Question No: 1 ( Marks-15 )

Slowhand Services was formed on May 1, 2010. The following transactions took place during the first month.

Transactions on May 1:

1. Eric Clapton invested $50,000 cash in the company, as its sole owner.

2. Hired two employees to work in the warehouse. They will each be paid a salary of $2,800 per month.

3. Signed a 2-year rental agreement on a warehouse; paid $24,000 cash in advance for the first year.

4. Purchased furniture and equipment costing $30,000. A cash payment of $10,000 was made immediately; Sign a Note Payable for the remainder will be paid in 6 months.

5. Paid $1,800 cash for a one-year insurance policy on the furniture and equipment.

Transactions during the remainder of the month:

6. Purchased basic office supplies for $500 cash.

7. Purchased more office supplies for $1,500 on account.

8. Total revenues earned were $20,000$8,000 cash and $12,000 on account.

9. Paid $400 to suppliers for accounts payable due.

10. Received $3,000 from customers in payment of accounts receivable.

11. Received utility bills in the amount of $200, to be paid next month.

12. Paid the monthly salaries of the two employees, totaling $5,600.

Instructions

1) Journalize the May transactions.

2) Post them into ledgers.

3) Prepare Trial balance..

Question No: 2 (Marks-15)

After preparing the trial balance in question no 1 other additional information is also available.

1. Salaries unpaid during month $ 1200.

2. Accrued Revenue unrecorded $ 1550.

3. Insurance expired $ 150 for the month.

4. Charge depreciation on Furniture & equipment $300.

5. Interest accrued on note payable $ 200.

6. Per month rent is $ 1000.

Required:

1. Pass adjusting entries to record additional information.

2. Prepare Worksheet.

3. Pass Closing Entries.

4. Prepare Income Statement, Statement of changes in owner's Equity and classified Balance Sheet