Question

Problem Section: Complete the accounting cycle for the period January 1 to February 28, 2018. We Do Taxes Company started operations as of January 1, 2018 and set up a small office in Edison to prepare tax returns and perform accounting services. Use the information to follow to journalize each transaction on the Journal Sheet. Jan 1 Paid six months rent on a lease rental contract, $5,400. Jan 3 Paid premiums on property and casualty insurance policies for the year, $1,800. Jan 5 Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $6,000. Jan 10 Received cash from clients on account $500. Jan 21 Purchased a new computer and other office equipment on account from Staples, $3,500. Jan 21 Paid part-time receptionist for two weeks' salary, $1,000. Jan 29 Recorded services provided on account for the period Jan 1-28, $10,300. Jan 30 Received cash from clients for fees earned during period, Jan 1-20, $5,000. Jan 31 Paid Staples for part of the debt incurred on Jan 21, $1,500. Feb 6 Received cash from clients on account $4,500. Feb 28 Paid dividends, $8,000. a) Supplies on hand on February 28 are $1,280. b) Depreciation of office equipment for January and February is $517 ($12,000 +$3,500/602 months). c) Rent expired during January and February is $1,800.

Answer 1

The journal entries are shown below

Post Ref. Credit Debit 5,400 $ $ 5,400 $ 1,800 $ 1,800 $ 6,000 $ 6,000 $ 500 $ 500 $ 3,500 $ 3,500 $ 1,000 $ 1,000 $ 10,300 $ 10,300 Date Description 1-Jan Prepaid Rent Cash 3-Jan Prepaid Insurance Cash 5-Jan Cash Unearned Fees 10-Jan Cash Accounts Receivable 21-Jan Equipment Accounts Payable 21-Jan Salaries and Wages Cash 29-Jan Accounts Receivable Fees Earned 30-Jan Cash Accounts Receivable 31-Jan Accounts Payable Cash 6-Feb Cash Accounts Receivable 28-Feb Dividends Cash 28-Feb Supplies Expense Supplies 28-Feb Depreciation Expense Accumulated Depreciation - Equipment 28-Feb Rent Expense Prepaid Rent 28-Feb Insurance Expense Prepaid Insurance $ 5,000 $ 5,000 $ 1,500 $ 1,500 $ 4,500 $ 4,500 $ 8,000 $ 8,000 $ 1,720 $ 1,720 $ 517 $ 517 $ 1,800 $ 1,800 $ 300 $ 300

Note:-

(1) Supplies Expense - The beginning balance of SUPPLIES not given in the question so assumed to be 3000. Supplies Expense = 3000 - 1280 = 1720

(2) Insurance Expense = (1800/12)*2 = 300