Question

P4-5B Jannero Pargo opened Pargo's Cleaning Service on July 1, 2012. During July the following transactions were completed. July Pargo invested $20,000 cash in the business. 1 Purchased used truck for $9,000, paying $4,000 cash and the balance on account. 3 Purchased cleaning supplies for $2,100 on account. 5 Paid $1,800 cash on one-year insurance policy effective July 1. 12 Billed customers $4,500 for cleaning services. 18 Paid $1,500 cash on amount owed on truck and $1,400 on amount owed on cleaning supplies. 20 Paid $2,500 cash for employee salaries. 21 Collected $3,400 cash from customers billed on July 12. 25 Billed customers $6,000 for cleaning services. 31 Paid gasoline for month on truck $350. 31 Withdraw $5,600 cash for personal use. The chart of accounts for Pargo's Cleaning Service contains the following accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 128 Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated ion-Equipment, No. 201 Accounts Payable, No. 212 Salaries and Wages Payable, No. 301 Owner's Capital, No. 306 Owner's Drawings, No. 350 Income Summary, No. 400 Service Revenue, No. 633 Gasoline Expense, No. 634 Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries and Wages Expense. Instructions

Answer 1

Pargo's Cleaning Service Journal Enteries Date Particulars 1.7.2012 Cash a/c Dr. To Jannero Pargo, Capital (Capital invested) Debit in $ Credit in $ 20000 20000 1.7.2012 9000 Truck a/c Dr. To Cash To Accounts Payable (Truck purchased) 4000 5000 3.7.2012 2100 Supplies a/c Dr. To Accounts Payable (Supplies on Accounts 2100 5.7.2012 Dr. 1800 Prepaid Insurance a/c To Cash (1 year insurance paid) 1800 4500 12.7.2012 Accounts Receivable a/c Dr. To Service Revenue (Services provided) 4500 2900 18.7.2012 Accounts Payable a/c Dr. To Cash (Creditors paid) 2900 2500 20.7.2012 Salary expense a/c Dr. To Cash (Being salary paid in cash) 2500 Dr. 3400 21.7.2012 Cash a/c To Accounts Receivable (Cash from detors) 3400 6000 25.7.2012 Accounts Receivable a/c Dr. To Service Revenue (Services provided) 6000 Dr. 350 31.7.2012 Gasoline Expense a/c To Cash (Expense paid) 350 5600 31.7.2012 Jannero Pargo, Withdrawals a/c Dr. To Cash (Drawings for personal use) 5600

Adjusting Enteries Date Particulars 31.7.2012 Accounts Receivable a/c Dr. To Service Revenue (Services provided) Debit in $ Credit in $ 2700 2700 500 31.7.2012 Depreciation a/c Dr. To Accumulated Depreciation (Being depreciation charged to asset) 500 150 31.7.2012 Insurance expense a/c Dr. 150 To Prepaid Insurance (Being Insurance expense charged to Prepaid insurance) 1800/12 1500 31.7.2012 Supplies expense a/c Dr. 1500 To Supplies (Being Supplies expense charged to Supplies.) 2100-600 1000 31.7.2012 Salary expense a/c Dr. To Salaries Payable (Salary accrued) 1000 Debit in $ Credit in $ 6000 Dr. 3500 Closing Enteries Date Particulars 31.7.2012 Income Summary a/c To Salary expense To Gasoline Expense To Depreciation To Insurance expense To Supplies expense (Expense accounts closed) 350 500 150 1500 13200 31.7.2012 Service Revenue a/c To Income Summary (Expense accounts closed) 13200 7200 31.7.2012 Income Summary a/c Dr. To Jannero Pargo, Capital (Profits transferred) 7200 5600 31.7.2012 Jannero Pargo, Capital a/c Dr. To Jannero Pargo, Withdrawals (Drawings) 5600

Worksheet For the month ending 31.7.2012 Particulars Cash Accounts Receivable Supplies Prepaid Insurance Truck Accumulated Depreciation Accounts Payable Salaries Payable Jannero Pargo, Capital Jannero Pargo, Withdrawals Service Revenue Salary expense Gasoline Expense Depreciation Insurance expense Supplies expense Totals Unadjusted Adjustments Adjusted Post closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 6250 6250 6250 7100 2700 9800 9800 2100 1500 600 600 1800 150 1650 1650 9000 9000 9000 500 500 500 4200 4200 4200 1000 1000 1000 20000 20000 21600 5600 5600 10500 2700 13200 2500 1000 3500 350 350 500 500 150 150 1500 1500 34700 34700 5850 5850 38900 38900 2 7300 27300 13200 Statement of Income For the month ending 31.7.2012 Service Revenue Less: Salary expense Gasoline Expense Depreciation Insurance expense Supplies expense Net Income 3500 350 500 150 1500 6000 7200 Statement of Owner's Equity For the month ending 31.7.2012 Jannero Pargo, Capital Net Income 20000 7200 27200 -5600 21600 Jannero Pargo, Withdrawals

Amounts in $ Amounts in $ Balance sheet As at 31.7.2012 Assets Current Assets Cash Accounts Receivable Supplies Prepaid Insurance Amounts in $ Amounts in $ Liabilities Current Liabilities 6250 Accounts Payable 9800 Salaries Payable 600 1650 18300 4200 1000 5200 Non Current Assets Truck Accumulated Deprecia Total Assets 9000 -500 Owner's Equity 8500 Jannero Pargo, Capital 26800 Total Liabilities & Equity 21600 26800

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