Question

For the past several years, Jolene Upton has operated a part-time consulting business from her home. As of July 1, 2019, Jolene decided to move to rented quarters and to operate the business, which was to be known as Gourmet Consulting, on a full-time basis. Gourmet Consulting entered into the following transactions during July:

Jul.	1	The following assets were received from Jolene Upton: cash, $19,000; accounts receivable, $22,300; supplies, $3,800; and office equipment, $8,900. There were no liabilities received.
	1	Paid three months’ rent on a lease rental contract, $6,000.
	2	Paid the premiums on property and casualty insurance policies, $4,500.
	4	Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $8,000.
	5	Purchased additional office equipment on account from Office Necessities Co., $5,100.
	6	Received cash from clients on account, $12,750.
	10	Paid cash for a newspaper advertisement, $500.
	12	Paid Office Necessities Co. for part of the debt incurred on July 5, $3,000.
	12	Provided services on account for the period July 1–12, $14,200.
	14	Paid receptionist for two weeks’ salary, $1,500.

Record the following transactions on Page 2 of the journal:

Jul.	17	Received cash from cash clients for fees earned during the period July 1–17, $10,400.
	18	Paid cash for supplies, $1,000.
	20	Provided services on account for the period July 13–20, $9,000.
	24	Received cash from cash clients for fees earned for the period July 17–24, $8,500.
	26	Received cash from clients on account, $12,000.
	27	Paid receptionist for two weeks’ salary, $1,500.
	29	Paid telephone bill for July, $325.
	31	Paid electricity bill for July, $675.
	31	Received cash from cash clients for fees earned for the period July 25–31, $7,100.
	31	Provided services on account for the remainder of July, $5,500.
	31	Jolene withdrew $20,000 for personal use.

	Required:
1.	Journalize each transaction in a two-column journal starting on Page 1, referring to the chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.)
2.	Post the July transactions. A. Download the spreadsheet in the Ledger panel and save the Excel file to your computer. Use the spreadsheet to post the July transactions from the journal to a ledger of four-column accounts. Be sure to save your work in Excel as it will be used to complete the following steps in Part 1 of this problem as well as steps in Part 2 of this problem. Your input into the spreadsheet will not be included in your grade in CengageNOW on this problem. B. Add the appropriate posting reference to the journal in CengageNOW.
3.	Prepare an unadjusted trial balance.
4.	At the end of July, the following adjustment data were assembled. Analyze and use these data to complete requirements (5) and (6). • Insurance expired during July is $375. • Supplies on hand on July 31 are $2,850. • Depreciation of office equipment for July is $400. • Accrued receptionist salary on July 31 is $140. • Rent expired during July is $2,000. • Unearned fees on July 31 are $3,000.
5.	(Optional) On your own paper or spreadsheet, enter the unadjusted trial balance on an end-of-period work sheet and complete the spreadsheet. Find a blank end-of-period work sheet in the Excel spreadsheet you previously downloaded.
6.	A. Journalize the adjusting entries on page 3 of the journal. Adjusting entries are recorded on July 31. B. Use the attached spreadsheet in the Ledger panel to post the adjusting entries to the ledger of four-column accounts, inserting balances is the accounts affected. Add the appropriate posting reference to the adjusting entries in the journal in CengageNOW.
7.	Prepare an adjusted trial balance.

8. If you completed the end-of-period work sheet in Part 1, use the adjusted trial balance figures to prepare an income statement, a statement of owner’s equity, and a balance sheet for the month ended July 31, 2019. If you didn’t complete the end-of-period work sheet in Part 1, use the ledger (the Excel spreadsheet) to prepare an income statement, a statement of owner’s equity, and a balance sheet for the month ended July 31, 2019. *If the account balance is zero (0), enter a zero (0). *Be sure to read the instructions for each financial statement carefully.
	9.
	A. Journalize the closing entries on page 4 of the journal. Closing entries are recorded on July 31. B. Use the spreadsheet to post the closing entries to the ledger of four-column accounts, inserting balances in the accounts affected. Add the appropriate posting reference to the closing entries in the journal in CengageNOW.
	10. Prepare a post-closing trial balance.

Answer 1

Gourmet Consulting Journal Enteries Date Particulars 1.7.2019 Cash a/c Dr. Accounts Receivable a/c Dr. Supplies a/c Dr. Office Equipment a/c Dr. To Jolene Upton, Capital (Being Capital introduced by Jolene Upton) Debit in $Credit in $ 19000 22300 3800 8900 54000 6000 1.7.2019 Prepaid Rent a/c Dr. To Cash (Being rent paid in advance) 6000 2.7.2019 4500 Prepaid Insurance a/c Dr. To Cash (Being Insurance paid in advance) 4500 4.7.2019 800 Cash a/c Dr. To Unearned Fees (Being advance received from clients) 8000 5100 5.7.2019 Office Equipment a/c Dr. To Accounts Payable (Being Equipment purchased on account from Office Necessities Co.) 5100 6.7.2019 12750 Cash a/c Dr. To Accounts Receivable (Being Cash received from Debtors) 12750

