Question

Kelly Pitney began her consulting business, Kelly Consulting on April 1, 2019. The accounting cycle for Kelly consulting for April including financial statements was illustrated in this chapter. During May, Kelly Consulting entered in to the following transactions.

May 3. Received cash from clients as an advanced payment for services to be provided and recorded it as unearned fees $4,500

5 received cash from clients on account, $2,450

9. Paid cash for a newspaper advertisement $225

13 Paid office station co. for part of their debt incurred on April 5, $640.

15 Provided services on account for the period May 1-15 $9180.

16 Paid part-time receptionist for two weeks salary including the amount owed on April 30. $750

17 Received cash from cash clients for fees earned during the period May 1-1, $8,360

Record the following transaction

20 purchased supplies on account $t35

21 provide services on account for the period May 16-20, $4820

25 received cash from cash clients for fees earned for the period May 17-23, $7,900

27 received cash from clients on account $9520

28 Paid part-time receptionist for two weeks salary $750

30 Paid telephone bill for May $260

31. Paid electricity bill for May, $810

31 Received cash from cash clients for fees earned for the period May 26-31, $3,300

31 Provide services on account for the remainder of May $2650\

31 Kelly withdrew $10,500 for personal use

Instructions

1. Chart of accounts for Kelly Consulting is shown in Exhibit 9 and the post closing trial balance as of April 30,2019 is shown in Exhibit 17. 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 1,2019, and place a checkmark in the post referencing column. Journalize each of the May transactions in a two column journal starting on page 5 of the journal and using Kelly Consulting Chart of accounts.

2. Post the journal to a ledger of four column accounts

3. Prepare an unadjusted trial balance

4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts 5 and 6

a. Insurance expired during May is $275

b. Supplies on hand on My 31 are $715

c Depreciation of office equipment for May is $330

d Accrued receptionist salary on May 31 is $325

e Rent expired during may is $1600

f unearned fees on May 31 are $3210

5 (optional) Enter the unadjusted trial balance on an end of period spreadsheet and complete the spreadsheet

6. journalize and post the adjusting entries. record the adjusting entries on page 7 of journal

7 prepare an adjusted trial balance

8 Prepare an income statement, a statement of owners equity and a balance sheet.

9 Prepare and post the closing entries. record the closing entries on page 8 of the journal. Indicate closed accounts by inserting a line in both balance columns opposite the closing entry.

10. prepare a post closing trial balance..

Chapter 4 Completing the Accounting Cycle 185 Kelly Consulting Post-Closing Trial Balance April 30, 2019 EXHIBIT 1.7 Post-Closing Trial Balance, Keily Consulting Account No. Debit Credit Balances Balances 12 Cash Accounts Receivable .............. Supplies Prepaid Rent.................. Prepaid Insurance.................. Office Equipment .................... Accumulated Depreciation ............. Accounts Payable........... Salaries Payable................. Unearned Fees .............. Kelly Pitney, Capital................ 22,100 3,400 1,350 3,200 1,500 14,500 3301204 800 120 2,500 42,300 46,050 46,050 Ledger, Kelly Consulting EXHIBIT 18 Ledger Account Cash Account No. 1 Account Supplies Account No. 14

