CJ Dise deposited $45,000 into Para Consulting as the sole owner. Para Consulting purchased supplies, $3,500; and office equipment, $19,500 with a 3 year note payable of $10,000 and the remainder in cash.
For the past several years, CJ Dise has operated a part-time consulting business from his home. As of October 1, 2021, CJ decided to move to rented quarters and to operate the business, which was to be known as Para Consulting, on a full-time basis. Para Consulting entered into the following transactions during October.
Transactions:
October:
- CJ Dise deposited $45,000 into Para Consulting as the sole owner.
- Para Consulting purchased supplies, $3,500; and office equipment, $19,500 with a 3 year note payable of $10,000 and the remainder in cash.
- Paid three months’ rent on a lease rental contract, $ 9,000.
- Paid cash for a newspaper advertisement, $200.
- Paid the yearly premium on property and casualty insurance policies, $6,000.
- Purchased additional office equipment on account from Office Equip Co., $4,500.
- Received cash from clients as an advance payment for services to be provided in the future, $6,000.
- CJ took clients out for a meal to discuss business, $100
- Paid Office Equip Co. for part of the debt incurred on the 5th, $2,500
- Paid cash for supplies, $3000.
- Recorded services provided on account for the period of the 1st –14th, $3,500.
- Paid part-time receptionist for two weeks’ salary, $600.
- Recorded cash from cash clients for services provided during the period of the 1st –16th, $4,000.
- Received cash from clients on account, $2,000.
- Recorded services provided on account for the period of the 15th –21nd, $3,500.
- Recorded cash from cash clients for services provided for the period of the 17th –25th, $2,500.
- Received the electricity bill for the month, $150. (Will pay it later)
- Paid part-time receptionist for two weeks’ salary, $600.
- Paid water bill for the month, $50.
- Recorded cash from cash clients for services provided for the remainder of the month, $2,500.
- Recorded services provided on account for the remainder of the month, 1,000.
- CJ Dise withdrew $5,000 for personal use.
Instructions
- Journalize each transaction in a two-column journal, referring to the following
chart of accounts in selecting the accounts to be debited and credited.
(Do not insert the account numbers in the journal at this time.)
101 Cash 310 CJ Dise, Drawing
120
122 Allowance for Doubtful Accounts 401 Fees Earned
124 Supplies 500
125 Prepaid Rent 501 Salary Expense
126 Prepaid Insurance 502 Rent Expense
150 Office Equipment 503 Supplies Expense
155
201 Accounts Payable 505 Insurance Expense
205 Note Payable 507 Interest Expense
210 Salaries Payable 509 Advertising Expense
220 Unearned Fees 512 Utilities Expense
301 CJ Dise, Capital 515 Meal Expense
- Post the journal to a ledger of four-column accounts.
- Prepare a
trial balance as of October 31, 2021, listing all the accounts in the order given in the ledger. - Journalize and post the
adjusting entries . - One month of Insurance has expired.
- Supplies on hand on at the end of the month are $2,000.
- Accrued receptionist salary for the remainder of the month is $100.
- One month of rent was used.
- Unearned fees at the end of the month are $3,500.
- $2,500 of fees needs to be accrued
- Calculate the interest for one month on the Note Payable using a 6% interest rate. (Use the Note Payable account and round to nearest whole number.)
- Depreciation of office equipment for the month based on SL depreciation over 3 years. (Round to nearest whole number)
- Bad Debt is 1% of sales for the month. (Round to nearest whole number) (Hint: Use the revenue balance after other adjusting entries have been completed)
- Prepare the adjusted trial balance for the end of the month.
- Prepare an income statement, a statement of owner’s equity, and a classified
balance sheet . - Journalize and
post the closing entries. (Income Summary is account #320 in the chart of accounts.) Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry.
- Prepare a post-closing trial balance for the end of the month.
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Journalize and post the
a. One month of Insurance has expired.
b. Supplies on hand on at the end of the month are $2,000.
c. Accrued receptionist salary for the remainder of the month is $100.
d. One month of rent was used.
e. Unearned fees at the end of the month are $3,500.
f. $2,500 of fees needs to be accrued
g. Calculate the interest for one month on the Note Payable using a 6% interest rate. (Use the Note Payable account and round to nearest whole number.)
h.
i.
- Prepare the adjusted
trial balance for the end of the month. - 6. Prepare an income statement, a statement of owner’s equity, and a classified
balance sheet . - Journalize and
post the closing entries. (Income Summary is account #320 in the chart of accounts.) Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. - Prepare a post-closing trial balance for the end of the month.
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