Question

Requirement #1:                                                                                                                                                    

During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation, completed the following transactions.                                                                                                                  

July 1     Began business by making a deposit in a company bank account of $40,000, in exchange                                           for 4,000 shares of $10 par value common stock.                                                                                        

July 3     Paid the current month's rent, $2,500                                                                                                             

July 5     Paid the premium on a 1-year insurance policy, $3,600                                                               

July 7     Purchased supplies on account from Little Company, $700.                                                       

July 10   Paid employee salaries, $2,800                                                                                                                          

July 14   Purchased equipment from Lake Company, $9,500. Paid $1,500 down and the balance was                      placed on account. Payments of $500 will be due until the balance is paid in full. The first payment is due 8/1.                                                                                                                                      

Note: Use accounts payable for the balance due.                                                                                         

July 15   Received cash for preparing tax returns for the first half of July, $6,500                                                                                                                                                                                                                      July 19   Made payment on account to Lake Company, $500.                                                                                                                                                                                                                                    

July 31   Received cash for preparing tax returns for the last half of July, $8,250                                                                                                                                                                                                                     July 31   Declared and paid cash dividends of $450.                                                        

Requirements

1. Prepare journal entries to record the July transactions in the General Journal.
2. Post the July journal entries to the following T-accounts and compute ending balances.
3. Prepare a trial balance for July.
4. Prepare adjusting entries using the following information in the General Journal                                                                                   

below. Show your calculations!                                                                                   a) One month's insurance has expired.                                                                                                                  

b) The remaining inventory of supplies is $300.                                                                                              

c) The estimated depreciation on equipment is $125.

D) the estimated income taxes are $2700       

Post the adjusting entries to the General Ledger T-accounts and compute adjusted balances.                                         

Just add to the balances that are already listed.        

Answer 1

Quick Tax Corporation Journal Enteries Date Particulars Jul-01 Cash a/c To Common Stock (Common Stock issued) Dr. Debit in $ Credit in $ 40000 40000 Dr. 2500 Jul-03 Rent Expense a/c To Cash (Rent paid) 2500 Dr. 3600 Jul-05 Prepaid Insurance a/c To Cash (1 year insurance paid) 3600 Jul-07 700 Supplies a/c Dr. To Accounts Payable (Supplies on account) 700 Jul-10 Dr. 2800 Salaries Expense a/c To Cash (Salaries paid) 2800 Jul-14 Dr. 9500 Equipment a/c To Cash To Accounts Payable (Equipment purchased) 1500 8000 Jul-15 6500 Cash a/c Dr. To Service Revenue (Services provided for cash) 6500 Dr. 500 Jul-19 Accounts Payable a/c To Cash (Creditors paid) 500 Jul-31 8250 Cash a/c Dr. To Service Revenue (Services provided for cash) 8250 Dr. 450 Jul-31 Dividend a/c To Cash (Dividend paid) 450

Adjusting Enteries Trans. Particulars Debit in $ Credit in $ Insurance Expense a/c Dr. To Prepaid Insurance 300 (Insurance expensed) 3600 / 12 400 Supplies Expense a/c Dr. To Supplies (Supplies expensed) 700 - 300 400 125 Depreciation Expense a/c Dr. To Accum. Depre - Equip. (To record depreciation) 125 d. 2700 Income Tax Expense a/c Dr. To Income Tax Payable (Income tax accrued) 2700

Woksheet For the Month ending Jul 31 300 Particulars Cash Supplies Prepaid Insurance Equipment Accum. Depre-Equip. Accounts Payable Income Tax Payable Common Stock Dividend Service Revenue Rent Expense Salaries Expense Insurance Expense Supplies Expense Depreciation Expense Income Tax Expense Totals Unadjusted Adjustments Adjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 43400 43400 700 400 300 3600 3300 9500 9500 125 125 8200 8200 2700 2700 40000 40000 450 450 14750 14750 2500 2500 2800 2800 300 300 400 400 125 125 2700 2700 62950 62950 3525 3525 65775 65775

Cash Common Stock Service Revenue Service Revenue Dividend 450 Bal. 450 450 450 Cash 40000 Rent Expense 6500 Prepaid Insurance 8250 Salaries Expense Equipment Accounts Payable Dividend Bal. 54750 2500 3600 2800 1500 500 450 43400 54750 Service Revenue Cash 14750 Cash 14750 Bal. 6500 8250 14750 Accounts Payable Cash Supplies 700 Supplies Expense Bal. 700 400 300 700 Rent Expense 2500 Bal. 2500 2500 2500 Cash Cash Prepaid Insurance 3600 Insurance Expense Bal. 3600 300 3300 3600 Salaries Expense 2800 Bal. 2800 2800 2800 1500 Prepaid Insurance Equipment Cash Accounts Payable 8000 Bal. 9500 Insurance Expense 300 Bal. 300 9500 9500 300 300 Accum. Depre - Equip. Depreciation Expense 125 Supplies Supplies Expense 400 Bal. 400 Bal. 125 400 400 125 125 Cash Bal. Accounts Payable 500 Supplies 8200 Equipment 8700 700 8000 8700 Depreciation Expense Accum. Depre - Equip. 125 Bal. 125 125 125 2700 Income Tax Payable Income Tax Payable Income Tax Expense 2700 2700 Income Tax Expense 2700 Bal. 2700 Bal. 2700 2700 2700 40000 Common Stock Cash 40000 40000 Bal. 40000