Kelly pitney began her consulting business, Kelly Consulting, on April 1, 2010. The accounting cylcle for Kelly Consulting for April , including financial statements was illistrated on page 157-168. During May, kelly consulting entered the following transactions:
May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $2,500.
- Received cash from clients on account, $1,750.
- Paid cash for a newspaper advertisement, $300.
- Paid office station company for part of the debt incurred on april 5, $400.
- Recorded services provided on account for the period May 1-15, $6,100.
- paid part-time receptionist for two weeks’ salary including the amount owed on April 30, $750.
- Recorded cash from cash clients for fees earned during the period May 1-16, $8,200.
- Purchased supplies on account, $400
- Recorded services provided on account for the period May 16-20, $3,900.
- Recorded cash from cash clients for fees earned for the period May 17-23, $5,100.
- Recieved cash from clients on account, $9,500.
- Paid part-time receptionist for two weeks salary, $750.
- Paid telephone bill for May, $120.
- Paid electricity bill for May $290.
- Recorded cash from cash clients for fees earned for the period May 26-31, $3,875.
- Recorded services provided on account for the remainder of May, $3,200.
- Kelly withdrew $8,000 for personal use.
Pg. 158 Chart of Accounts:
April 1. The following assets were recieved from Kelly Pitney: Cash, $13,100; Accounts receivable, $3,000; Supplies, $1,400; and office equipment, $12,500. there were no liabilities recieved.
- Paid three months rent on a lease rental contract, $4,800.
- Paid the premiums on property and casualty insurance policies, $1,800.
- Recieved cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $5,000.
- Purchased additional office equipment on account from Office Station Co., $2,000.
- Recieved cash from clients on account, $1,800.
- Paid cash for a newspaper advertisement, $120.
- paid Office Station Co. for part of the debt incurred on April 5, $1,200.
- Recorded services provided on account for the period April 1-12, $4,200.
- Paid part-time receptionist for two weeks’ salary, $750.
- Recorded cash from cash clients for fees earned during the period April 1-16, $6,250.
- Paid cash for supplies, $800.
- Recorded services provided on account for the period April 13-20, $2,100.
- Recorded cash from cash clients for fees earned for the period April 17-24, $3,850.
- Recieved cash from clients on account, $5,600.
- Paid part-time receptionist for two weeks’ salary, $750.
- Paid telephone bill for April, $130.
- paid electricity bill for April, $200.
- Recorded cash from clients for fees earned for the period April 25-30, $3,050.
- Recorded services provided on account for the remainder of April, $1,500.
- kelly withdrew $6,000 for personal use.
Pg. 166 Post-closing trial balance
Debit Credit
cash…………………………..22,100
Accounts receivable…….3,400
Supplies………………………1,350
Prepaid rent………………….3,200
Prepaid insurance………….1,500
office equipment……………14,500
Accumualted depreciation.. 330
Accounts payable………….. 800
Salaries Payable………….. 120
Unearned Fees……………. 2,500
kelly pitney, Capital………. 42,300
46,050 46,050
Instructions:
- The chart of accounts for Kelly Consulting is shown on page 158, and the post-closing trail balance as of April 30, 2010 is shown on page 166. For each account in the post-closing trial balance, enter the balance in the appropriate balance column of a four column account. Date the balances May 1, 2010, and place a check mark in the posting referece column. Journalize each of the May transactions in a two column journal using Kelly Consulting’s chart of accounts. (do not insert the account numbers in the journal at this time.)
- Post the journal to a ledger of four-column accounts.
- Prepare an unadjusted trail balance
- At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts 5 and 6.
- Insurance expired during May is $300.
- Supplies on hand on May 31 are $600.
- Depreciation of office equipment for May is $330.
- Accrued receptionist salary on May 31 is $240.
- Rent expired during May is $1,600.
- Unearned fees on May 31 are $2,000
- Enter the unadjusted trial balance on an end-of-period spreadsheet (worksheet) and complete the spreadsheet.
- Journalize and post the adjusting entries.
7.Prepare an adjusted trial balance.
- Prepare an income statement, a statement of owner’s equity, and a balance sheet.
- Prepare and post the closing entries. (Income summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.
- Prepare a post-closing trial balance
COMPREHENSIVE PROBLEM 1
- and 2. JOURNAL Pages 5 and 6
Post.
