Assignment
As of July 1, 2016, Kel El decided to move to rented quarters and to operate a consulting business, which was to be known as KE Consulting, on a full-time basis. KE Consulting entered into the following transactions during July.
Transactions:
July:
1. Kel El deposited $30,000 into KE Consulting as the sole owner.
1. KE Consulting purchased supplies, $1,500; and office equipment, $15,500.
1. Paid three months' rent on a lease rental contract, $3,300.
2. Paid the yearly premium on property and casualty insurance policies, $7,200.
4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $5,000.
4. Purchased additional office equipment on account from Office Equip Co., $1,500.
10. Paid cash for a newspaper advertisement, $120.
14. Recorded services provided on account for the period July 1-14, $2,300.
15. Paid Office Equip Co. for part of the debt incurred on July 4, $1,100.
15. Paid part-time receptionist for two weeks' salary, $600.
17. Recorded cash from cash clients for fees earned during the period July 1-16, $4,250.
18. Paid cash for supplies, $500.
22. Recorded services provided on account for the period July 15-22, $2,100.
25. Recorded cash from cash clients for fees earned for the period July 17-25, $1,850.
26. Received cash from clients on account, $2,600.
28. Paid part-time receptionist for two weeks' salary, $600.
29. Paid water bill for July, $35.
30. Received the electricity bill for July, $224. (Will pay it later)
30. Recorded cash from cash clients for fees earned for the period July 26-30, $3,250.
30. Recorded services provided on account for the remainder of July, $1,200.
30. Kel El withdrew $4,000 for personal use.
Instructions
1. 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 301 Kel El, Capital
120 Accounts Receivable 310 Kel El, Drawing
124 Supplies 401 Fees Earned
125 Prepaid Rent 501 Salary Expense
126 Prepaid Insurance 502 Rent Expense
150 Office Equipment 503 Supplies Expense
155 Accumulated Depreciation 504 Depreciation Expense
201 Accounts Payable 505 Insurance Expense
210 Salaries Payable 509 Advertising Expense
220 Unearned Fees 512 Utilities Expense
2. Post the journal to a ledger of four-column accounts.
3. Prepare a trial balance as of July 31, 2016, listing all the accounts in the order given in the ledger.
4. Journalize and post the adjusting entries.
a. One month worth of Insurance expired.
b. Supplies on hand on July 31 are $1,350.
c. Depreciation of office equipment for July is $700.
d. Accrued receptionist salary on July 31 is $90.
e. Rent expired during July is $1,100.
f. Unearned fees on July 31 are $2,600.
5. Prepare the adjusted trial balance.
6. Prepare an income statement, a statement of owner's equity, and a balance sheet.
7. 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.
8. Prepare a post-closing trial balance.