Problem: Ewok-Ackbar opened Ewok's Carpet Cleaners Inc. on March 1. During March, the following transactions were completed.
Mar. 1 Issued $10,000 of common stock for $10,000 cash.
1 Purchased used truck for $6,000, paying $4,000 cash and the balance on account.
3 Purchased cleaning supplies for $1,200 on account.
5 Paid $1,800 cash on one-year insurance policy effective March 1.
14 Billed customers $2,800 for cleaning services.
18 Paid $1,500 cash on amount owed on truck and $500 on amount owed on cleaning supplies.
Mar. 20 Paid $1,500 cash for employee salaries.
21 Collected $1,600 cash from customers billed on March 14.
28 Billed customers $2,500 for cleaning services.
31 Paid gas and oil for month on truck $200.
31 Declared and paid a $700 cash dividend.
The chart of accounts for Ewok's Carpet Cleaners Inc. contains the following accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation-Equipment, No. 201 Accounts Payable, No. 212 Salaries Payable, No. 311 Common Stock, No. 320 Retained Earnings, No. 350 Income Summary, No. 400 Service Revenue, No. 633 Gas & Oil Expense, No. 634 Cleaning Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, No. 726 Salaries Expense.
Instructions:
(a) Journalize and post the March transactions. Use page J1 for the journal and the three-column form of account.
(b) Prepare a trial balance at March 31 on a work sheet.
(c) Enter the following adjustments on the work sheet and complete the work sheet.
(1) Earned but unbilled revenue at March 31 was $600.
(2) Depreciation on equipment for the month was $250.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $400 of cleaning supplies on hand at March 31.
(5) Accrued but unpaid employee salaries were $500.
(d) Journalize and post adjusting entries. Use page J2 for the journal.
(e) Prepare the income statement and a retained earnings statement for March and a classified balance sheet at March 31.
(f) Journalize and post closing entries and complete the closing process. Use page J3 for the journal.
(g) Prepare a post-closing trial balance at March 31.