Question

Speedy Cleaning Service began its operations on December 1, 2019. The following transactions took place during its first month of operations. The company uses the calendar year as its reporting period. During December, the company completed the following transactions. Summary of Transactions: Dec. 1 Stockholders invested $14,000 cash in the business in exchange for common stock. Dec. 2 Purchased a used truck for $10,000, paying $3,000 cash and the balance on account Dec. 3 Dec. 5 Dec. 12 Purchased cleaning supplies for $800 on account. Paid $1,800 on a 1-year insurance policy, effective December 1. Billed customers $3,800 for cleaning services. Paid $1,000 of the amount owed on truck, and $400 of the amount owed on cleaning supplies. Dec. 18 Dec. 20 Paid $1,600 for employee salaries. Dec. 21 Collected $1,400 from customers billed on December 12. Billed customers $1,500 for cleaning services. Dec. 25 Dec. 31 Paid gasoline for the month on the truck, $400. Dec. 31 Declared and paid a $600 cash dividend.

Answer 1

Speedy Cleaning Service Journal entries Date Account 1-Dec Cash Common Stock Credit Calculation Debit $ 14,000 $ 14,000 $ 10,000 2-Dec Equipment Cash Accounts Payable $ $ 3,000 7,000 $ 800 3-Dec Supplies Accounts Payable $ 800 $ 1,800 5-Dec Prepaid Insurance Cash $ 1,800 $ 3,800 12-Dec Accounts Receivable Service revenue $ 3,800 $ 1,400 =1,000+400 18-Dec Accounts Payable Cash $ 1,400 20-Dec Salaries & Wages expense $ 1,600 Cash $ 1,600 $ 1,400 21-Dec Cash Accounts Receivable $ 1,400 $ 1,500 25-Dec Accounts Receivable Service revenue $ 1,500 $ 400 31-Dec Gasoline expense Cash $ 400 $ 600 31-Dec Dividends Cash $ 600

Credit Date Credit Date Credit Date Credit Debit Date Supplies 800 31-Dec Debit Date Accounts Receivable 3,800 21-Dec 1,500 1,300 Debit Date Prepaid Insurance 1,800 31-Dec 1,400 3-Dec 700 5-Dec Speedy Cleaning Service T Accounts Date Debit Date Cash 1-Dec 14,000 2-Dec 21-Dec 1,400 5-Dec 18-Dec 20-Dec 31-Dec 31-Dec 150 12-Dec 25-Dec 31-Dec 3,000 1,800 1,400 1,600 400 600 Bal. Bal. 6,600 Equipment 10,000 Bal. 5,200 Accumulated Depreciation-Equipment 31-Dec 200 100 Accounts Payable 1,400 2-Dec 3-Dec 1,650 Salaries & Wages Payable 31-Dec 2-Dec 18-Dec 500 7,000 800 Bal. 200 Bal. 6,400 Bal. 500 10,000 Common Stock 1-Dec Bal. Retained Earnings 600 31-Dec Dividends 600 31-Dec 14,000 31-Dec 3,050 31-Dec 600 Income Summary 3,550 31-Dec 3,050 31-Dec 31-Dec 6,600 Bal. 14,000 Bal. 2,450 Bal. Gasoline expense Supplies expense 700 Bal. Depreciation expense 31-Dec 200 31-Dec 31-Dec 400 Service revenue 12-Dec 25-Dec 6,600 31-Dec 3,800 1,500 1,300 31-Dec 31-Dec 700 31-Dec 400 31-Dec 200 Bal. Bal. 31-Dec Insurance expense 150 31-Dec Salaries & Wages expense 20-Dec 1,600 31-Dec 500 31-Dec 150 2,100 Bal. Bal.

Unadjusted TB Debit Credit 6,600 3,900 800 1,800 10,000 6,400 Speedy Cleaning Service Account Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation Equipment Accounts Payable Salaries & Wages Payable Common Stock Retained Earnings Dividends Income Summary Service revenue Supplies expense Gasoline expense Depreciation expense Insurance expense Salaries & Wages expense Totals 14,000 600 5,300 1,600 25,700 25,700

Adjusting entries 31-Dec Accounts Receivable Service revenue $ 1,300 $ 1,300 $ 200 31-Dec Depreciation expense Accumulated Depreciation Equipment $ 200 $ 150 =1,800/12 31-Dec Insurance expense Prepaid Insurance $ 150 $ 700 =800-100 31-Dec Supplies expense Supplies $ 700 $ 500 31-Dec Salaries & Wages expense Salaries & Wages Payable $ 500

Speedy Cleaning Service Account Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation Equipment Accounts Payable Salaries & Wages Payable Common Stock Retained Earnings Dividends Income Summary Service revenue Supplies expense Gasoline expense Depreciation expense Insurance expense Salaries & Wages expense Totals Adjusted TB Debit Credit 6,600 5,200 100 1,650 10,000 200 6,400 500 14,000 600 6,600 700 400 200 150 2,100 27,700 27,700

6,600 Speedy Cleaning Service Income Statement For month ended December 31, 2019 Revenue Service revenue Expenses Supplies expense Gasoline expense Depreciation expense Insurance expense Salaries & Wages expense Total Expenses Net Income 700 400 200 150 2,100 3,550 3,050

Speedy Cleaning Service Statement of Stockholders Equity For month ended December 31, 2019 Common Stock Retained Earnings Total Equity 14,000 Balance, December 1, 2019 Issue of common stock Net Income Dividends Balance, December 31, 2019 3,050 (600) 2,450 14,000 3,050 (600) 16,450 14,000

Speedy Cleaning Service Balance Sheet As of December 31, 2019 Assets Current Assets: Cash Accounts Receivable Supplies Prepaid Insurance Total Current Assets Liabilities Liabilities: 6,600 Accounts Payable 5,200 Salaries & Wages Payable 100 1,650 13,550 Total Liabiltiies $ $ $ $ $ $ $ 6,400 500 $ 6,900 Fixed Assets: Equipment Accumulated Depreciation-Equipment Equipment, net $ $ $ Stockholders Equity: 10,000 Common Stock (200) Retained Earnings 9,800 Total Stockholders Equity $ $ $ 14,000 2,450 16,450 Total Assets $ 23,350 Total Liabilities & Stockholders Equity $ 23,350

Credit Calculation Closing entries Date Account 31-Dec Service revenue Income Summary Debit $ 6,600 $ 6,600 $ 3,550 700 31-Dec Income Summary Supplies expense Gasoline expense Depreciation expense Insurance expense Salaries & Wages expense S $ $ $ $ 400 200 150 2,100 $ 3,050 =6,600-3,550 31-Dec Income Summary Retained Earnings $ 3,050 $ 600 31-Dec Retained Earnings Dividends $ 600

Speedy Cleaning Service Account Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation Equipment Accounts Payable Salaries & Wages Payable Common Stock Retained Earnings Totals Post closing TB Debit Credit 6,600 5,200 100 1,650 10,000 200 6,400 500 14,000 2,450 23,550 23,550