Question

Followings are the transactions related to HCD for catering services company on November 1,2018. During the first month of operations the following transactions occurred:

Nov. 1 Invested $150,000 cash in new business
2 Purchased Car for $15,000 cash
3 Purchased office furniture for $5,000 on account from IKEA
4 Paid $1,500 cash utilities
5 Hired a manager at a salary of $4,000 per month, effective December 1
6 Rendered services for $8,000 on account
7 Rendered services for $100,000, received $40,000 cash and the remaining on account
8 Paid $800 for November office rent
9 Purchased land costing $50,000 by paying 20,000 cash and the remaining on account.
10 Purchased supplies for $5,000, paid 50% cash and the remaining on account
11 Paid $1,200 cash for a one-year insurance policy
12 Paid $5,000 on account for IKEA (November 3)
13 Received $4,000 cash in advance for future services
14 Received $8,000 on account for services performed on November 6.
15 Signed Notes Payable for a loan of $12,000 from ADIB Bank
16 Paid advertising expense $1,500
17 Billed customers $1,800 for services provided
18 Purchased Car for $25,000 paid $15,000 cash and signed a note payable for the Remaining balance
19 They bought a software for the company of $8,000 cash
20 Depreciation expense for the month of November 5,000
21 Collected $60,000 cash for services provided on November 7
22 Purchased gas and oil for $700 cash
23 Purchased inventory for $1,500 on account
31 Paid $6,250 salaries of the month

Instructions:
a) Journalize the transactions

b) Prepare a trial balance on November 30,2018

c) Prepare an income statement and owners’ equity statement for the month of November and a balance sheet at November 30
HINT: Trial Balance = $324,800
Total Assets = $304,050

d) Journalize the following adjustments related to the end of November 30:
1. Depreciation of the fixed assets for the month was $1,200
2. One month of the insurance expired
3. An inventory count shows $2,000 of supplies on hand at November 30
4. All the unearned revenue was earned

e) Prepare an adjusted trial balance

f) Prepare an income statement, owners’ equity statement and a balance sheet after adjustment

Answer 1

HCD for catering services company Journal entries Date Account 1-Nov Cash Capital Credit Calculation Debit $ 150,000 $ 150,000 $ 15,000 2-Nov Vehicles Cash $ 15,000 $ 5,000 3-Nov Office furniture Accounts Payable $ 5,000 $ 1,500 4-Nov Utilities expense Cash $ 1,500 5-Nov No entry $ 8,000 6-Nov Accounts Receivable Service Revenue $ 8,000 7-Nov Cash Accounts Receivable Service Revenue $ 40,000 $ 60,000 $ 100,000 $ 800 8-Nov Rent expense Cash $ 800 $ 50,000 9-Nov Land Cash Accounts Payable $ 20,000 $ 30,000 $ 5,000 10-Nov Supplies Cash Accounts Payable $ $ 2,500 2,500 $ 1,200 11-Nov Prepaid Insurance Cash $ 1,200 $ 5,000 12-Nov Accounts Payable Cash $ 5,000 $ 4,000 13-Nov Cash Unearned Revenue $ 4,000 $ 8,000 14-Nov Cash Accounts Receivable $ 8,000 $ 12,000 15-Nov Cash Notes Payable $ 12,000 $ 1,500 16-Nov Advertising expense Cash $ 1,500 $ 1,800 17-Nov Accounts Receivable Service Revenue $ 1,800 $ 25,000 18-Nov Vehicles Cash Accounts Payable $ $ 15,000 10,000 $ 8,000 19-Nov Software Cash $ 8,000 $ 5,000 20-Nov Depreciation expense Accumulated Depreciation $ 5,000 $ 60,000 21-Nov Cash Accounts Receivable $ 60,000 $ 700 22-Nov Gas and oil expense Cash $ 700 $ 1,500 23-Nov Inventory Accounts Payable $ 1,500 30-Nov Salaries expense $ 6,250 Cash $ 6,250

