Service Business Accounting Cycle Assume that you are starting a new business, Arrow Accounting Services, with a new partner, Harry Fowl. Harry has had some existing business and you are leaving a position at a larger firm. You've decided for liability purposes to set yourself up as a small corporation. You agree to set up shop at the start of December to allow yourselves time to get ready for the upcoming tax ("busy") scason. Your partner has some existing clients that will now be clients of Arrow. The chart of accounts for Arrow Accounting Services is listed below. Follow the instructions to complete the accounting records for the month of December ARROW ACCOUNTING SERVICES Chart of Accounts REVENUE 401 Fees Income porain yer begoners of ASSETS 101 Cash 111 Accounts Receivable 119 Allowance for Doubtful Accounts 121 Supplies 131 Prepaid Rent 134 Prepaid Insurance 141 Equipment 142 Accumulated Depreciation - Equipment LIABILITIES 202 Accounts Payable 211 Customer Deposits OWNER'S EQUITY 301 Capital 309 Income Summer EXPENSES 511 Salaries Expense 514 Uites Expense 517 Supplies Expense 520 Rent Expense 523 Depreciation Expense-Equipment 526 Insurance Expense 529 Advertising Expense 532 Telephone Expense 535 Maintanancer Expense 540 Bad Debt Expense recht ton fatis 1. Analyze each transaction below and record it in the general journal 2. Post the transactions for the general ledger accounts 3. Prepare a trial balance. 4. Prepare the adjusting entries using the following information: a Compute and record the adjustment for supplies used during the month. An inventory taken on December 31 showed supplies of $475 on hand. b&Record the adjustment for expired rent of $2,500 for the month. c. Compute and record the adjustment for expired insurance for the month, d. Record the adjustment for depreciation of $250 on the old equipment for the month. The first adjustment for depreciation for the new equipment will be recorded in January, 5. Prepare an income statement for the month. 6. Prepare a statement of owner's equity. 7. Prepare a balance sheet. & Journalize and post the closing entries. 9. Prepare a post closing trial balance. TRANSACTIONS Dec. 1 You contribute $16,000 Harry Fowl contribution to the business is $2,000 due on existing credit accounts, $15,000 of new equipment. 2 Purchase supplies for $1,500. Check 1009. 7 Sold services for $5,800 in cash and $745 on credit during the first week of December. 9 Purchased a one-year insurance policy for $3,600; issued Check 1010 to pay the full amount in advance. 11 Collected a total of $395 on nccount from credit customer during the first week of December 12 Issued Check 1011 for $395 to pay for advertising on the local radio station during the month. 13 Collected a total of $500 on account from credit customers during the second week of December 14 Retured some supplies that were damaged for a cash refund of $40. 15 Sold services for $8,500 in cash and $400 on credit during the second week of December 18 Purchased supplies for $800 from Fellowes, Inc, received Invoice 3284, payable in 30 days. 19 Sold services for the $3,890 in cash and $2,560 on credit during the third week of December 20 Collected a total of $750 on account from credit customers during the third week of December 21 Issued Check 1012 for $1,275 for pay for maintenance work on the office cquipment. 22 Issued Check 1013 for $150 to pay for advertisements in the local newspaper. 23 Received the monthly telephone bill for $215 and paid it with Check 1014. 23 Collected a total of $1,560 on account from credit customers during the fourth week of December 26 Driving through tower you notice that one of your new customers, a used book store, has put up a going out of business sale sign in its window. You look and notice that the business still owes you approximately $500 for work you've completed. 28 Sent Check 1016 for $235 in payment of the monthly bill for utilities. 29 Sold services for $5,890 in cash and $675 on credit during the fourth week of December. 30 Issued Checks 1017-1022 for $5,400 to pay the monthly salaries of the regular employees and three part-time workers. 31 Issued Check 1023 for $415 to pay for cleaning services for the month. 31 Purchased additional equipment for $6,000 from Master Equipment Company, issued Check 1024 for $1,250 and bought the rest on credit. The equipment has a five-year life and no salvage value. 31 Received advance payment for tax work for new clients in the amount of $2,500. 31 Sold services for $545 in cash and $325 on credit on December 31