Reviewing the Accounting Cycle Twice
This comprehensive problem requires you to complete the accounting cycle for Stevens Realty twice. This will allow you to review Chapters 1 to 4, while reinforcing the relationships among all parts of the accounting cycle. By completing two cycles, you will see how the ending June balances in the ledger are used to accumulate data in July.
First, examine the chart of accounts for Stevens Realty (attached).
On June 1 John Stevens opened a real estate office in Hamilton called Stevens Realty. The following transactions were completed for the month of June.
2009
June 1 John Stevens invested $9,000 cash in the real estate agency along with $4,000 worth of office equipment.
1 Rented office space and paid three months' rent in advance, $3,000, cheque 601.
2 Bought a company automobile on account.
4 Purchased office supplies. Wrote cheque 603, $300.
5 Purchased additional office supplies on account, $150.
6 Sold a house and collected a $6,000 commission.
8 Paid gas bill for car, $22. Cheque 604.
15 Paid the salary of the part-time office secretary, $350. Cheque 605.
17 Sold a building lot and earned a commission, $6,500. Payment is to be received on July 8.
20 John Stevens withdrew $1,000 from the business to pay personal expenses. Cheque 606.
21 Sold a house and collected a $3,500 commission.
22 Paid gas bill for car. $25. Cheque 607.
24 Paid $600 to repair automobile. Cheque 608.
30 Paid the salary of the part-time office secretary, $350. Cheque 609.
30 Paid the June telephone bill, $510. Cheque 610.
30 Received advertising bill for June, $1,200. The bill is to be paid on July 2.
Required Work for June
1. Journalize transactions and post to ledger accounts.
2. Prepare a trial balance in the first two columns of the worksheet and complete
the worksheet using the following adjustment data:
a. One month's rent had expired
b. An inventory shows $50 worth of office supplies remaining
c. Amortization on office equipment, $100
d. Amortization on automobile, $200
3. Prepare a June income statement, statement of owner's equity, and balance sheet.
4. From the worksheet, journalize and post adjusting and closing entries (page 3 of journal).
5. Prepare a post-closing trial balance.
During July, Stevens Realty completed these transactions:
Required Work for July
1. Journalize transactions in a general journal (pages 4 and 5) and post to ledger accounts.
2. Prepare a trial balance in the first two columns of the worksheet and complete
the worksheet using the following adjustment data:
a. One month's rent had expired.
b. An inventory shows $90 worth of office supplies remaining.
c. Amortization on office equipment, $100
d. Amortization on automobile, $200
3. Prepare a July income statement, statement of owner's equity, and balance sheet.
4. From the worksheet, journalize and post adjusting and closing entries (page 6 of journal).
5. Prepare a post-closing trial balance