Question

July 1	Acquired $28,000 cash by issuing common stock.
July 2	Paid $6,600 cash in advance for a one-year lease on an office.
July 2	Borrowed $18,000 from National Bank by signing a two-year note with interest at 9% per year. The principal and interest will be repaid on July 1, 2021.
July 3	Paid $14,400 cash for office equipment with a useful life of 5 years and no salvage value.
July 4	Paid $300 cash for a one-year insurance policy.
July 7	Purchased supplies on account for $450.
July 10	Earned $9,000 of consulting revenue. Client paid cash.
July 15	Hired a secretary-receptionist and agreed to pay him $1,200 a month, payable the first of every month for the wages earned in the prior month.
July 20	Received monthly utility bill for $120. It will be paid in August.
July 22	Received $3,000 from a client for services to be performed in August
July 25	Billed clients for providing $8,000 in services.
July 28	Paid for supplies purchased on July 7.
July 30	Collected $2,700 from accounts receivable.

Requirement #2: Prepare an unadjusted trial balance for July 31, 2019.

Information for adjusting entries for July 31:

July 31	Make the adjustment for interest on the note payable.
July 31	Make the adjustment for depreciation.
July 31	Make the adjustment for insurance.
July 31	Counted the supplies, had $100 of supplies on hand.
July 31	Make the adjustment for rent expense.
July 31	Make the adjustment for wages earned for one-half month by secretary-receptionist.

Requirement #3: Prepare journal entries for the adjustments for July and post to the ledger.

Requirement #4: Prepare an adjusted trial balance for July 31, 2019.

Answer 1

Credit Calculation Journal entries Date Account 1-Jul Cash Common Stock Debit $ 28,000 $ 28,000 $ 6,600 2-Jul Prepaid Rent Cash $ 6,600 $ 18,000 2-Jul Cash Notes Payable $ 18,000 $ 14,400 3-Jul Office Equipment Cash $ 14,400 $ 300 4-Jul Prepaid Insurance Cash $ 300 $ 450 7-Jul Supplies Accounts Payable $ 450 $ 9,000 10-Jul Cash Consulting revenue $ 9,000 15-Jul No entry $ 120 20-Jul Utility expense Accounts Payable $ 120 $ 3,000 22-Jul Cash Unearned Revenue $ 3,000 $ 8,000 25-Jul Accounts Receivable Consulting revenue $ 8,000 $ 450 28-Jul Accounts Payable Cash $ 450 $ 2,700 $ 2,700 30-Jul Cash Accounts Receivable Adjusting entries 31-Jul Interest expense Interest Payable $ 135 =18,000*9%*1/12 $ 135 $ 240 =14,400/5*1/12 31-Jul Depreciation expense Accumulated Depreciation $ 240 $ 25 =300/12 31-Jul Insurance expense Prepaid Insurance $ 25 $ 350 -450-100 31-Jul Supplies expense Supplies $ 350 $ 550 =6,600/12 31-Jul Rent expense Prepaid Rent $ 550 $ 600 =1,200/2 31-Jul Wages expense Wages Payable $ 600

Credit Credit Date Debit Date Credit Accounts Receivable 25-Jul $ 8,000 30-Jul $ 2,700 Date Debit Date Supplies 7-Jul $ 450 Date Debit Date Prepaid Rent 2-Jul $ 6,600 T Accounts Date Debit Date Credit Cash 1-Jul $ 28,000 2-Jul $ 6,600 2-Jul $ 18,000 3-Jul $ 14,400 10-Jul $ 9,000 4-Jul $ 300 22-Jul $ 3,000 28-Jul $ 450 30-Jul $ 2,700 Unadj Bal. $ 38,950 Unadj Bal. $ 5,300 Unadj Bal. $ 450 Unadj Bal. $ 6,600 31-Jul $ 350 31-Jul $ 550 Adj Bal. $ 6,050 Adj Bal. $ 38,950 Prepaid Insurance 4-Jul $ 300 Adj Bal. $ 5,300 Office Equipment 3-Jul $ 14,400 Adj Bal. $ 100 Accumulated Depreciation Op bal Unadj Bal. $ 300 Unadj Bal. $ 14,400 Unadj Bal. $ 31-Jul $ . 240 31-Jul $ 25 Adj Bal. $ 240 Adj Bal. $ 275 Accounts Payable 7-Jul $ 28-Jul $ 450 20-Jul $ $ 14,400 Wages Payable Op bal Adj Bal. Interest Payable Op bal Unearned Revenue 22-Jul $ 3,000 450 120 Unadj Bal. $ 120 Unadj Bal. $ 3,000 Unadj Bal. $ 31-Jul $ . 600 Unadj Bal. $ 31-Jul $ - 135 Adj Bal. $ 135 Adj Bal. $3,000 Adj Bal. $ 120 Notes Payable 2-Jul $ 18,000 Adj Bal. $ 600 Common Stock 1-Jul $ 28,000 Unadj Bal. $ 18,000 Unadj Bal. $ 28,000 $ 28,000 Adj Bal. Wages expense Rent expense Insurance expense Adj Bal. $ 18,000 Consulting revenue 10-Jul $ 9,000 25-Jul $ 8,000 Unadj Bal. $ 17,000 Unadj Bal. $ 31-Jul $ . 600 Unadj Bal. $ 31-Jul $ - 550 Unadj Bal. $ 31-Jul $ . 25 $ 17,000 Adj Bal. Adj Bal. Adj Bal. Adj Bal. Utility expense 20-Jul $ 120 $ 600 Supplies expense $ 550 Depreciation expense $ 25 Interest expense Unadj Bal. $ 120 Unadj Bal. $ 31-Jul $ - 350 Unadj Bal. $ 31-Jul $ - 240 Unadj Bal. $ 31-Jul $ - 135 Adj Bal. $ 120 Adj Bal. $ 350 Adj Bal. $ 240 Adj Bal. $ 135

Unadjusted TB Debit Credit 38,950 5,300 450 6,600 300 14,400 120 Company Account Names Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Office Equipment Accumulated Depreciation Accounts Payable Wages Payable Interest Payable Unearned Revenue Notes Payable Common Stock Consulting revenue Wages expense Rent expense Insurance expense Utility expense Supplies expense Depreciation expense Interest expense Totals Adjusted TB Debit Credit 38,950 5,300 100 6,050 275 14,400 240 120 600 135 3,000 18,000 28,000 17,000 600 550 25 120 350 240 135 67,095 67,095 3,000 18,000 28,000 17,000 120 66,120 66,120