Question

For the past several years, Jolene Upton has operated a part-time consulting business from her home. As of July 1, 2019, Jolene decided to move to rented quarters and to operate the business, which was to be known as Gourmet Consulting, on a full-time basis. Gourmet Consulting entered into the following transactions during July:

Jul.	1	The following assets were received from Jolene Upton: cash, $19,000; accounts receivable, $22,300; supplies, $3,800; and office equipment, $8,900. There were no liabilities received.
	1	Paid three months’ rent on a lease rental contract, $6,000.
	2	Paid the premiums on property and casualty insurance policies, $4,500.
	4	Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $8,000.
	5	Purchased additional office equipment on account from Office Necessities Co., $5,100.
	6	Received cash from clients on account, $12,750.
	10	Paid cash for a newspaper advertisement, $500.
	12	Paid Office Necessities Co. for part of the debt incurred on July 5, $3,000.
	12	Provided services on account for the period July 1–12, $14,200.
	14	Paid receptionist for two weeks’ salary, $1,500.

Record the following transactions on Page 2 of the journal:

Jul.	17	Received cash from cash clients for fees earned during the period July 1–17, $10,400.
	18	Paid cash for supplies, $1,000.
	20	Provided services on account for the period July 13–20, $9,000.
	24	Received cash from cash clients for fees earned for the period July 17–24, $8,500.
	26	Received cash from clients on account, $12,000.
	27	Paid receptionist for two weeks’ salary, $1,500.
	29	Paid telephone bill for July, $325.
	31	Paid electricity bill for July, $675.
	31	Received cash from cash clients for fees earned for the period July 25–31, $7,100.
	31	Provided services on account for the remainder of July, $5,500.
	31	Jolene withdrew $20,000 for personal use.

	Required:
1.	Journalize each transaction in a two-column journal starting on Page 1, referring to the chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.)
2.	Post the July transactions. A. Download the spreadsheet in the Ledger panel and save the Excel file to your computer. Use the spreadsheet to post the July transactions from the journal to a ledger of four-column accounts. Be sure to save your work in Excel as it will be used to complete the following steps in Part 1 of this problem as well as steps in Part 2 of this problem. Your input into the spreadsheet will not be included in your grade in CengageNOW on this problem. B. Add the appropriate posting reference to the journal in CengageNOW.
3.	Prepare an unadjusted trial balance.
4.	At the end of July, the following adjustment data were assembled. Analyze and use these data to complete requirements (5) and (6). • Insurance expired during July is $375. • Supplies on hand on July 31 are $2,850. • Depreciation of office equipment for July is $400. • Accrued receptionist salary on July 31 is $140. • Rent expired during July is $2,000. • Unearned fees on July 31 are $3,000.
5.	(Optional) On your own paper or spreadsheet, enter the unadjusted trial balance on an end-of-period work sheet and complete the spreadsheet. Find a blank end-of-period work sheet in the Excel spreadsheet you previously downloaded.
6.	A. Journalize the adjusting entries on page 3 of the journal. Adjusting entries are recorded on July 31. B. Use the attached spreadsheet in the Ledger panel to post the adjusting entries to the ledger of four-column accounts, inserting balances is the accounts affected. Add the appropriate posting reference to the adjusting entries in the journal in CengageNOW.
7.	Prepare an adjusted trial balance.

For the past several years, Jolene Upton has operated a part-time consulting business from her home. As of July 1, 2019, Jolene decided to move to rented quarters and to operate the business, which was to be known as Gourmet Consulting, on a full-time basis. Gourmet Consulting entered into the following transactions during July. In Part 1 of this problem, the accounting cycle was completed up through the preparation of the adjusted trial balance.

	Required:
	8. If you completed the end-of-period work sheet in Part 1, use the adjusted trial balance figures to prepare an income statement, a statement of owner’s equity, and a balance sheet for the month ended July 31, 2019. If you didn’t complete the end-of-period work sheet in Part 1, use the ledger (the Excel spreadsheet) to prepare an income statement, a statement of owner’s equity, and a balance sheet for the month ended July 31, 2019. *If the account balance is zero (0), enter a zero (0). *Be sure to read the instructions for each financial statement carefully.
	9.
	A. Journalize the closing entries on page 4 of the journal. Closing entries are recorded on July 31. B. Use the spreadsheet to post the closing entries to the ledger of four-column accounts, inserting balances in the accounts affected. Add the appropriate posting reference to the closing entries in the journal in CengageNOW.
	10. Prepare a post-closing trial balance.