Date Description Ref. Debit Credit
2010
May 3 Cash……………………………………………………………. 11 2,500
Unearned Fees……………………………………….. 23 2,500
5 Cash……………………………………………………………. 11 1,750
Accounts Receivable……………………………….. 12 1,750
9 Miscellaneous Expense…………………………………. 59 300
Cash………………………………………………………. 11 300
13 Accounts Payable…………………………………………. 21 400
Cash………………………………………………………. 11 400
15 Accounts Receivable…………………………………….. 12 6,100
Fees Earned…………………………………………… 41 6,100
16 Salary Expense…………………………………………….. 51 630
Salaries Payable…………………………………………… 22 120
Cash………………………………………………………. 11 750
17 Cash……………………………………………………………. 11 8,200
Fees Earned…………………………………………… 41 8,200
20 Supplies……………………………………………………….. 14 400
Accounts Payable…………………………………… 21 400
21 Accounts Receivable…………………………………….. 12 3,900
Fees Earned…………………………………………… 41 3,900
25 Cash……………………………………………………………. 11 5,100
Fees Earned…………………………………………… 41 5,100
27 Cash……………………………………………………………. 11 9,500
Accounts Receivable……………………………….. 12 9,500
28 Salary Expense…………………………………………….. 51 750
Cash………………………………………………………. 11 750
30 Miscellaneous Expense…………………………………. 59 120
Cash………………………………………………………. 11 120
31 Miscellaneous Expense…………………………………. 59 290
Cash………………………………………………………. 11 290
31 Cash……………………………………………………………. 11 3,875
Fees Earned…………………………………………… 41 3,875
- and 2. JOURNAL Pages 5 and 6
Post.
Date Description Ref. Debit Credit
2010
May 31 Accounts Receivable…………………………………….. 12 3,200
Fees Earned…………………………………………… 41 3,200
31 Kelly Pitney, Drawing………………………………….. 32 8,000
Cash………………………………………………………. 11 8,000
2., 6., and 9.
Cash 11
Post. Balance
Date Item Ref. Dr. Cr. Dr. Cr.
2010
May 1 Balance………………….. ü ………….. ………….. 22,100 …………..
3 ………………………………. 5 2,500 ………….. 24,600 …………..
5 ………………………………. 5 1,750 ………….. 26,350 …………..
9 ………………………………. 5 ………….. 300 26,050 …………..
13 ………………………………. 5 ………….. 400 25,650 …………..
16 ………………………………. 5 ………….. 750 24,900 …………..
17 ………………………………. 6 8,200 ………….. 33,100 …………..
25 ………………………………. 6 5,100 ………….. 38,200 …………..
27 ………………………………. 6 9,500 ………….. 47,700 …………..
28 ………………………………. 6 ………….. 750 46,950 …………..
30 ………………………………. 6 ………….. 120 46,830 …………..
31 ………………………………. 6 ………….. 290 46,540 …………..
31 ………………………………. 6 3,875 ………….. 50,415 …………..
31 ………………………………. 6 ………….. 8,000 42,415 …………..
Accounts Receivable 12
2010
May 1 Balance………………….. ü ………….. ………….. 3,400 …………..
5 ………………………………. 5 ………….. 1,750 1,650 …………..
15 ………………………………. 5 6,100 ………….. 7,750 …………..
21 ………………………………. 6 3,900 ………….. 11,650 …………..
27 ………………………………. 6 ………….. 9,500 2,150 …………..
31 ………………………………. 6 3,200 ………….. 5,350 …………..
Supplies 14
2010
May 1 Balance………………….. ü ………….. ………….. 1,350 …………..
20 ………………………………. 6 400 ………….. 1,750 …………..
31 Adjusting……………….. 7 ………….. 1,150 600 …………..
Prepaid Rent 15
Post. Balance
Date Item Ref. Dr. Cr. Dr. Cr.
2010
May 1 Balance………………….. ü ………….. ………….. 3,200 …………..
31 Adjusting……………….. 7 ………….. 1,600 1,600 …………..
Prepaid Insurance 16
2010
May 1 Balance………………….. ü ………….. ………….. 1,500 …………..
31 Adjusting……………….. 7 ………….. 300 1,200 …………..
Office Equipment 18
2010
May 1 Balance………………….. 5 ………….. ………….. 14,500 …………..
