Problem - Emma Pfhoul started a computer consulting business, Phoulish Consulting Services, in December, 20X1. The following transactions occurred during the month.
1) On 12 /2, Emma invested $55,000 of cash and $25,000 of equipment into the business.
2) On 12/3, Emma acquired the assets and liabilities of another business that had closed due to the death of the owner. She paid $35,000 cash and acquired the following: Equipment $13,000, Accounts Receivable $20,000, & Office Supplies $9,000 and he assumed the liability for Accounts Payable of $7,000.
3) On 12/4, paid a total of $3,900 to her landlord for the following: current month's rent of $1,300, $1,300 as an advance payment for January rent and $1,300 as a security deposit (which will be returned upon termination of the three year lease), check #1001.
4) On 12/10, the business purchased $5,000 worth of office supplies on account from Gullickson Enterprises.
5) On 12/15, Shakira Co. was billed $23,000 on invoice #101 for services that had been rendered.
6) On 12/20, paid salaries of $2,200, check number 1002.
7) On 12/22, purchased $1,200 worth of office supplies from Mayer Bros Co on account.
8) On 12/27, received a check in the amount of $16,000 from MacAnally Inc as a partial payment on the amount of receivables purchased on 12/3.
9) On 12/30, paid electric bill of $800, check #1003.
10) On 12/30, received $3,000 from cash customers.
11) On 12/31, Emma withdrew $800 for adult beverages for her personal New Years' Eve party.
INSTRUCTIONS:
1) Journalize each of the above transactions into the journal provided. (You do not have to list explanations)
2) Post the journal to the general ledger provided (Make up appropriate three digit account numbers).
NOTE: Post all cash transactions to the formal general ledger & the remaining accounts to either the formal general ledgers or to "T Accounts"
3) Journalize the following Adjusting Entries.
a) Accrued salaries on December 31st were $1,000.
b) Depreciation on the office equipment for December was $900.
c) Office Supplies on hand at the end of December were $3,800.
4) Post the Adjusting Entries.
5) Journalize Closing Entries (NOTE: You do not have to post the closing entries).
6) Briefly explain the reason for using subsidiary ledgers below.
7) Prepare a formal Income Statement as of December 31, 20X1.
8) Prepare a formal Statement of Owner's Equity as of December 31, 20X1.
9) Prepare a formal Balance Sheet as of December 31, 20X1.