Question 1. On January 1, 2015, Sheldon Howe and Charlie Bouthat started an accounting firm called Howe, Bouthat and Associates. The following activities took place in January:
January 1: Howe and Bouthat Invested $30,000 of cash, $15,000 of office equipment and $2,000 of office supplies in exchange for 100 shares of capital stock.
2: Billed and received $5,000 from Client GHI for future services to be performed.
3: Purchased a one-year (January 2015 through December 2015) professional liability insurance policy for $1,200.
3: Paid office rent for January $4,500.
5: Purchased an additional $500 of office supplies for cash.
8: Billed client ABC $10,000 for services performed and collected this amount.
15: Paid the secretary his semi-monthly salary of $1,000.
16: Purchased $2,000 of office supplies on account.
20: Purchased a used car for business purposes for $15,000; paid $5,000 down and signed a promissory note for the balance.
20: Received a telephone bill for $100.
21: Purchased and paid for an office computer, $1,500
28: Paid the telephone bill received on January 20.
29: Paid $200 for maintenance costs for the used car.
30: Received an invoice for January cleaning services $1,000.
30: Billed Client DEF $5,000 for services rendered.
31: Paid the secretary his semi-monthly salary of $1,000.
REQUIRED:
1. Record the January transactions in general journal form and post to T accounts.
2. Prepare ALL required adjusting entries in addition to the following:
a. At the end of January there was $1,000 of office supplies on hand.
b. Depreciation on all of the plant assets was $1,000.
c. At the end of January, $2,000 of services for GHI was billed.
3. Prepare an income statement for Howe, Bouthat and Associates.