Question

ABC Services, Inc. is the company you started on December 1, 2019. The following transactions occurred during the month of December 2019:

1 . The business was started with a $10,000 capital investment from the owner and sole shareholder on December l, 2019. Additional business funding of $10,000 was obtained from a bank 'loan the same day. (90 day note)
2. Rent of $6,000 for the first 3 months was required which included rent of $2,000 for the month of December 2019A check of $6,000 was paid on December 2nd.
3. Equipment for $5,000 was purchased on account on December 5th.
4.   Services were performed on December 10th for $10,000 and invoiced to the client on the same day.
5.   Supplies of $1 ,000 were purchased on account on December 15th .
6.   Salary for the office assistant of $2,500 was paid on December 15th. The office assistant earns a salary of $5,000/month. The next payroll date is January 2nd 2020.
7.   A client paid you $2,500 on December 20th for your services to be performed in 2020.
8.   An insurance policy payment of $2,400 was made on December 30th for a policy period December l , 2019 to December I , 2020.
Journalize the above transactions in proper journal entry form (excluding explanations) (16 Points)
You assembled the following data in January 2020 possibly related to transactions in December 2019:
l . A utility invoice dated January 4, 2020 for $600 was received for electricity December l , 2019 to Decetnber 31, 2019.
2.   Depreciation for the equipment for the month was $100.
3.   Supplies existing at December 31, 2019 totaled $400,
4.   Interest on the bank loan for the month was $150, no payment has been made.
5.   An adjusting entry may be required for the insurance policy.
6.   An adjusting entry may be required for salaries.

Journalize the above adjustments in proper journal entry form (excluding explanations)

Prepare the closing entries for December 3 1, 2019 in proper journal entry form

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Only need this section and below answered? 1-3 only

1.) Prepare a post-closing trial balance at December 31, 2019?

2.) Use T-Accounts representing the general ledger to determine the account balances ?

3.) Prepare the three basic financial statements in proper format at and for the month ended December ?

Answer 1

ABC Services, Inc. Dr. Journal Enteries Trans. Particulars 1 Cash a/c To Capital To Note Payable (Capital Invested) Debit in $ Credit in $ 20000 10000 10000 2 Dr. 6000 Prepaid Rent a/c To Cash (3 months rent paid) 6000 3 5000 Equipment a/c Dr. To Accounts Payable (Equipment on account) 5000 4 10000 Accounts Receivable a/c Dr. To Service Revenue (Services provided on account) 10000 5 1000 Supplies a/c Dr. To Accounts Payable (Supplies on account) 1000 Dr. 2500 Salary Expense a/c To Cash (Salary paid) 2500 2500 Cash a/c Dr. To Unearned Service Revenue (Advance from client) 2500 8 Dr. 2400 Prepaid Insurance a/c To Cash (1 year insurance paid) 2400 Adjusting Enteries Trans. Particulars 1 Utility Expense a/c To Accounts Payable (Expense accrued) Dr. Debit in $ Credit in $ 600 600 2 Depreciation Expense a/c Dr. To Accum Depre - Equip. (To record depreciation) 100 3 Dr. 600 Supplies Expense a/c To Supplies (Supplies expensed) 600 Dr. Interest Expense a/c To Interest Payable (Interest accrued) 150 Dr. 200 Insurance Expense a/c To Prepaid Insurance (Insurance expired) 200 Dr. 2500 Salary Expense a/c To Salary Payable (Salary accrued) 2500 Dr. 2000 Rent Expense a/c To Prepaid Rent (Rent expired) 2000

Worksheet For the Month ending 31.12.2019 Particulars Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Equipment Accum Depre - Equip. Accounts Payable Salary Payable Unearned Service Revenue Interest Payable Note Payable Capital Service Revenue Salary Expense Utility Expense Depreciation Expense Supplies Expense Interest Expense Insurance Expense Rent Expense Totals Unadjusted Adjustments Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 11600 11600 11600 10000 10000 10000 1000 600 400 400 6000 2000 4000 4000 2400 200 2200 2200 5000 5000 5000 100 100 100 6000 600 6600 6600 2500 2500 2500 2500 2500 2500 150 150 150 10000 10000 10000 10000 10000 11350 10000 10000 2500 2500 5000 600 600 100 100 600 600 150 150 200 200 2000 2000 38500 38500 6150 6 150 41850 41850 33200 33200 10000 Statement of Income For the Month ending 31.12.2019 Service Revenue Less: Salary Expense Utility Expense Depreciation Expense Supplies Expense Interest Expense Insurance Expense Rent Expense Net Income 5000 600 100 600 150 200 2000 8650 1350 Statement of Owner's Equity For the Month ending 31.12.2019 Capital Net Income 10000 1350 11350

Amounts in $ Amounts in $ Balance sheet As at 31.12.2019 Assets Current Assets Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Amounts in $ Amounts in $ Liabilities Current Liabilities 11600 Accounts Payable 10000 Salary Payable 400 Unearned Service Revenue 4000 Interest Payable 2200 28200 6600 2500 2500 150 11750 Non Current Assets Equipment Accum Depre - Equip. 10000 5000 -100 Non Current Liabilities Note Payable 4900 Owner's Equity Capital 33100 Total Liabilities & Equity 11350 33100 Total Assets