Create a Trial Balance and Income Statement
Cash $18,470
A/R 14,333
Advertising Supplies 3,998
Prepaid Insurance 23,137
Equipment 135,495
A/D – Equipment $19,207
Accounts Payable 11,998
Unearned Service Revenue 14,336
Notes Payable 62,679
Common Stock 67,546
Retained Earnings 19,667
Totals $195,433
During the month of July, the following occurred:
July 2 received $8,127 of the prior month’s receivables
July 3 paid $5,220 of the prior month’s accounts payable and paid $3,200 for July rent
July 5 earned $6,736 worth of the prior month’s unearned revenue
July 6 provided a service and billed the client $3,376
July 9 bought advertising supplies for $2,217 on account
July 10 received $4,200 for a service to be provided
July 11 provided a service and billed the client $7,366
July 12 collected $9,127 of receivables
July 13 paid $7,500 of the notes payable
July 16 bought advertising supplies for $1,189 cash
July 18 provided a service and billed the client $4,934
July 20 received $2,700 for a service to be provided
July 23 paid $4,223 travel expense (all for July travel)
July 24 paid $2,400 of accounts payable
July 25 paid temporary employees $3,356 of wages (all for July work)
July 26 paid $5,000 of the notes payable
July 27 paid the shareholder a $3,000 dividend
July 30 provided a service fully earning the $4,200 from July 10
July 31 paid the shareholder a $4,500 dividend
Required – Part A
Part A1 provide general journal entries in general journal form for the above transactions
Part A2 create a trial balance at July 31 fully taking into account the beginning balances and thegeneral journal entries recorded in part A1 (t-accounts are recommended for key accounts; do not hand them in t-accounts)
Adjusting Entry Information
a. the insurance expires at a rate of $1,218 per month
b. a month-end count reveals about $2,400 of advertising supplies remain on-hand
c. annual depreciation (straight-line is used) is $19,356
d. a thorough analysis reveals only $3,200 of the unearned revenue is not yet earned at month-end
e. the interest on the N/P for the month is $418 (hint: don’t increase the principal of the note)
f. estimated expenses for the month are $2,100 utilities and $800 telephone
g. a bank reconciliation reveals that a $4,000 payment from a client (A/R) was not recorded
Required – Part B
Part B1 provide adjusting journal entries, in general journal form, for the above
Part B2 create an adjusted trial balance
Part B3 create an income statement and a statement of retained earnings for the month of July
Part B4 create a balance sheet at 7/31/12
Part B5 provide closing entries in general journal form