Question

P4-5A Lee Chang opened Lee's Window Washing on July 1, 20 completed: July 2017. In July, the following transactions were signing a note payable for the balance. ce policy, effective July 1. 1 Invested $20,000 cash in the business, 1 Purchased a used truck for $25,000, paying $5.00 1 Paid $2,800 on a one-year insurance policy, effective 5 Billed customers $3.300 for cleaning services. 12 Purchased supplies for $2,100 on account. Paid $3,000 for employee salaries. Billed customers 58,900 for cleaning services. 28 Collected $3,300 from customers billed on July 5. 31 Paid $550 for fuel for the month on the truck. 31 Withdrew $2,600 cash for personal use. 18 25 Instructions (a) Journalize and post the July transactions to the general ledger (b) Prepare a trial balance at July 31. (c) Journalize and post the following July 31 adjustments: 1. Earned but unbilled fees at July 31 were $1,500. 2. The truck has an estimated useful life of five years. 3. One twelfth of the insurance expired. 4. An inventory count shows $700 of supplies on hand at July 31. 5. Accrued but unpaid employee salaries were $800. 6. The note payable has a 5.5% annual interest rate. (d) Prepare an adjusted trial balance. (e) Prepare the income statement and statement of owner's equity for July, and a classified balance sheet at July 31, 2017. Of the note payable, $5,000 must be paid by June 30, 2018 (f) Journalize and post the closing entries. (g) Prepare a post-closing trial balance at July 31.

Answer 1

Date July 1 Accounts Titles and Explanation Debit Credit Cash $20,000 Owner's Capital $20,000 July 1 $25,000 Truck Cash Note Payable $5,000 $20,000 July 1 $2,800 Preapaid Insurance Cash $2,800 July 5 $3,300 Accounts Receivable Service Revenue $3,300 July 12 $2,100 Supplies Accounts Payable $2.100 July 18 Salaries Expense $3,000 Cash $3,000 July 25 $8.900 Accounts Receivable Service Revenue $8.900 July 28 $3,300 Cash Accounts Receivable $3,300 July 31 $550 Fuel Expense Cash $550 July 31 $2,600 Owner's Withdrawal Cash $2,600 Unadjusted Trial Balance At July 31 Debit Credit Cash $9,350 Accounts Receivable $8,900 Supplies $2,100 Preapaid Insurance $2,800 Truck $25,000 Accounts Payable $2,100 Note Payable $20,000 Owner's Capital $20,000 Owner's Withdrawal $2,600 Service Revenue $12,200 Salaries Expense $3,000 Fuel Expense $550 Total $54,300 $54,300 Date July 31 Accounts Titles and Explanation Debit Credit Accounts Receivable $1,500 Service Revenue $1,500 July 31 $417 Depreciation Expense Accumulated Depreciation ($25,000/5 years x 1/12) $417 July 31 $233 Insurance Expense Preapaid Insurance ($2,800/12) $233 July 31 $1,400 Supplies Expense Supplies ($2,100 - $700) $1,400 July 31 $800 Salaries Expense Salaries Payable $800 July 31 Interest Expense Interest Payable ($20,000 x 5.5% x 1/12) 92 Adjusted Trial Balance At July 31 Debit Credit Cash $9,350 Accounts Receivable $10,400 Supplies $700 Preapaid Insurance $2,567 Truck $25,000 Accumulated Depreciation $417 Accounts Payable $2,100 Note Payable $20,000 Salaries Payable $800 Interest Payable $92 Owner's Capital $20,000 Owner's Withdrawal $2,600 Service Revenue $13,700 Salaries Expense $3,800 Fuel Expense $550 Depreciation Expense $417 Insurance Expense $233 Supplies Expense $1,400 Interest Expense $92 Total $57,109 $57,109