Answer 1

Post ref Debit Credit Calculation Kelly Consulting Journal entries Date Account Page 5 3-May Cash Unearned Fees GL5 $ 4,500 GL5 $ 4,500 $ 2,450 5-May Cash Accounts Receivable GL5 GL5 $ 2,450 $ 225 9-May Miscellaneous Expense Cash GL5 GL5 $ 225 GL5 $ 640 13-May Accounts Payable Cash GL5 $ 640 $ 9,180 15-May Accounts Receivable Fees Earned GL5 GL5 $ 9,180 16-May Salaries Payable Salaries Expense Cash GL5 GLS $ $ 120 630 750-120 GL5 $ 750 $ 8,360 17-May Cash Fees Earned GL5 GL5 $ 8,360 Page 6 20-May Supplies Accounts Payable $ 735 GL6 GL6 $ 735 $ 4,820 21-May Accounts Receivable Fees Earned GL6 GLO $ 4,820 $ 7,900 25-May Cash Fees Earned GL6 GL6 $ 7,900 $ 9,520 27-May Cash Accounts Receivable GL6 GLO $ 9,520 GL6 $ 750 28-May Salaries Expense Cash GL6 $ 750 $ 260 30-May Miscellaneous Expense Cash GL6 GL6 $ 260 GL6 $ 810 31-May Miscellaneous Expense Cash GL6 $ 810 $ 3,300 31-May Cash Fees Earned GL6 GL6 $ 3,300 $ 2,650 31-May Accounts Receivable Fees Earned GL6 GL6 $ 2,650 $ 10,500 GL6 GLO $ 10,500 31-May Kelly Pitney, Withdrawals Cash Adjusting entries Page 1 31-May Insurance expense Prepaid Insurance $ 275 GL7 GL7 $ 275 $ 1,370 =1,350+735-715 31-May Supplies expense Supplies GL7 GL7 $ 1,370 GL7 GL7 $ 31-May Depreciation expense Accumulated Depreciation 330 $ 330 $ 325 31-May Salaries Expense Salaries Payable GL7 GL7 $ 325 $ 1,600 31-May Rent expense Prepaid Rent GL7 GL7 $ 1,600 GL7 $ 3,790 =2500+4500-3210 GL7 $ 3,790 31-May Unearned Fees Fees Earned Closing entries Page 8 31-May Fees Earned Income Summary GL8 $ 40,000 GLS $ 40,000 $ 6,575 GL8 GLS 31-May Income Summary Salaries Expense Rent expense Supplies expense Depreciation expense Insurance expense Miscellaneous Expense 0222 $ $ $ $ $ $ 1,705 1,600 1,370 330 275 1,295 66 60 $ 33,425 31-May Income Summary Kelly Pitney, Capital GL8 GL8 $ 33,425 31-May Kelly Pitney, Capital Kelly Pitney, Withdrawals GL8 GLS $ 10,500 $ 10,500

Balance Credit Credit Balance Credit Debit Credit Debit $ 2,450 Date Item Post Ref Debit Accounts Receivable 1-May Balance 5-May Received cash from clients on account GL5 15-May Recorded services provided on account GL5 $ 9,180 21-May Recorded services provided on account GL6 $ 4,820 27-May Received cash from clients on account GL6 31-May Recorded services provided on account GL6 $ 2,650 $ 3,400 $ 950 $ 10,130 $ 14,950 $ 5,430 $ 8,080 GLS $ 9,520 Kelly Consulting T Accounts Date item Post Ref Debit Cash 1-May Balance 3-May Advance pmt for services to be provided GL5 $ 4,500 5-May Received cash from clients on account GL5 $ 2,450 9-May Paid cash for a newspaper advertisement GLS 13-May Paid Office Station Co. 16-May Paid part-time receptionist GL5 17-May Recorded cash from cash clients GL5 $ 8,360 25-May Recorded cash from cash clients GL6 $ 7,900 27-May Received cash from clients on account GL6 $ 9,520 28-May Paid part-time receptionist GL6 30-May Paid telephone bill GL6 31-May Paid electricity bill GL6 31-May Recorded cash from cash clients GL6 $ 3,300 31-May Paid dividends GL6 Supplies 1-May Balance 20-May Purchased supplies on account GL6 $ 735 31-May Supplies used GL7 Prepaid Insurance 1-May Balance 31-May Insurance expired GL7 Accumulated Depreciation 1-May Balance 31-May Depreciation of office equipment GL7 $ 22,100 $ 26,600 $ 29,050 $ 225 $ 28,825 $ 640 $ 28,185 $ 750 $ 27,435 $ 35,795 $ 43,695 $ 53,215 $ 750 $ 52,465 $ 260 $ 52,205 $ 810 $ 51,395 $ 54,695 $ 10,500 $ 44,195 Prepaid Rent $ $ $ 1,350 2,085 715 1-May Balance 31-May Rent expired GL7 $ 1,600 $ $ $ 3,200 1,600 1,600 $ 1,370 Office Equipment 1-May Balance $ $ 1,500 1,225 $ 14,500 $ 14,500 $ 275 Accounts Payable S 330 $ $ $ $ $ 1-May Balance 13-May Paid Office Station Co. 20-May Purchased supplies on account 640 330 660 660 660 GL5 GL6 $ $ $ $ 300 160 895 895 $ 735 $ $ $ 120 - 325 Unearned Fees 1-May Balance 3-May Advance pmt for services to be provided GLS 31-May Unearned fees earned GL7 $ 4,500 $ $ $ 2,500 7,000 3,210 $ 325 $ 3,790 $33,425 $ 42,300 $ 75,725 $ 65,225 $ 40,000 $ 10,500 $ . 31-May Closing 31-May Closing 31-May Closing Income Summary GLS GLS $ 6,575 GLS $33,425 Salaries Expense $ 40,000 $ 33,425 $ - GLS $ 10,500 1-May Balance 16-May Paid part-time receptionist 28-May Paid part-time receptionist 31-May Accrued receptionist salary 31-May Closing $ $ $ GL5 GL6 GL7 GLS 630 750 325 $ . $ 9,180 $ 17,540 $ 22,360 $ 30,260 $ 33,560 $ 36,210 $ 40,000 $ 9,180 $ 8,360 $ 4,820 $ 7,900 $ 3,300 $ 2,650 $ 3,790 $ $ $ $ $ . 630 1,380 1,705 . GL6 Salaries Payable 1-May Balance 16-May Paid part-time receptionist GL5 $ 120 31-May Accrued receptionist salary GL7 Kelly Pitney, Capital 1-May Balance 31-May Closing GLS 31-May Closing GLS $ 10,500 Kelly Pitney, withdrawals 1-May Balance 31-May Paid dividends GL6 $ 10,500 31-May Closing Fees Earned 1-May Balance 15-May Recorded services provided on account GLS 17-May Recorded cash from cash clients GLS 21-May Recorded services provided on account GLO 25-May Recorded cash from cash clients 31-May Recorded cash from cash clients GL6 31-May Recorded services provided on account GL6 31-May Unearned fees earned GL7 31-May Closing GLS $ 40,000 Miscellaneous Expense 1-May Balance ✓ 9-May Paid cash for a newspaper advertisement GLS $ 225 30-May Paid telephone bill GL6 $ 260 31-May Paid electricity bill GL6 $ 810 31-May Closing GLS Supplies expense 1-May Balance 31-May Supplies used GL7 $ 1,370 31-May Closing GLS Rent expense 1-May Balance 31-May Rent expired GL7 $ 1,600 31-May Closing GL8 $ 1,705 Insurance expense $ S $ $ $ $ 1-May Balance 31-May Insurance expired 31-May Closing 275 . 225 485 1,295 . GL7 GL8 $ $ $ - 275 - $ 275 $ 1,295 $ $ $ . 1,370 . Depreciation expense 1-May Balance 31-May Depreciation of office equipment GL7 $ 31-May Closing GLS ation of office equipment G7 $ 330. 330 $ $ $ - 330 . 30 $ 1,370 $ 330 GL7 $ 1,600 $ 1,600 $ $ $ . 1,600 - $ 1,600