CHART OF ACCOUNTSGourmet ConsultingGeneral Ledger

	ASSETS
11	Cash
12	Accounts Receivable
14	Supplies
15	Prepaid Rent
16	Prepaid Insurance
18	Office Equipment
19	Accumulated Depreciation-Office Equipment

	LIABILITIES
21	Accounts Payable
22	Salaries Payable
23	Unearned Fees

	EQUITY
31	Jolene Upton, Capital
32	Jolene Upton, Drawing
33	Income Summary

	REVENUE
41	Fees Earned

	EXPENSES
51	Salary Expense
52	Rent Expense
53	Supplies Expense
54	Depreciation Expense
55	Insurance Expense
59	Miscellaneous Expense

Labels

Current assets

Current liabilities

Expenses

For the Month Ended July 31, 2019

July 31, 2019

Property, plant, and equipment Revenues Amount Descriptions Decrease in owner’s equity Increase in owner’s equity Investments during the month Net income Net loss Jolene Upton, capital, July 1, 2019 Jolene Upton, capital, July 31, 2019 Total assets Total current assets Total expenses Total liabilities Total liabilities and owner’s equity Total property, plant, and equipment Withdrawals

Answer 1

1. and 2. JOURNAL Page 1 Post. Ref. Date Description Debit Credit 2019 July 1 11 12 Cash Accounts Receivable Supplies Office Equipment Jolene Upton, Capital 19,000 22,300 3,800 8,900 14 18 31 54,000 6,000 Prepaid Rent Cash 11 6,000 16 4,500 Prepaid Insurance Cash 11 4,500 Cash 8,000 Unearned Fees 8,000 5,100 Office Equipment Accounts Payable 21 5,100 Cash 12,750 11 12 Accounts Receivable 12,750 500 Miscellaneous Expense Cash 500 3,000 Accounts Payable Cash 3,000 14,200 Accounts Receivable Fees Earned 14,200 1,500 Salary Expense Cash 1,500

JOURNAL Page 2 Post. Date Description Ref. Debit Credit 2019 July 17 Cash 11 10,400 Fees Earned 41 10,400 14 1,000 Supplies Cash 1,000 9,000 Accounts Receivable Fees Earned 12 41 9,000 Cash 8,500 11 41 Fees Earned 8,500 Cash 12,000 11 12 Accounts Receivable 12,000 1,500 Salary Expense Cash 1,500 Miscellaneous Expense Cash D 325 D 325 Miscellaneous Expense Cash 675 675 Cash 7,100 Fees Earned 7,100 5,500 Accounts Receivable Fees Earned 5,500 20,000 Jolene Upton, Drawing Cash 11 20,000

2., 6., and 9. GENERAL LEDGER Cash 11 Balance Post. Ref. Date Item Dr. Cr. 2019 July 19,000 6,000 4,500 8,000 12,750 500 3,000 1,500 10,400 19,000 13,000 8,500 16,500 29,250 28,750 25,750 24,250 34,650 33,650 42,150 54,150 52,650 52,325 51,650 58,750 38,750 1,000 8,500 12,000 1,500 325 675 7,100 20,000 Accounts Receivable 12 Post. Balance Date Item Ref. Dr. Dr. Cr. 2019 July 22,300 12,750 14,200 9,000 22,300 9,550 23,750 32,750 20,750 26,250 12,000 5,500

Supplies 14 Post Post. Balance Date Item Ref. Dr. 2019 July 18 E 3,800 1,000 2,850 3,800 4,800 2,850 Adjusting 2,850 Prepaid Rent 15 Balance Post. Ref. Ora Date Item Dr. 2019 July 6,000 6,000 4,000 - 31 Adjusting 2,000 Prepaid Insurance 16 Post. Balance Date Item Ref. Dr. Cr. 2019 July 4,500 2 31 4,500 4,125 Adjusting 375 Office Equipment Balance Post. Ref. Date Item Dr. Cr. 2019 July 8,900 5,100 8,900 14,000