Accumulated Depreciation 19
2010
May 1 Balance………………….. ü ………….. ………….. ………….. 330
31 Adjusting……………….. 7 ………….. 330 ………….. 660
Accounts Payable 21
2010
May 1 Balance………………….. ü ………….. ………….. ………….. 800
13 ………………………………. 5 400 ………….. ………….. 400
20 ………………………………. 6 ………….. 400 ………….. 800
Salaries Payable 22
2010
May 1 Balance………………….. ü ………….. ………….. ………….. 120
16 ………………………………. 5 120 ………….. ………….. —
31 Adjusting……………….. 7 ………….. 240 ………….. 240
Unearned Fees 23
2010
May 1 Balance………………….. ü ………….. ………….. ………….. 2,500
3 ………………………………. 5 ………….. 2,500 ………….. 5,000
31 Adjusting……………….. 7 3,000 ………….. ………….. 2,000
Kelly Pitney, Capital 31
Post. Balance
Date Item Ref. Dr. Cr. Dr. Cr.
2010
May 1 Balance………………….. ü ………….. ………….. ………….. 42,300
31 Closing…………………… 8 ………….. 27,665 ………….. 69,965
31 Closing…………………… 8 8,000 ………….. ………….. 61,965
Kelly Pitney, Drawing 32
2010
May 31 ………………………………. 6 8,000 ………….. 8,000 …………..
31 Closing…………………… 8 ………….. 8,000 — —
Income Summary 33
2010
May 31 Closing…………………… 8 ………….. 33,375 ………….. 33,375
31 Closing…………………… 8 5,710 ………….. ………….. 27,665
31 Closing…………………… 8 27,665 ………….. — —
Fees Earned 41
2010
May 15 ………………………………. 5 ………….. 6,100 ………….. 6,100
17 ………………………………. 6 ………….. 8,200 ………….. 14,300
21 ………………………………. 6 ………….. 3,900 ………….. 18,200
25 ………………………………. 6 ………….. 5,100 ………….. 23,300
31 ………………………………. 6 ………….. 3,875 ………….. 27,175
31 ………………………………. 6 ………….. 3,200 ………….. 30,375
31 Adjusting……………….. 7 ………….. 3,000 ………….. 33,375
31 Closing…………………… 8 33,375 ………….. — —
Salary Expense 51
2010
May 16 ………………………………. 5 630 ………….. 630 …………..
28 ………………………………. 6 750 ………….. 1,380 …………..
31 Adjusting……………….. 7 240 ………….. 1,620 …………..
31 Closing…………………… 8 ………….. 1,620 — —
Rent Expense 52
Post. Balance
Date Item Ref. Dr. Cr. Dr. Cr.
2010
May 31 Adjusting……………….. 7 1,600 ………….. 1,600 …………..
31 Closing…………………… 8 ………….. 1,600 — —
Supplies Expense 53
2010
May 31 Adjusting……………….. 7 1,150 ………….. 1,150 …………..
31 Closing…………………… 8 ………….. 1,150 — —
Depreciation Expense 54
2010
May 31 Adjusting……………….. 7 330 ………….. 330 …………..
31 Closing…………………… 8 ………….. 330 — —
Insurance Expense 55
2010
May 31 Adjusting……………….. 7 300 ………….. 300 …………..
31 Closing…………………… 8 ………….. 300 — —
Miscellaneous Expense 59
2010
May 9 ………………………………. 5 300 ………….. 300 …………..
30 ………………………………. 6 120 ………….. 420 …………..
31 ………………………………. 6 290 ………….. 710 …………..
31 Closing…………………… 8 ………….. 710 — —
3.
KELLY CONSULTING
Unadjusted Trial Balance
May 31, 2010
Debit Credit
Balances Balances
Cash…………………………………………………………………………………….. 42,415
Accounts Receivable……………………………………………………………… 5,350
Supplies………………………………………………………………………………… 1,750
Prepaid Rent………………………………………………………………………… 3,200
Prepaid Insurance…………………………………………………………………. 1,500
Office Equipment………………………………………………………………….. 14,500
Accumulated Depreciation…………………………………………………….. 330
Accounts Payable………………………………………………………………….. 800
Salaries Payable…………………………………………………………………….
