Question

Instructions: This practice problem is related to chapters 1-3, ensure you refer to those chapters as you are completing the required steps. Also, please note that any incomplete work will not be accepted, and it will automatically receive zero points. Please note that this problem must be manually done, and when completing this practical problem; you need to use the attached work-sheets. Do not change the formatting of the worksheets or create your own as they will not be accepted. Problem Data Linda Trammel opened Alie Computer Repair, Inc. on July 1, 2019. During July, the following transactions took place. July 1 Issued $70,000 of common stock for $70,000 cash. 2 Purchased equipment for $30,000, paying $5,000 cash and the balance on a 3 year note payable. 2 Paid $4,800 cash on a 12-month insurance policy effective July 1, 2019. 3 Paid $2,500 cash for July's rent. 5 Purchased repair supplies for $3,500 on account. 16 Paid $3,000 cash for employees' salaries for July 1 - 15. 17 Received $7,500 from customer for repair services provided in the 1st half of July. 18 Billed customer $2,500 for repair services performed in July. 18 Received $2,500 for computer repair services to be performed in August. 28 Paid the telephone bill for the month of July in the amount of $500. 29 Collected $1,500 cash from customers billed on July 18. 31 Paid $3,500 cash on amount owed on the repair supplies purchased on July 5. 31 Received $7,000 from customer for repair service provided during the 2nd half of July. 30 Declared and paid a $,1000 cash dividend. 31 Received the utility for the month of July for $700. The bill will be paid in August. The following is a list of the general ledger accounts that are utilized by Alie Computer Repair, Inc.: Account Number 101 110 120 121 Account Title Cash Account Receivable Repair Supplies Prepaid Insurance Page 1

Answer 1

Alie Computer Repair Journal Enteries Date Particulars 1.7.2019 Cash a/c Dr. To Common Stock (Common stock issued) Debit in $ Credit in $ 70000 70000 30000 2.7.2019 Equipment a/c Dr. To Cash To Note Payable (Equipment purchased) 5000 25000 2.7.2019 4800 Prepaid Insurance a/c Dr. To Cash 12 month insurance paid) 4800 Dr. 2500 3.7.2019 Rent Expense a/c To Cash (Rent paid) 2500 3500 5.7.2019 Repair Supplies a/c Dr. To Accounts Payable (Supplies on account) 3500 3000 16.7.2019 Salaries Expense a/c Dr. To Cash (Salary paid) 3000 7500 17.7.2019 Cash a/c Dr. To Repair Revenue (Services for cash) 7500 2500 18.7.2019 Accounts Receivable a/c Dr. To Repair Revenue (Revenue on account) 2500

Date Particulars 18.7.2019 Cash a/c Dr. To Repair Revenue (Services for cash) Debit in $ Credit in $ 2500 2500 500 28.7.2019 Telephone Expense a/c Dr. To Cash (Telephone Expense paid) 500 1500 29.7.2019 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 1500 3500 31.7.2019 Accounts Payable a/c Dr. To Cash (Cash paid to creditors) 3500 7000 31.7.2019 Cash a/c Dr. To Repair Revenue (Services for cash) 7000 Dr. 1000 31.7.2019 Dividend a/c To Cash (Dividend paid) 1000 700 31.7.2019 Utilities Expense a/c Dr. To Accounts Payable (Expense accrued) 700

Adjusting Enteries Date Particulars 31.7.2019 Depreciation Expense - Equip. a/c Dr. To Accumulated Depreciation Equip (To record depreciation) 5500 / 12 Debit in $ Credit in $ 458 458 400 31.7.2019 Insurance Expense a/c Dr. To Prepaid Insurance (Insurance expensed) 4800/12 400 2100 31.7.2019 Supplies Expense a/c Dr. To Repair Supplies (Supplies Expensed) 3400 - 1400 2100 3000 31.7.2019 Salaries Expense a/c Dr. To Salary Payable (Salary accrued) 3000 250 31.7.2019 Interest Expense a/c Dr. To Interest Payable (Interest accrued) 25000 x 12% x 1/12 250 1500 31.7.2019 Accounts Receivable a/c Dr. To Repair Revenue (Revenue on account) 1500 Debit in $ Credit in $ 12908 2500 6000 500 Closing Enteries Date Particulars 31.7.2019 Income Summary a/c Dr. To Rent Expense To Salaries Expense To Telephone Expense To Utilities Expense To Depreciation Expense - Equip. To Insurance Expense To Supplies Expense To Interest Expense (Expense accounts closed) 700 458 400 2100 250 21000 31.7.2019 Repair Revenue a/c Dr. To Income Summary (Revenue accounts closed) 21000 Dr. 8092 31.7.2019 Income Summary a/c To Retained Earnings (Profits Transferred) 8092 1000 31.7.2019 Retained Earnings a/c Dr. To Dividends (Dividends charged to Retained Earnings) 1000

Worksheet For the period ending 31.7.2019 Particulars Cash Accounts Receivable Repair Supplies Prepaid Insurance Equipment Accumulated Depreciation Equip Accounts Payable Salary Payable Interest Payable Note Payable Common Stock Dividend Repair Revenue Rent Expense Salaries Expense Telephone Expense Utilities Expense Depreciation Expense - Equip. Insurance Expense Supplies Expense Interest Expense Totals Unadjusted Adjustments Adjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 68200 68200 1000 1500 2500 3500 2100 1400 4800 400 4400 30000 30000 458 458 700 700 3000 3000 250 250 25000 25000 70000 70000 1000 1000 19500 1500 21000 2500 2500 3000 3000 6000 500 500 700 700 458 458 400 400 2100 2100 250 250 115200 115200 7708 7 708 120408 120408

21000 Statement of Income For the period ending 31.7.2019 Repair Revenue Less: Rent Expense Salaries Expense Telephone Expense Utilities Expense Depreciation Expense - Equip. Insurance Expense Supplies Expense Interest Expense Net Income 2500 6000 500 700 458 400 2100 250 12908 8092 Statement of Retained Earnings For the period ending 31.7.2019 Net Income Dividend 8092 -1000 7092

250 Balance sheet As at 31.7.2019 Assets Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Current Assets Current Liabilities Cash 68200 Accounts Payable 700 Accounts Receivable 2500 Salary Payable 3000 Repair Supplies 1400 Interest Payable 3950 Prepaid Insurance 4400 76500 Non Current Liabilities Non Current Assets Note Payable 25000 Equipment 30000 Accumulated Depreci -458 29542 Shareholders Equity Common Stock 70000 Retained Earnings 7092 77092 Total Assets 106042 Total Liabilities & Equity 106042