Adjustments Debit Credit Income Statement Debit Credit Unadjusted TB Debit Credit 44,195 8,080 2,085 3,200 1,500 14,500 330 895 1,370 1,600 275 Balance Sheet Debit Credit 44,195 8,080 715 1,600 1,225 14,500 660 895 325 3,210 42,300 10,500 330 Kelly Consulting Account Names Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Office Equipment Accumulated Depreciation Accounts Payable Salaries Payable Unearned Fees Kelly Pitney, Capital Kelly Pitney, Withdrawals Fees Earned Salaries Expense Rent expense Supplies expense Depreciation expense Insurance expense Miscellaneous Expense Totals Net Income Totals Adjusted TB Debit Credit 44,195 8,080 715 1,600 1,225 14,500 660 895 325 3,210 42,300 10,500 40,000 1,705 1,600 1,370 330 275 1,295 87,390 87,390 Post Closing TB Debit Credit 44,195 8,080 715 1,600 1,225 14,500 660 895 325 3,210 65,225 325 3,790 7,000 42,300 10,500 36,210 3,790 40,000 1,380 325 1,600 1,370 330 275 1,705 1,600 1,370 330 275 1,295 6,575 33,425 40,000 1,295 86,735 86,735 7,690 7,690 40,000 80,815 70,315 70,315 47,390 33,425 80,815 40,000 80,815 70,315 70,315

40,000 Kelly Consulting Income Statement For Month ended May 31, 2019 Fees Earned Expenses Salaries Expense Rent expense Supplies expense Depreciation expense Insurance expense Miscellaneous Expense Total Expenses Net Income 1,705 1,600 1,370 330 275 1,295 6,575 33,425 42,300 Statement of Owners Equity For Month ended May 31, 2019 Capital, Beginning of Period Add Net Income Less Withdrawals Capital, End of Period 33,425 (10,500) 65,225

Kelly Consulting Balance Sheet As of May 31, 2019 Assets Current Assets Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Total Current Assets Liabilities & Owners Equity Current Liabilities 44,195 Accounts Payable 8,080 Salaries Payable 715 Unearned Fees 1,600 1,225 55,815 Total Liabilities 895 325 3,210 4,430 65,225 Property, Plant & Equipment Office Equipment Accumulated Depreciation Total Property, Plant & Equipment Owners Equity 14,500 Capital (660) 13,840 Total Assets 69,655 Total Liabilities & Owners Equity 69,655