Practice Set Exam -
Instructions:
1. Prepare journal entries to record external transactions.
2. Post journal entries to general ledger T accounts.
3. Prepare journal entries to record adjusting entries.
4. Post the adjusting entries to the general ledger T accounts (include a balance on each account)
5. Prepare an adjusted trial balance.
6. Prepare, using good form, an income statement, a statement of stockholders' equity, and a classified balance sheet.
7. Prepare closing journal entries.
8. Post the closing entries to the general ledger T accounts (include a balance on each account).
9. Prepare a post-closing trial balance.
10. Calculate ratios.
Doodles Inc. engaged in the following transactions in 2017.
Jan 1 - The owner invested $70,000 into the company in exchange for 5,000 shares of common stock.
Jan 1 - Purchased a computer system for $32,000.
Jan 14 - Purchased $1,200 of supplies on account.
Feb 25 - Invoiced clients for services provided on account, $36,000.
Mar 31 - Paid rent for two years, $19,200.
April 1 - The company borrowed $50,000 from Bank of America.
May 14 - Collected $8,500 on account.
July 1 - Paid salaries of $3,000.
July 31 - Paid $800 on account for supplies purchased on January 14.
Aug 10 - Received cash for services provided, $10,200.
Sept 1 - Paid utilities of $4,000.
Oct 1 - Received $30,000 in advance for services to be provided in the future.
Nov 15 - Paid for an ad in the local newspaper, $1,500.
Dec 15 - The company declared and paid $6,000 in dividends.
Dec 30 - Invoiced clients for services performed totaling $9,000.
Adjusting Entries
The data below was gathered for the accountant to complete December 31 adjusting entries (use the journal below and post to the ledger (T accounts) on pages 4 and 5). Once you post to the ledger show the balances in the ledger.
- At December 31, the Company had $300 of supplies on hand.
- Accrued salaries as of December 31 totaled $3,500.
- 1% of the ending balance in the accounts receivable account is estimated to become uncollectible.
- The prepaid rent paid on March 31 was for two years beginning April 1.
- The computer system purchased on January 1 has a five-year useful life and a $2,000 anticipated salvage value.
- The $50,000 borrowed from Bank of America on April 1 was a 4 year note with a 9% rate of interest. Principal is due in 4 years, interest is paid annually on April 1.
- The $30,000 received on October 1 was for services that would be completed equally over 12 months beginning October 1.
Based on the balance in the ledger (T accounts) on pages 4 and 5, complete an adjusted trial balance. Once the trial balance is complete, produce the financial statements.
Once the financial statements are complete, prepare the closing entries for Doodles Inc. (use the journal below and post to the ledger (T accounts) on pages 4 and 5). Once you post to the ledger create a post-closing trial balance.
Attachment:- Assignment File.rar