Question

How do I prepare the following statements and prepare closing entries in general journal form for the following transactions?

1. Prepare the following financial statements—must be done on Excel.
   1. A single-step income statement
   2. A multi-step income statement
   3. A statement of Retained Earnings
   4. A classified Balance Sheet
   5. A cash flow statement using the indirect method.
2. Prepare Closing entries in General Journal Form

Transactions to Record for the month of March

1-Mar	Issued 1,000 shares of F&F common stock for $30,000. The common stock has a $10 par value.
1-Mar	Paid $4,500 for rent for the Months of March and April
1-Mar	Hired two employees. Each employee will be paid $20 per hour. Employees will start on March 8th.
1-Mar	Borrowed $10,000 cash on a 3-year, 6% Note Payable, Interest is paid quarterly with the first payment due on June 1. Assume all months have 30 days.   See Account Titles
1-Mar	Purchased with cash four identical computers for $1,500 each. 4 desks with chairs for $800 each, 4 filing cabinets for $300 each and a $700 printer.
3-Mar	Purchased $2,500 of supplies on account.
5-Mar	Paid $250 for phone and internet service for the month of March.
6-Mar	Obtained Insurance coverage for $3,600 for a six-month period from March 1st to August 31st. Paid the premium in Cash.
10-Mar	Placed ads in the local papers. Each ad costs $80 per week and will run for the 3 weeks left in March and 4 weeks into April. (Total of 7 weeks.) The ads were placed on account.
15-Mar	Billed customers $4,500. $2,000 was for accounting services and the remainder for tax work.
16-Mar	Paid employees $1,200 for their services for the first week.
17-Mar	Several customers paid in advance for the firm to prepare their tax returns.   F&F received a check for $2,700.
20-Mar	Paid $800 toward the cost of supplies. See March 3rd transaction
22-Mar	Received Check for $2,400 from customers for the services billed on March 15.
23-Mar	Paid employees $1,750 for services from March 15 to March 22
25-Mar	Determined that a more powerful computer was need. One of the $1,500 computers was sold for $1,200 and a new computer costing $2,800 was purchased for cash. Ignore any depreciation on the computer sold.
28-Mar	F&F was informed that a customer who was billed $150 on March 15th had declared bankruptcy. Using the allowance method, write off this account.
29-Mar	Repurchased 200 shares of F&F common stock at $25 per share. These shares will be held in the treasury and will not receive cash dividends.
31-Mar	Paid employees $1,900 for services from March 23 to March 30
31-Mar	Billed Customers $7,900. $3,000 was for accounting services and the remainder for tax work.
31-Mar	Declared and Paid a cash dividend of $1.00 per share. (Treasury Stock does not receive this dividend.)

Then Post the transactions to T Accounts. You can prepare an unadjusted trial balance using the worksheet to check the equality of Debits and Credits. If you don’t want the worksheet, just prepare an unadjusted trial balance.

Using your knowledge, prepare the following adjusting entries. You can use the worksheet to make these entries or just record them in the general journal.

• The Allowance for Doubtful Account should be equal to 4% of Accounts Receivable.
• Adjust for insurance        
• Adjust for Advertising
• The Utility Bill arrived for the month of March. It was for $295 and will be paid in April.
• Supplies of $718 remain on hand
• Make sure Rent is correct.
• The 3-$1,500 computers and the printer should be depreciated over 3 years using the straight-line method. Assume there is no salvage value. You will be calculating depreciation for one month.
• The desks, chairs, and filing cabinets should be depreciated for the month assuming an 8 year life and a 1,000 salvage value. The straight line method will be used.
• 35% of the Unearned Tax Consulting Revenue was earned during the period
• Accounting Consulting Revenue of $1,400 was earned during the period, but was not billed or collected. (Ignore for bad debt adjustment)
• Employees worked for 15 hours on March 31. They will be paid in April.    
• Accrue 1 months interest on the note payable
• The Company is in the 20% tax bracket. This entry cannot be made until Net Income is determined.

Using the worksheet if you did one prepare an Income Statement both single and multi-step, a Statement of Retained Earnings and a Classified Balance Sheet. If you did not do the worksheet you must still prepare these statements, but you should not split Operating Expenses in General Expenses and Selling Expense you may keep them under the category of Operating Expenses.

Using the Statements you prepared, prepare a Statement of Cash Flows using the Indirect Method.

Prepare closing entries at the end of the month.

