Question

Mike Shaw began his contracting business, Mike Shaw Contractors, on April 1, 2017. The post-closing trial balance for Mike Shaw Contractors for April is down below. During May, Mike Shaw Contractors entered into the following transactions:

May 3.	Received cash from clients as an advance 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 the debt incurred on April 5, $640.
15.	Recorded services provided on account for the period May 1–15, $9,180.
16.	Paid part-time receptionist for two weeks' salary including the amount owed on April 30, $750.
17.	Recorded cash from cash clients for fees earned during the period May 1–16, $8,360.
Record the following transactions on Page 6 of the journal:
20.	Purchased supplies on account, $735.
21.	Recorded services provided on account for the period May 16–20, $4,820.
25.	Recorded cash from cash clients for fees earned for the period May 17–23, $7,900.
27.	Received cash from clients on account, $9,520.
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.	Recorded cash from cash clients for fees earned for the period May 26–31, $3,300.
31.	Recorded services provided on account for the remainder of May, $2,650.
31.	Mike Shaw withdrew $10,500 for personal use.

Chart of Accounts for Mike Shaw Contractors
11	Cash	31	Mike Shaw, Capital
12	Accounts Receivable	32	Mike, Shaw, Drawing
14	Supplies	33	Income Summary
15	Prepaid Rent	41	Fees Earned
16	Prepaid Insurance	51	Salary Expense
18	Office Equipment	52	Rent Expense
19	Accumulated Depreciation	53	Supplies Expense
21	Accounts Payable	54	Depreciation
22	Salaries payable	55	Insurance Expense
23	Unearned Fees	59	Miscellaneous Expense

Post-Closing Trial Balance, Mike Shaw Contractors

Mike Shaw Contractors
Post-Closing Trial Balance
April 30, 2017
	Debits	Credits
Cash	22,100
Accounts Receivable	3,400
Supplies	1,350
Prepaid Rent	3,200
Prepaid Insurance	1,500
Office Equipment	14,500
Accumulated Depreciation		330
Accounts Payable		800
Salaries Payable		120
Unearned Fees		2,500
Mike Shaw, Capital		42,300
Totals	46,050	46,050

Instructions:

1. The chart of accounts and post-closing trial balance (April 2017) for Mike Shaw Contractors is shown below. 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, 2017, and place a check mark in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting on Page 5 of the journal and using Mike Shaw's chart of accounts. (Do not insert the account numbers in the journal at this time.)  

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 May 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 $1,600.

f. Unearned fees on May 31 are $3,210.

5. 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 the journal

7. Prepare an adjusted trial balance.

8. Prepare an income statement, a statement of owner's equity, and a balance sheet.

9. Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.

10. Prepare a post-closing trial balance.

Answer 1

Mike Shaw Contractors Journal Enteries Date Particulars 3.5.2018 Cash a/c To Unearned Fees (Advance from client) Dr. Debit in $ Credit in $ 4500 4500 5.5.2018 2450 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 2450 225 9.5.2018 Miscellaneous Expense a/c Dr. To Cash (Advertisement expense paid) 225 Dr. 640 13.5.2018 Accounts Payable a/c To Cash (Creditors paid) 640 9180 15.5.2018 Accounts Receivable a/c Dr. To Fees Earned (Services provided on account) 9180 Dr. Dr. 630 120 16.5.2018 Salary Expense a/c Salaries payable a/c To Cash (Salary paid) 750 8360 17.5.2018 Cash a/c Dr. To Fees Earned (Services provided in cash) 8360 20.5.2018 Supplies a/c To Accounts Payable (Supplies on account) 735

Date Particulars 21.5.2018 Accounts Receivable a/c Dr. To Fees Earned (Services provided on account) Debit in $ Credit in $ 4820 4820 7900 25.5.2018 Cash a/c Dr. To Fees Earned (Services provided in cash) 7900 9520 27.5.2018 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 9520 Dr. 750 28.5.2018 Salary Expense a/c To Cash (Salary paid) 750 260 30.5.2018 Miscellaneous Expense a/c Dr. To Cash (Telephone expense paid) 260 31.5.2018 Miscellaneous Expense a/c Dr. To Cash (Electricity expense paid) 810 3300 31.5.2018 Cash a/c Dr. To Fees Earned (Services provided in cash) 3300 2650 31.5.2018 Accounts Receivable a/c Dr. To Fees Earned (Services provided on account) 2650 10500 31.5.2018 Mike, Shaw, Drawing a/c Dr. To Cash (withdrew for personal use) 10500

Adjusting Enteries Trans. Particulars Insurance expense a/c To Prepaid Insurance (Insurance expensed) Dr. Debit in $ Credit in $ 275 275 b. 1370 Supplies Expense a/c Dr. To Supplies (Supplies expensed) 1350 + 735 - 715 1370 330 Depreciation Expense - Equip a/c Dr. To Accum. Depre - Equip (Depreciation charged to Equip) 330 d. Dr. 325 Salary Expense a/c To Salaries payable (Salary accrued) 325 e. Dr. 1600 Rent Expense a/c To Prepaid rent (Rent expired) 1600 3790 Unearned Fees a/c Dr. To Fees Earned (Fees earned) 2500+ 4500 - 3210 3790 Closing Enteries Date Particulars 31.5.2018 Income Summary a/c Dr. To Salary Expense To Rent Expense To Supplies Expense To Depreciation To Insurance Expense To Miscellaneous Expense (Expense accounts closed) Debit in $ Credit in $ 6575 1705 1600 1370 330 275 1295 Dr. 40000 31.5.2018 Fees Earned a/c To Income Summary (Revenue accounts closed) 40000 Dr. 33425 31.5.2018 Income Summary a/c To Mike Shaw, Capital (Profits transferrred) 33425 Dr. 10500 31.5.2018 Mike Shaw, Capital a/c To Mike, Shaw, Drawing (Drawings charged to Capital) 10500

Trial Balance For the period ending 31.5.2018 Particulars Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Office Equipment Accumulated Depreciation Accounts Payable Salaries Payable Unearned Fees Mike Shaw, Capital Mike, Shaw, Drawing Fees Earned Salary Expense Rent Expense Supplies Expense Depreciation Insurance Expense Miscellaneous Expense Totals Unadjusted Adjustments Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 44195 44195 44195 8080 8080 8080 2085 1370 715 715 3200 1600 1600 1600 1500 275 1225 1225 14500 14500 14500 330 330 660 660 895 895 895 325 325 325 7000 3790 3210 3210 42300 42300 65225 10500 10500 36210 40000 1380 325 1705 1600 1600 1370 1370 330 330 275 275 1295 1295 867358673576907690 87390 8739070315 70315 3790

40000 Statement of Income For the period ending 31.5.2018 Fees Earned Less: Salary Expense Rent Expense Supplies Expense Depreciation Insurance Expense Miscellaneous Expense Net Income 1705 1600 1370 330 275 1295 6575 33425 Statement of Owner's Equity For the period ending 31.5.2018 Mike Shaw, Capital Net Income 42300 33425 75725 -10500 65225 Mike, Shaw, Drawing

Balancesheet As at 31.5.2018 Assets Current Assets Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Current Liabilities 44195 Accounts Payable 895 8080 Salaries Payable 325 Unearned Fees 3210 4430 1600 1225 55815 715 Non Current Assets Office Equipment Accumulated Depreci Total Assets 14500 -660 Owner's Equity 13840 Mike Shaw, Capital 69655 Total Liabilities & Equity 65225 69655