Accumulated Depreciation 19 Balance Post. Ref. Date Item Dr. Dr. Cr. 2019 July 31 Adjusting 3 - 400 - 400 400 Accounts Payable Post. Balance Date Item Item Ref. Dr. Cr. 2019 July 5 1 5,100 5,100 2,100 12 3,000 Salaries Payable 22 Balance Post. Ref. Date Item Cr. 2019 July 31 Adjusting 140 140 Unearned Fees 23 Post. Balance Date Item Ref. Dr. Dr. Cr. 2019 July 8,000 4 31 8,000 3,000 Adjusting 3,000

Jolene Upton, Capital 31 Balance Post. Ref. Date Item Dr. Dr. Cr. 2019 July 1 31 54,000 50,335 Closing Closing 54,000 104,335 84,335 20,000 Jolene Upton, Drawing Balance Post. Ref. Date Item Dr. Cr. Dr. Cr. 2019 July 31 20,000 20,000 31 Closing 20,000 Fees Earned 41 Balance Post. Date Item Item Ref. Cr. Dr. Cr. 2019 July 14,200 10,400 9,000 8,500 7,100 5,500 3,000 14,200 24,600 33,600 42,100 49,200 54,700 59,700 Adjusting Closing 57,700

Salary Expense 51 Post. Balance Date Item Ref. Dr. Dr. Cr. 2019 July 14 27 1,500 1,500 140 1,500 3,000 3,140 Adjusting Closing 3,140 Rent Expense per Balance Post. Balance Balance Item - Dr Date Item Dr. Cr. 2019 July 31 2,000 2,000 Adjusting Closing 31 2,000 2,000 Supplies Expense 53 Post. Balance Date Item Ref. Dr. Cr. 2019 July 1,950 1,950 31 31 Adjusting Closing 1,950 Depreciation Expense /// 54 Post. Balance Date Item Ref. Dr. Cr. 2019 July 400 400 Adjusting Closing 31 400

Salary Expense 51 Post. Balance Date Item Ref. Dr. Dr. Cr. 2019 July 14 27 1,500 1,500 140 1,500 3,000 3,140 Adjusting Closing 3,140 Rent Expense per Balance Post. Balance Balance Item - Dr Date Item Dr. Cr. 2019 July 31 2,000 2,000 Adjusting Closing 31 2,000 2,000 Supplies Expense 53 Post. Balance Date Item Ref. Dr. Cr. 2019 July 1,950 1,950 31 31 Adjusting Closing 1,950 Depreciation Expense /// 54 Post. Balance Date Item Ref. Dr. Cr. 2019 July 400 400 Adjusting Closing 31 400

Insurance Expense 55 Balance Post. Ref. Date Item Dr. 2019 July 31 375 375 31 Adjusting Closing 375 Miscellaneous Expense 59 Balance Post. Ref. Date Item Dr. Cr. 2019 July 500 325 675 500 825 1,500 Closing 1,500

GOURMET CONSULTING Unadjusted Trial Balance July 31, 2019 Acct. No. Credit Balances Debit Balances 38,750 26,250 4,800 6,000 4,500 14,000 2,100 Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Office Equipment Accumulated Depreciation Accounts Payable Salaries Payable Unearned Fees Jolene Upton, Capital Jolene Upton, Drawing Fees Earned Salary Expense Rent Expense Supplies Expense Depreciation Expense Insurance Expense Miscellaneous Expense 8,000 54,000 20,000 54,700 3,000 1,500 118,800 118,800

Income Statement Dr. Cr. - Account Title Cr. Cash Balance Sheet Dr. 38,750 26,250 2,850 4,000 4,125 14,000 - 400 GOURMET CONSULTING End-of-Period Spreadsheet (Work Sheet) For the Month Ended July 31, 2019 Adjusted Unadjusted Trial Balance Adjustments Trial Balance Dr. Cr. Dr. Cr. Dr. Cr. 38,750 - 38,750 - 26,250 26,250 4,800 1,950 2,850 - 6,000 2,000 4,000 4,500 375 4,125 14,000 14,000 400 400 2,100 2,100 140 140 8,000 5,000 3,000 54,000 54,000 20,000 20,000 54,700 5,000 59,700 3,000 140 3,140 2,000 2,000 1,950 1,950 400 400 375 1,500 1,500 118,800 118,800 9,865 9 ,865 119,340 119,340 2,100 Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Office Equipment Accum. Depreciation Accounts Payable Salaries Payable Unearned Fees Jolene Upton, Capital Jolene Upton, Drawing Fees Earned Salary Expense Rent Expense Supplies Expense Depreciation Expense Insurance Expense Miscellaneous Expense 14 140 3,000 54,000 - 20,000 - 59,700 375 3,140 2,000 1,950 400 375 1,500 9,365 50,335 59,700 59,700 109,975 Net Income 59,640 50,335 109,975 59,700 109,975