Answer 1

Adjusting Enteries Debit in $ Credit in $ Date Particulars Bad Debts expense a/c Mar-31 Dr. 228 To Allowance for doubtful accounts 228 (Bad expense estimated) (4500 - 2400 -150 ) x 4% + 150 Mar-31 Insurance Expense a/c Dr. 600 To Prepaid Insurance 600 (Insurance expensed) 3600/6 Mar-31 Advertising Expense a/c Dr. 240 To Prepaid Advertising (Advetising expensed) 80 x 3 240 Mar-31 Utility Expense a/c Dr. 295 To Accounts Payable 295 (Expense accrued) Supplies Expense a/c Mar-31 Dr. 1782 To Supplies 1782 (Supplies expensed) 2500 - 718 Mar-31 Rent Expense a/c Dr. 1500 To Prepaid Rent 1500 (Rent expensed) 4500/3 Mar-31 Depreciation Expense a/c To Accum. Depre - Comp. Dr 125 125 (To record depreciation) ( 4500 /3) x 1/12 Mar-31 Depreciation Expense a/c Dr 19 To Accum. Depre - Printer 19 (To record depreciation) ( 700/3) x 1/12 Mar-31 Depreciation Expense a/c Dr 35 To Accum. Depre - Furniture 35 (To record depreciation) ((4400 -1000 )/8) x 1/12) Unearned Tax Consulting Revenue a/c Dr. Mar-31 945 To Service Revenue 945 (Revenue earned) Mar-31 Accounts Receivable a/c Dr. 1400 To Service Revenue 1400 (Sevices on account) Mar-31 Salary expense a/c Dr. 300 To Salary Payable (Salary paid) 15 x 20 = 300 300 Interest Expense a/c To Interest Payable Mar-31 Dr. 50 50 (Interest accrued) 10000 x 6% x 1/12 Mar-31 Income Tax Expense a/c Dr. 834 To Income Tax Payable 834 (Income Tax accrued)

Worksheet For the Month ending March 31 Adjustments Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Unadjusted Adjusted Particulars Cash 12600 12600 Accounts Receivable 11250 9850 1400 Allowance for Doubtful accounts 228 -150 78 Supplies 2500 1782 718 Prepaid Rent 1500 4500 3000 Prepaid Insurance 3600 3000 600 Prepaid Advertisement 560 240 320 7300 Computer 730 Accum. Depre - Comp. 125 125 Furniture 4400 4400 Accum. Depre - Furniture 19 19 Printer 700 700 Accum. Depre - Printer Accounts Payable 35 35 2260 295 2555 Unearned Tax Consulting Revenue Interest Payable 2700 945 1755 50 50 Income Tax Payable 834 834 Salary Payable 300 300 Note Payable 10000 10000 Common Stock 10000 10000 Additional paid in Capital 20000 20000 Treasury Stock 5000 5000 Cash Dividend 800 800 Service Revenue 12400 2345 14745 Internet Expense 250 250 Advertisement expense 240 240 Salary expense 4850 300 5150 Loss on Sale 300 300 Bad Debts expense 228 228 Insurance Expense 600 600 Utility Expense 295 295 Supplies Expense 1782 1782 1500 1500 Rent Expense Depreciation Expense 180 180 Interest Expense 50 50 Income Tax Expense 834 834 Totals 57210 57210 8354 8354 60497 60497

Statement of Income - Single Step For the Month ending March 31 Service Revenue 14745 Less: Internet Expense 250 Advertisement expense 240 Salary expense 5150 Loss on Sale 300 Bad Debts expense 228 Insurance Expense 600 Utility Expense 295 Supplies Expense 17 Rent Expense 1500 Depreciation Expense 180 Interest Expense 50 10575 4170 Income Tax Expense @ 20% -834 Net Income 3336 Statement of Retained Earnings For the Month ending March 31 Net Income 3336 Cash Dividend -800 2536 Statement of Income - Multiple Step For the Month ending March 31 Service Revenue 14745 Less:Operating Expense Internet Expense 250 Advertisement expense 240 Salary expense 5150 Bad Debts expense 228 Insurance Expense 600 Utility Expense 295 Supplies Expense 1782 Rent Expense 1500 Depreciation Expense 180 10225 Operating Income 4520 Non Operating items : Loss on Sale -300 Interest Expense -50 4170 Income Tax Expense @ 20% -834 3336 Net Income

Balance sheet As at Mar 31 Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Assets Current Liabilites Current Assets Accounts Payable Cash 2555 12600 Accounts Receivable Unearned Tax Consulting Revenue Interest Payable 11250 1755 Allowance for Doubtful accounts -78 50 Income Tax Payable Supplies 718 834 Salary Payable Prepaid Rent 3000 300 5494 Prepaid Insurance 3000 Prepaid Advertisement 30810 Non Current Liabilites 320 Note Payable 10 Non Current Assets Computer 7300 7175 Shareholders Equity Accum. Depre - Comp. -125 Common Stock 10000 Furniture 4400 4381 Additional paid in Capital Accum. Depre - Furniture -19 20000 Retained Earnings Printer 700 2536 Accum. Depre - Printer -35 665 Treasury Stock -5000 27536 43030 Total Liabilities & Equity Total Assets 43030

Statement of Cash flows For the Month ending March 31 Cashflow from Operating Activity 3336 Net Income Adjustments: 180 Depreciation Expense Loss on sale 300 Increase in Accounts Receivable -11172 Increase in Supplies -718 Increase in Prepaid Rent -3000 Increase in Prepaid Insurance -3000 Increase in Prepaid Advertisement -320 Increase in Accounts Payable 2555 Increase inUnearned Tax Consulting Revenue 1755 Increase in Interest Payable Increase in Income Tax Payable 50 834 Increase in Salary Payable Cash used for Operating Activity 300 -12236 -8900 Cashflow from Investing Activity Computer purchased -8800 Computer sold 1200 Furniture Purchased -4400 Printer Purchased -700 Cash used for Investing Activity -12700 Cashflow from Financing Activity Common Stock issued 10000 Additional paid in Capital 20000 Note Payable 10000 -5000 Treasury Stock Cash Dividend -800 Cash geneated from Financing Activity Net Increase in Cash 34200 12600 Beginning Cash Balance Ending Cash Balance 12600