Unearned Fees………………………………………………………………………. 5,000
Kelly Pitney, Capital……………………………………………………………… 42,300
Kelly Pitney, Drawing…………………………………………………………… 8,000
Fees Earned………………………………………………………………………….. 30,375
Salary Expense……………………………………………………………………… 1,380
Rent Expense…………………………………………………………………………
Supplies Expense……………………………………………………………………
Depreciation Expense…………………………………………………………….
Insurance Expense…………………………………………………………………
Miscellaneous Expense………………………………………………………….. 710
78,805 78,805
| A | B | C | D | E | F | G | H | I | J | K | L | M |
| KELLY CONSULTING | ||||||||||||
| End-of-Period Spreadsheet (Work Sheet) | ||||||||||||
| For the Month Ended May 31, 2010 | ||||||||||||
| Unadjusted | Adjusted | Income | Balance | |||||||||
| Trial Balance | Adjustments | Trial Balance | Statement | Sheet | ||||||||
| Account Title | Dr. | Cr. | Dr. | Cr. | Dr. | Cr. | Dr. | Cr. | Dr. | Cr. | ||
| 1 | Cash | 42,415 | 42,415 | 42,415 | 1 | |||||||
| 2 | Accounts Receivable | 5,350 | 5,350 | 5,350 | 2 | |||||||
| 3 | Supplies | 1,750 | (b) 1,150 | 600 | 600 | 3 | ||||||
| 4 | Prepaid Rent | 3,200 | (e) 1,600 | 1,600 | 1,600 | 4 | ||||||
| 5 | Prepaid Insurance | 1,500 | (a) 300 | 1,200 | 1,200 | 5 | ||||||
| 6 | Office Equipment | 14,500 | 14,500 | 14,500 | 6 | |||||||
| 7 | Accum. Depreciation | 330 | (c) 330 | 660 | 660 | 7 | ||||||
| 8 | Accounts Payable | 800 | 800 | 800 | 8 | |||||||
| 9 | Salaries Payable | (d) 240 | 240 | 240 | 9 | |||||||
| 10 | Unearned Fees | 5,000 | (f) 3,000 | 2,000 | 2,000 | 10 | ||||||
| 11 | Kelly Pitney, Capital | 42,300 | 42,300 | 42,300 | 11 | |||||||
| 12 | Kelly Pitney, Drawing | 8,000 | 8,000 | 8,000 | 12 | |||||||
| 13 | Fees Earned | 30,375 | (f) 3,000 | 33,375 | 33,375 | 13 | ||||||
| 14 | Salary Expense | 1,380 | (d) 240 | 1,620 | 1,620 | 14 | ||||||
| 15 | Rent Expense | (e) 1,600 | 1,600 | 1,600 | 15 | |||||||
| 16 | Supplies Expense | (b) 1,150 | 1,150 | 1,150 | 16 | |||||||
| 17 | Depreciation Expense | (c) 330 | 330 | 330 | 17 | |||||||
| 18 | Insurance Expense | (a) 300 | 300 | 300 | 18 | |||||||
| 19 | Miscellaneous Expense | 710 | 710 | 710 | 19 | |||||||
| 20 | 78,805 | 78,805 | 6,620 | 6,620 | 79,375 | 79,375 | 5,710 | 33,375 | 73,665 | 46,000 | 20 | |
| 21 | Net income | 27,665 | 27,665 | 21 | ||||||||
| 22 | 33,375 | 33,375 | 73,665 | 73,665 | 22 | |||||||
- JOURNAL Page 7
Post.
Date Ref. Debit Credit
Adjusting Entries
2010
May 31 Insurance Expense……………………………………….. 55 300
Prepaid Insurance………………………………….. 16 300
Insurance expired.
31 Supplies Expense…………………………………………. 53 1,150
Supplies…………………………………………………. 14 1,150
Supplies used ($1,850 – $950).
31 Depreciation Expense…………………………………… 54 330
Accumulated Depreciation……………………… 19 330
Equipment depreciation.
31 Salary Expense…………………………………………….. 51 240
Salaries Payable……………………………………… 22 240
Accrued salaries.
31 Rent Expense………………………………………………. 52 1,600
Prepaid Rent………………………………………….. 15 1,600
Rent expired.
31 Unearned Fees…………………………………………….. 23 3,000
Fees Earned…………………………………………… 41 3,000
Unearned fees ($4,050 – $1,300).
7.
