Chapter 2, Problem 2.41CP

Journalizing transactions, posting to T-accounts, and preparing a trial balance

Problem P2-41 continues with the consulting business begun in Problem P1-54 in Chapter 1. Here you will account for Daniels Consulting’s transactions as it is actually done in practice.

Daniels Consulting completed the following transactions during December 2016:

Dec. 2	Stockholders contributed $20,000 cash in exchange for common stock.
2	Paid monthly office rent, $2,000.
3	Paid cash for a computer, $3,600. This equipment is expected to remain in service for five years.
4	Purchased office furniture on account, $3,000. The furniture should last for five years.
5	Purchased office supplies on account, $800.
9	Performed consulting service for a client on account, $2,500.
12	Paid utilities expenses, $150.
18	Performed service for a client and received cash of $2,100.
21	Received $2,400 in advance for client service to be performed in the future.
21	Hired an administrative assistant to be paid $2,055 on the 20th day of each month. The secretary begins work immediately.
26	Paid $200 on account.
28	Collected $400 on account.
30	Cash dividends of $1,000 were paid to stockholders.

Requirements

1. Journalize the transactions, using the following accounts: Cash; Accounts Receivable; Office Supplies; Equipment; Furniture; Accounts Payable; Unearned Revenue; Common Stock; Dividends; Service Revenue; Rent Expense; and Utilities Expense. Explanations are not required.

2. Open a T-account for each of the accounts.

3. Post the journal entries to the T-accounts, and calculate account balances. Formal posting references are not required.

4. Prepare a trial balance as of December 31, 2016.

5. Prepare the income statement of Daniels Consulting for the month ended December 31, 2016.

6. Prepare the statement of retained earnings for the month ended December 31, 2016.

7. Prepare the balance sheet as of December 31, 2016.

8. Calculate the debt ratio for Daniels Consulting at December 31, 2016.