JOURNAL Page 3 Post. Ref. Date Debit Credit Description Adjusting Entries 2019 July 55 Insurance Expense Prepaid Insurance 375 375 31 1,950 Supplies Expense Supplies 1,950 400 Depreciation Expense Accumulated Depreciation 400 140 Salary Expense Salaries Payable [ 140 2,000 Rent Expense Prepaid Rent 2,000 31 Unearned Fees Fees Earned 5,000 5,000

GOURMET CONSULTING Adjusted Trial Balance July 31, 2019 Acct. No. Credit Balances Debit Balances 38,750 26,250 2,850 4,000 4,125 14,000 Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Office Equipment Accumulated Depreciation Accounts Payable Salaries Payable Unearned Fees Jolene Upton, Capital Jolene Upton, Drawing Fees Earned Salary Expense Rent Expense Supplies Expense Depreciation Expense Insurance Expense Miscellaneous Expense 400 2,100 140 3,000 54,000 20,000 59,700 3,140 2,000 1,950 400 375 1,500 119,340 119,340

GOURMET CONSULTING Income Statement For the Month Ended July 31, 2019 Revenues: Fees earned $ 59,700 $ Expenses: Salary expense Rent expense Supplies expense Depreciation expense Insurance expense Miscellaneous expense Total expenses Net income 3,140 2,000 1,950 400 375 1,500 9,365 50,335 $ GOURMET CONSULTING Statement of Owner's Equity For the Month Ended July 31, 2019 $ $ Jolene Upton, capital, July 1, 2019 Investments during month Net income Withdrawals Increase in owner's equity Jolene Upton, capital, July 31, 2019 54,000 50,335 (20,000) 84,335 84,335

GOURMET CONSULTING Income Statement For the Month Ended July 31, 2019 Revenues: Fees earned $ 59,700 3,140 2,000 1,950 Expenses: Salary expense Rent expense Supplies expense Depreciation expense Insurance expense Miscellaneous expense Total expenses Net income 400 375 1,500 9,365 50,335 $ GOURMET CONSULTING Statement of Owner's Equity For the Month Ended July 31, 2019 $ Jolene Upton, capital, July 1, 2019 Investments during month Net income Withdrawals Increase in owner's equity Jolene Upton, capital, July 31, 2019 54,000 50,335 (20,000) 84,335 84,335

GOURMET CONSULTING Balance Sheet July 31, 2019 Assets $ 38,750 26,250 2,850 4.000 4.125 Current assets: Cash Accounts receivable Supplies Prepaid rent Prepaid insurance Total current assets Property, plant and equipment: Office equipment Accumulated depreciation Total property, plant, and equipment Total assets $ 75,975 $ 14,000 400 $ 13,600 89.575 Liabilities $ Current liabilities: Accounts payable Salaries payable Unearned fees Total liabilities 2100 140 3.000 $ 5,240 Owner's Equity Jolene Upton, capital Total liabilities and owner's equity 84,335 89,575 JOURNAL Page 4 Post. Date Debit Credit Description Closine Entries 2019 July 31 $ 59,700 3,140 2,000 1.950 Fees Earned Salary Expense Rent Expense Supplies Expense Depreciation Expense Insurance Expense Miscellaneous Expense Jolene Upton, Capital 400 375 1.500 50,335 31 Jolene Upton, Capital Jolene Upton, Drawing 20,000 20,000

GOURMET CONSULTING Post-Closing Trial Balance July 31, 2019 Acct. Credit Balances No. Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Office Equipment Accumulated Depreciation Accounts Payable Salaries Payable Unearned Fees Jolene Upton, Capital Debit Balances 38,750 26,250 2,850 4,000 4,125 14,000 400 2,100 140 3,000 84,335 89,975 89,975