KELLY CONSULTING
Adjusted Trial Balance
May 31, 2010
Debit Credit
Balances Balances
Cash…………………………………………………………………………………….. 42,415
Accounts Receivable……………………………………………………………… 5,350
Supplies………………………………………………………………………………… 600
Prepaid Rent………………………………………………………………………… 1,600
Prepaid Insurance…………………………………………………………………. 1,200
Office Equipment………………………………………………………………….. 14,500
Accumulated Depreciation…………………………………………………….. 660
Accounts Payable………………………………………………………………….. 800
Salaries Payable……………………………………………………………………. 240
Unearned Fees………………………………………………………………………. 2,000
Kelly Pitney, Capital……………………………………………………………… 42,300
Kelly Pitney, Drawing…………………………………………………………… 8,000
Fees Earned………………………………………………………………………….. 33,375
Salary Expense……………………………………………………………………… 1,620
Rent Expense………………………………………………………………………… 1,600
Supplies Expense…………………………………………………………………… 1,150
Depreciation Expense……………………………………………………………. 330
Insurance Expense………………………………………………………………… 300
Miscellaneous Expense………………………………………………………….. 710
79,375 79,375
8.
KELLY CONSULTING
Income Statement
For the Month Ended May 31, 2010
Fees earned………………………………………………………………………… $ 33,375
Expenses:
Salary expense…………………………………………………………….. $1,620
Rent expense……………………………………………………………….. 1,600
Supplies expense………………………………………………………….. 1,150
Depreciation expense…………………………………………………… 330
Insurance expense……………………………………………………….. 300
Miscellaneous expense…………………………………………………. 710
Total expenses…………………………………………………………. 5,710
Net income…………………………………………………………………………. $ 27,665
KELLY CONSULTING
Statement of Owner’s Equity
For the Month Ended May 31, 2010
Kelly Pitney, capital, May 1, 2008……………………………………….. $ 42,300
Net income for the month……………………………………………………. $ 27,665
Less withdrawals………………………………………………………………… 8,000
Increase in owner’s equity…………………………………………………… 19,665
Kelly Pitney, capital, May 31, 2010……………………………………… $ 61,965
KELLY CONSULTING
Balance Sheet
May 31, 2010
Assets Liabilities
Current assets: Current liabilities:
Cash………………………….. $42,415 Accounts payable…….. $ 800
Accounts receivable……. 5,350 Salaries payable……….. 240
Supplies……………………… 600 Unearned fees………….. 2,000
Prepaid rent……………….. 1,600 Total liabilities………. $ 3,040
Prepaid insurance………. 1,200
Total current assets….. $51,165
Property, plant, and Owner’s Equity
equipment:…………………. Kelly Pitney,
Office equipment………… $14,500 capital……………………… 61,965
Less accum. depr……… 660 13,840 Total liabilities and
Total assets……………………. $ 65,005 owner’s equity…………. $ 65,005
- JOURNAL Page 8
Post.
Date Ref. Debit Credit
Closing Entries
2010
May 31 Fees Earned…………………………………………………. 41 33,375
Income Summary…………………………………… 33 33,375
31 Income Summary…………………………………………. 33 5,710
Salary Expense………………………………………. 51 1,620
Rent Expense…………………………………………. 52 1,600
Supplies Expense……………………………………. 53 1,150
Depreciation Expense……………………………… 54 330
Insurance Expense…………………………………. 55 300
Miscellaneous Expense……………………………. 59 710
31 Income Summary…………………………………………. 33 27,665
Kelly Pitney, Capital………………………………. 31 27,665
31 Kelly Pitney, Capital…………………………………….. 31 8,000
Kelly Pitney, Drawing…………………………….. 32 8,000
10.
KELLY CONSULTING
Post-Closing Trial Balance
May 31, 2010
Debit Credit
Balances Balances
Cash………………………………………………………………………………….. 42,415
Accounts Receivable…………………………………………………………… 5,350
Supplies ……………………………………………………………………………. 600
Prepaid Rent……………………………………………………………………… 1,600
Prepaid Insurance………………………………………………………………. 1,200
Office Equipment……………………………………………………………….. 14,500
Accumulated Depreciation………………………………………………….. 660
Accounts Payable……………………………………………………………….. 800
Salaries Payable…………………………………………………………………. 240
Unearned Fees……………………………………………………………………. 2,000
Kelly Pitney, Capital…………………………………………………………… 61,965
Totals………………………………………………………………………….. 65,665 65,665
