Question

For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 20Y2, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond entered into the following transactions during July:

Jul.	1	The following assets were received from Steffy Lopez in exchange for common stock: cash, $13,500; accounts receivable, $20,800; supplies, $3,200; and office equipment, $7,500. There were no liabilities received.
	1	Paid two months’ rent on a lease rental contract, $4,800.
	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, $5,500.
	5	Purchased additional office equipment on account from Office Station Co., $6,500.
	6	Received cash from clients on account, $15,300.
	10	Paid cash for a newspaper advertisement, $400.
	12	Paid Office Station Co. for part of the debt incurred on July 5, $5,200.
	12	Recorded services provided on account for the period July 1–12, $13,300.
	14	Paid receptionist for two weeks’ salary, $1,750.

Record the following transactions on Page 2 of the journal:

Jul.	17	Recorded cash from cash clients for fees earned during the period July 1–17, $9,450.
	18	Paid cash for supplies, $600.
	20	Recorded services provided on account for the period July 13–20, $6,650.
	24	Recorded cash from cash clients for fees earned for the period July 17–24, $4,000.
	26	Received cash from clients on account, $12,000.
	27	Paid receptionist for two weeks’ salary, $1,750.
	29	Paid telephone bill for July, $325.
	31	Paid electricity bill for July, $675.
	31	Recorded cash from cash clients for fees earned for the period July 25–31, $5,200.
	31	Recorded services provided on account for the remainder of July, $3,000.
	31	Paid dividends, $12,500.

	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 journal to a ledger of four-column accounts. Add the appropriate posting reference to the journal.
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). A. Insurance expired during July is $375. B. Supplies on hand on July 31 are $1,525. C. Depreciation of office equipment for July is $750. D. Accrued receptionist salary on July 31 is $175. E. Rent expired during July is $2,400. F. Unearned fees on July 31 are $2,750.
5.	(Optional) On your own paper or spreadsheet, enter the unadjusted trial balance on an end-of-period work sheet and complete the work sheet.
6.	A. Journalize the adjusting entries on page 3 of the journal. Adjusting entries are recorded on July 31. Refer to the Chart of Accounts for exact wording of account titles. B. Post the adjusting entries, inserting balances in the accounts affected.
7.	Prepare an adjusted trial balance.
8.	A. Prepare an income statement for the month ended July 31, 20Y2. Be sure to complete the statement heading. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. You will not need to enter colons (:) on the income statement. B. Prepare a statement of stockholders’ equity for the month ended July 31, 20Y2. Be sure to complete the statement heading. Negative amount should be indicated by the minus sign. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. If an amount is zero, enter "0". C. Prepare a balance sheet as of July 31, 20Y2. Be sure to complete the statement heading. Fixed assets must be entered in order according to account number. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary. Negative amount should be indicated by the minus sign.
9.	A. Journalize the closing entries on page 4 of the journal. Refer to the Chart of Accounts for exact wording of account titles. B. Post the closing entries, inserting balances in the accounts affected. Leave the ITEM column BLANK for each row. If the account balance is zero (0) after closing entries are posted, enter a zero (0) in the account's normal balance column.
10.	Prepare a post-closing trial balance.

Answer 1

1 & 2 :

In the books of Diamond Consulting :

Date	Account Titles	Debit	Credit
		$	$
Page 1
July 1	Cash	13,500
	Accounts Receivable	20,800
	Supplies	3,200
	Office Equipment	7,500
	Common Stock		45,000
July 1	Prepaid Rent	4,800
	Cash		4,800
July 2	Prepaid Insurance	4,500
	Cash		4,500
July 4	Cash	5,500
	Unearned Fees		5,500
July 5	Office Equipment	6,500
	Accounts Payable		6,500
July 6	Cash	15,300
	Accounts Receivable		15,300
July 10	Advertising Expense	400
	Cash		400
July 12	Accounts Payable	5,200
	Cash		5,200
July 12	Accounts Receivable	13,300
	Fees Earned		13,300
July 14	Salaries and Wages Expense	1,750
	Cash		1,750
Page 2
July 17	Cash	9,450
	Fees Earned		9,450
July 18	Supplies	600
	Cash		600
July 20	Accounts Receivable	6,650
	Fees Earned		6,650
July 24	Cash	4,000
	Fees Earned		4,000
July 26	Cash	12,000
	Accounts Receivable		12,000
July 27	Salaries and Wages Expense	1,750
	Cash		1,750
July 29	Telephone Expense	325
	Cash		325
July 31	Electricity Expense	675
	Cash		675
July 31	Cash	5,200
	Fees Earned		5,200
July 31	Accounts Receivable	3,000
	Fees Earned		3,000
July 31	Dividends	12,500
	Cash		12,500
Adjusting Entries
July 31
A.	Insurance Expense	375
	Prepaid Insurance		375
B.	Supplies Expense	2,275
	Supplies		2,275
C.	Depreciation Expense	750
	Accumulated Depreciation : Office Equipment		750
D.	Salaries and Wages Expense	175
	Salaries and Wages Payable		175
E.	Rent Expense	2,400
	Prepaid Rent		2,400
F.	Unearned Fees	2,750
	Fees Earned		2,750