000 31 Wrote a business check to pay for Jim's home phone bill, $310. Southside Food Vendors reported a total of $2,800 of vending machine sales for July. Ten percent of these sales is $280. Since $200 had already been received and recorded in July, Jim was owed $80. Received the $80 check 31 Directions: 1. Open an account in the ledger for each account shown in the chart of accounts, 2. Journalize each of the transactions for July, beginning on page 1 of the general journal. 3. Post the journal entries to the ledger. 4. Prepare a trial balance of the ledger in the first two columns of a 10-column work sheet. 5. Complete the 10-column work sheet. Assume for the purposes of this problem that Jim has a one-month accounting period. Data for adjustments are as follows: (a) Office supplies on hand, $850. (b) Photography supplies on hand, $5,550. (c) Insurance expired, $300. (d) Salaries unpaid, two days of a five-day week; weekly salaries are $1,400. (e) Depreciation of office equipment, $190. ( Depreciation of photography equipment, $275. (g) Depreciation of furniture and fixtures, $75. 6. Prepare an income statement for the month ended July 31, 7. Prepare a statement of owner's equity for the month ended July 31. 8. Prepare a balance sheet as of July 31. 9. Journalize adjusting entries from the completed work sheet. 10. Journalize closing entries. 11. Post adjusting and closing entries to the ledger. 12. Prepare a post-closing trial balance. Accounting for the Service Business PARTI