Credit Credit Date Debit Date Credit Accounts Receivable 6-Nov $ 8,000 14-Nov $ 8,000 7-Nov $ 60,000 21-Nov $ 60,000 17-Nov $ 1,800 Date Debit Date Inventory 23-Nov $ 1,500 Date Debit Date Supplies 10-Nov $ 5,000 HCD for catering services company T Accounts Date Debit Date Credit Cash 1-Nov $ 150,000 2-Nov $ 15,000 7-Nov $ 40,000 4-Nov $ 1,500 13-Nov $ 4,000 8-Nov $ 800 14-Nov $ 8,000 9-Nov $ 20,000 15-Nov $ 12,000 10-Nov $ 2,500 21-Nov $ 60,000 11-Nov $ 1,200 12-Nov $ 5,000 16-Nov $ 1,500 18-Nov $ 15,000 19-Nov $ 8,000 22-Nov $ 700 30-Nov $ 6,250 Bal. $196,550 Prepaid Insurance 11-Nov $ 1,200 Bal. $ 1,800 Land 9-Nov $ 50,000 Bal. $ 1,500 Vehicles 2-Nov $ 15,000 18-Nov $ 25,000 Bal. $ 5,000 Office furniture 3-Nov $ 5,000 Bal. Bal. Bal. $ 1,200 Software 19-Nov $ 8,000 $ 50,000 Accumulated Depreciation 20-Nov $ 5,000 $ 5,000 Unearned Revenue 13-Nov $ 4,000 Bal. $ 40,000 Accounts Payable 12-Nov $ 5,000 3-Nov $ 5,000 9-Nov $ 30,000 10-Nov $ 2,500 18-Nov $ 10,000 23-Nov $ 1,500 Bal. $ Bal. $ 44,000 Bal. $ 4,000 8,000 Notes Payable 15-Nov $ 12,000 Bal. $ 5,000 Capital 1-Nov $ 150,000 Bal. $ 150,000 Bal. $ 12,000 Service Revenue 6-Nov $ 8,000 7-Nov $ 100,000 17-Nov $ 1,800 Salaries expense 30-Nov $ 6,250 Rent expense 8-Nov $ 800 Utilities expense 4-Nov $ 1,500 $ 109,800 Bal. Bal. Gas and oil expense 22-Nov $ 700 Bal. $ 6,250 Advertising expense 16-Nov $ 1,500 Bal. $ 800 Depreciation expense 20-Nov $ 5,000 $ 1,500 Insurance expense Bal. $ 700 Bal. $ 1,500 Bal. $ 5,000 Bal.

HCD for catering services com| Unadjusted TB Account Names Debit Credit Cash 196,550 Accounts Receivable 1,800 Inventory 1,500 Supplies 5,000 Prepaid Insurance 1,200 Land 50,000 Vehicles 40,000 Office furniture 5,000 Software 8,000 Accumulated Depreciation 5,000 Accounts Payable 44,000 Unearned Revenue 4,000 Notes Payable 12,000 Capital 150,000 Service Revenue 109,800 Salaries expense 6,250 Rent expense 800 Utilities expense 1,500 Gas and oil expense 700 Advertising expense 1,500 Depreciation expense 5,000 Insurance expense Supplies expense Totals 324,800 324,800

HCD for catering services company Income Statement For the Month Ended November 30, 2018 Unadjusted 109,800 Revenues Service Revenue Expenses Salaries expense Rent expense Utilities expense Gas and oil expense Advertising expense Depreciation expense Total Expenses Net Income 6,250 800 1,500 700 1,500 5,000 15,750 94,050 Statement of Owners Equity For the Month Ended November 30, 2018 Capital beginning balance Add Investments Add Net Income Less Withdrawals Capital ending balance 150,000 94,050 244,050

Unadjusted HCD for catering services company Balance Sheet As of November 30, 2018 Assets Current Assets Cash Accounts Receivable Inventory Supplies Prepaid Insurance Total Current Assets 196,550 1,800 1,500 5,000 1,200 206,050 Fixed Assets Land Vehicles Office furniture Software Accumulated Depreciation Total Fixed Assets Total Assets 50,000 40,000 5,000 8,000 (5,000) 98,000 304,050 Liabilities & Owners Equity Current Liabilities Accounts Payable Unearned Revenue Notes Payable Total Liabilties 44,000 4,000 12,000 60,000 Owners Equity Capital Total Liabilities & Owners Equity 244,050 304,050