For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 2018, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond entered into the following transactions during July: July 1. The following assets were received from Steffy Lopez in exchange for common stock: cash, $13,500; accounts receivable, $20,800; supplies, $3,200; and office equipment, $7,500. There were no liabilities received. 1. Paid two months’ rent on a lease rental contract, $4,800. 2. Paid the premiums on property and casualty insurance policies, $4,500. 4. Received cash from clients as an advance payment for services to be provided, and recorded it as unearned fees, $5,500. 5. Purchased additional office equipment on account from Office Station Co., $6,500. 6. Received cash from clients on account, $15,300. 10. Paid cash for a newspaper advertisement, $400. 12. Paid Office Station Co. for part of the debt incurred on July 5, $5,200. 12. Recorded services provided on account for the period July 1-12, $13,300. 14. Paid receptionist for two weeks’ salary, $1,750. Record the following transactions on Page 2 of the journal: 17. Recorded cash from cash clients for fees earned during the period July 1–17, $9,450. 18. Paid cash for supplies, $600. 20. Recorded services provided on account for the period July 13–20, $6,650. Recorded cash from cash clients for fees earned for the period July 17–24 24. Recorded cash from cash clients for fees earned for the period July 17–24, $4,000. 26. Received cash from clients on account, $12,000. 27. Paid receptionist for two weeks’ salary, $1,750. 29. Paid telephone bill for July, $325. 31. Paid electricity bill for July, $675. 31. Recorded cash from cash clients for fees earned for the period July 25–31, $5,200. 31. Recorded services provided on account for the remainder of July, $3,000. 31. Paid dividends, $12,500. Instructions 1. journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in t he journal at this time.) 11 Cash 12 Accounts Receivable 14 Supplies 15 Prepaid Rent 16 Prepaid Insurance 18 Office Equipment 19 Accumulated Depreciation 21 Accounts Payable 22 Salaries Payable 23 Unearned Fees 31 Common Stock 32 Retained Earning 51 Salary Expense 52 Rent Expense 53 Supplies Expense 54 Depreciation Expense 55 Insurance Expense 59 Miscellaneous Expense 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). (A) Insurance expired during July is $375. (B) Supplies on hand on July 31 are $1,525. (C) Depreciation of office equipment for July is $750. (D) Accrued receptionist salary on July 31 is $175. (E) Rent expired during July is $2,400. (F) Unearned fees on July 31 are $2,750. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Complete accounting cycle
For the past several years, Steffy Lopez has operated a part-time consulting business
from his home. As of July 1, 2018, Steffy decided to move to rented quarters and to
operate the business, which was to be known as Diamond Consulting, on a full-time
basis. Diamond entered into the following transactions during July:
July
1.
The following assets were received from Steffy Lopez in exchange for common
stock: cash, $13,500;
equipment, $7,500. There were no liabilities received.
1. Paid two months’ rent on a lease rental contract, $4,800.
2. Paid the premiums on property and casualty insurance policies, $4,500.
4.
Received cash from clients as an advance payment for services to be provided,
and recorded it as unearned fees, $5,500.
5.
Purchased additional office equipment on account from Office Station Co.,
$6,500.
6. Received cash from clients on account, $15,300.
10. Paid cash for a newspaper advertisement, $400.
12. Paid Office Station Co. for part of the debt incurred on July 5, $5,200.
12. Recorded services provided on account for the period July 1-12, $13,300.
14. Paid receptionist for two weeks’ salary, $1,750.
Record the following transactions on Page 2 of the journal:
17.
Recorded cash from cash clients for fees earned during the period July 1–17,
$9,450.
18. Paid cash for supplies, $600.
20. Recorded services provided on account for the period July 13–20, $6,650.
Recorded cash from cash clients for fees earned for the period July 17–24
24.
Recorded cash from cash clients for fees earned for the period July 17–24,
$4,000.
26. Received cash from clients on account, $12,000.
27. Paid receptionist for two weeks’ salary, $1,750.
29. Paid telephone bill for July, $325.
31. Paid electricity bill for July, $675.
31.
Recorded cash from cash clients for fees earned for the period July 25–31,
$5,200.
31. Recorded services provided on account for the remainder of July, $3,000.
31. Paid dividends, $12,500.
Instructions
1. journalize each transaction in a two-column journal starting on Page 1, referring to
the following chart of accounts in selecting the accounts to be debited and credited.
(Do not insert the account numbers in t he journal at this time.)
11 Cash
12 Accounts Receivable
14 Supplies
15 Prepaid Rent
16 Prepaid Insurance
18 Office Equipment
19 Accumulated
21 Accounts Payable
22 Salaries Payable
23 Unearned Fees
31 Common Stock
32 Retained Earning
51 Salary Expense
52 Rent Expense
53 Supplies Expense
54 Depreciation Expense
55 Insurance Expense
59 Miscellaneous Expense
2. Post the journal to a ledger of four-column accounts.
3. Prepare an unadjusted
4. At the end of July, the following adjustment data were assembled. Analyze and use
these data to complete parts (5) and (6).
(A) Insurance expired during July is $375.
(B) Supplies on hand on July 31 are $1,525.
(C) Depreciation of office equipment for July is $750.
(D) Accrued receptionist salary on July 31 is $175.
(E) Rent expired during July is $2,400.
(F) Unearned fees on July 31 are $2,750.
5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and
complete the spreadsheet.
6. Journalize and post the
the journal.
7. Prepare an adjusted trial balance.
8. Prepare an income statement, a
9. Prepare and
of accounts.) Record the closing entries on Page 4 of the journal. Indicate closed
accounts by inserting a line in both the Balance columns opposite the closing entry
Trending now
This is a popular solution!
Step by step
Solved in 7 steps
