Question

Project Data: Sam Evans owns and operates a consulting firm called Evans Consulting. The business began operating in October 2019. Transactions for October and November 2019 have been recorded and posted Evans Consulting had the following transactions in December 2019 Dec 2 Provided $3,950 consulting services to Gomez Company on account 3 Paid $1.025 cash to Hillside Mall for Evans Consulting's share of mall advertising costs 4 Paid $400 cash for minor repairs to the company's computer 10 Purchased $1,100 of computer supplies on credit from Harris Office Products 14 Paid cash to employee for six days of work at the rate of $125 per day 15 Notified by Alex's Engineering Co. that Evans Consulting's' bid of $7.000 on a proposed project has been accepted. Alex's paid a $1,500 cash advance to Evans Consulting 20 Completed a project for Lyn Corporation and received $5,625 cash. 28 Received $3,000 cash from Gomez Co. on its receivable. 29 Reimbursed S. Evans $193 for business automobile mileage. 31 S. Evans withdrew $1,500 cash from the company for personal use. The following additional facts are collected for use in making adjusting entries prior to preparing financial statements for the company's first three months of operations: a. The December 31 inventory count of computer supplies shows $320 still available. b. Three of the four months' prepaid rent has expired c. Three months have expired since the 12-month insurance premium was paid in advance. d. As of December 31, the only employee of Evans Consulting had not been paid for four days of work at $125 per day. e. The computer system, acquired for $8,000 on October 1, is expected to have a four- year life with no salvage value. f. The office equipment, acquired for $20,000 on October 1, is expected to have a five- year life with no salvage value. Required: 1. Journalize the December transactions for Evans Consulting. You may omit explanations for the journal entries. Skip a line between each journal entry - see the journal entries for October - November as a formatting example 2. Post the December transactions to the appropriate accounts in the modified ledger. 3. Prepare a trial balance to prove the equality of debits and credits prior to continuing with this project. Omit any accounts that have a zero balance. Check figure: $99,816. Consult your instructor if your trial balance does not balance before proceeding with the project. 4. Journalize the adjusting entries to reflect items a through fabove. 5. Post the adjusting entries to the appropriate accounts in the ledger. 6. Prepare an adjusted trial balance as of December 31, 2019. Check figure: $101,816. Consult your instructor if your adjusted trial balance does not balance before proceeding with the project. 7. Prepare the three basic financial statements in good form. See pages 120-121 of your accounting text for a good example of financial statement formatting. a. Prepare an income statement for the three months ended December 31, 2019. b. Prepare a statement of owner's equity for the three months ended December 31, 2019. c. Prepare a balance sheet as of December 31, 2019. 8. Journalize and post the necessary closing entries for Evans Consulting. 9. Prepare a post-closing trial balance as of December 31, 2019.

Answer 1

1.

Prepare journal entries as follows:

Date	Account Titles	Debit	Credit
December
2	Accounts receivable	$3,950
	Consulting service revenue		$3,950
3	Advertising cost	$1,025
	Cash		$1,025
4	Repair Expense	$400
	Cash		$400
10	Computer supplies	$1,100
	Accounts payable		$1,100
14	Wages expense (6 days × $125)	$750
	Cash		$750
15	Cash	$1,500
	Unearned Consulting revenue		$1,500
20	Cash	$5,625
	Consulting service revenue		$5,625
28	Cash	$3,000
	Accounts receivable		$3,000
29	Business expense	$193
	Cash		$193

_______________________________________________________________

Opening data is missing for prepartion of modified ledgers and few adjusting entries

Adjusting Entry as follows:
Trn.	Account Titles	Debit	Credit
a	Computer supplies expense ($1100-$320)	$780
	Computer supplies		$780
b	Rent expense
	Prepaid Rent (Data missing)
c	Insurance
	Prepaid insurance (data missing)
d	Wages expense	$500
	Wages payable (4 days × $125)		$500
e	Depreciation expense ($8000/4) × 3/12	$500
	Accumulated Depreciation-Computer		$500
f	Depreciation expense ($20000/5) × 3/12	$1,000
	Accumulated Depreciation-Computer		$1,000