Date Particulars 10.7.2019 Advertisement Expense a/c Dr. To Cash (Being advertisement expense paid in cash) Debit in $ Credit in $ 500 500 3000 12.7.2019 Accounts Payable a/c Dr. To Cash (Being Office Necessities Co. Paid off in part) 3000 14200 12.7.2019 Accounts Receivable a/c Dr. To Fees Earned (Being Fees earned on Account) 14200 1500 14.7.2019 Salary Expense a/c Dr. To Cash (Being sa;ary paid to receptionist) 1500 10400 17.7.2019 Cash a/c Dr. To Fees Earned (Being Fees earned in Cash) 10400 1000 18.7.2019 Supplies a/c Dr. To Cash (Being Supplies paid in cash) 1000 9000 20.7.2019 Accounts Receivable a/c Dr. To Fees Earned (Being Fees earned on Account) 9000

Dr. Date Particulars 24.7.2019 Cash a/c To Fees Earned (Being Fees earned in Cash) Debit in $ Credit in $ 8500 8500 12000 26.7.2019 Cash a/c Dr. To Accounts Receivable (Being Cash received from Debtors) 12000 1500 27.7.2019 Salary Expense a/c Dr. To Cash (Being sa;ary paid to receptionist) 1500 325 29.7.2019 Telephone Expense a/c Dr. To Cash (Being Telephone expense paid in cash) 325 675 31.7.2019 Electricity Expense a/c Dr. To Cash (Being Electricity expense paid in cash) 675 7100 31.7.2019 Cash a/c Dr. To Fees Earned (Being Fees earned in Cash) 7100 5500 31.7.2019 Accounts Receivable a/c Dr. To Fees Earned (Being Fees earned on Account) 5500 20000 31.7.2019 Jolene Upton, Drawing a/c Dr. To Cash (Being Drawings by Jolene recorded) 20000

Adjustment Enteries Date Particulars Debit in $Credit in $ 31.7.2019 Insurance Expense a/c Dr. To Prepaid Insurance 375 (Being insurance expense charged to prepaid insurance) 375 1950 31.7.2019 Supplies Expense a/c Dr. To Supplies (Being Supplies Expense charged to Supplies) 1950 400 31.7.2019 Depreciation Expense - Office Equipment a/c Dr. To Accumulated Depreciation - Off Equip (Being Depreciation charged to Office Equip.) 400 140 31.7.2019 Salary Expense a/c Dr. To Salary Payable (Being salary expense accrued) 140 2000 31.7.2019 Rent Expense a/c Dr. To Prepaid Rent (Being Rent Expense charged to Prepaid Rent) 2000 5000 31.7.2019 Unearned Fees a/c Dr. To Fees Earned (Being Unearned Fees recognized) 5000 Closing Enteries Date Particulars 31.7.2019 Income Summary a/c Dr. To Advertisement Expense To Salary Expense To Telephone Expense To Electricity Expense To Insurance Expense To Supplies Expense To Depreciation Expense - Office Equipment To Rent Expense (Being expenses transferred to Income summary) Debit in $Credit in $ 9365 500 3140 325 675 375 1950 400 2000 59700 31.7.2019 Fees Earned a/c Dr. To Income Summary (Being Fees earned transferred to Income Summary) 59700 50335 31.7.2019 Income Summary a/c Dr. To Jolene Upton, Capital (Being profit Transferred to capital) 50335 20000 31.7.2019 Jolene Upton, Capitala/c Dr. To Jolene Upton, Drawing (Being Drawings charged to Capital) 20000

Trial Balance For the period ending 31.7.2019 Particulars Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Office Equipment Accumulated Depreciation - Off Equip Accounts Payable Unearned Fees Salary Payable Jolene Upton, Capital Jolene Upton, Drawing Fees Earned Advertisement Expense Salary Expense Telephone Expense Electricity Expense Insurance Expense Supplies Expense Depreciation Expense - Office Equipment Rent Expense Totals Unadjusted Adjustment Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 38750 38750 38750 26250 26250 26250 4800 1950 2850 2850 6000 2000 4000 4000 4500 375 4125 4125 14000 14000 14000 400 400 400 2100 2100 2100 8000 5000 3000 3000 140 140 140 54000 54000 84335 20000 20000 54700 59700 500 500 3000 140 3140 325 325 675 675 375 375 1950 1950 400 400 2000 2000 118800 118800 9865 9 865 119340 119340 89975 89975 5000

59700 Statement of Income For the period ending 31.7.2019 Fees Earned Less: Advertisement Expense Salary Expense Telephone Expense Electricity Expense Insurance Expense Supplies Expense Depreciation Expense - Office E Rent Expense Net Income 500 3140 325 675 375 1950 400 2000 9365 50335 Statement of Owners Capital For the period ending 31.7.2019 Jolene Upton, Capital Net Income 54000 50335 104335 -20000 84335 Less:Jolene Upton, Drawing

Amounts in $ Amounts in $ 2100 3000 140 5240 As at 31.12.2019 Assets Amounts in $ Amounts in $ Liabilities Current Assets Current Liabilities Cash 38750 Accounts Payable Accounts Receivable 26250 Unearned Fees Supplies 2850 Salary Payable Prepaid Rent 4000 Prepaid Insurance 4125 75975 Owners Equity Jolene Upton, Capital Non Current Assets Office Equipment 14000 Accumulated Deprecia -400 13600 Total Assets 89575 Total Liabilities & Equity 84335 89575