Question

The Accounting Cycle: Statements and Closing Entries Chapt Case Study CS-1 to 12:34 Grindstone Paving provides residential and commercial paving services. Its balance sheet at the end of June 2018 is shown below, along with its chart of accounts Grindstone Paving Balance Sheet As at June 30, 2018 Assets Liabilities Cash $7.580 Accounts Payable $15,800 Accounts Receivable 6,000 Unearned Revenue 6,200 Prepaid Insurance 1,800 Notes Payable 22.000 Equipment 55,000 Total Liabilities 44.000 Owner's Equity Stone, Capital 26,380 Total Assets $20380 Total Llabilities and Owner's Equity $70,380 Account Account 400 101 105 110 120 125 Account Description ASSETS Cash Accounts Receivable Prepaid Insurance Equipment Accumulated Depreciation--Equipment LIABILITIES Accounts Payable Interest Payable Salary Payable nearned Revenue Notes Payable OWNER'S EQUITY Stone, Capital Stone, Withdrawals Income Summary Account Description REVENUE Service Revenue EXPENSES Advertising Expense Depreciation Expense Insurance Expense Interest Expense Salaries Expense Telephone Expense 500 510 515 $20 545 550 200 205 210 215 220 300 310 315 For the month of July 2018, Grindstone Paving had the following transactions, Jul 1 The owner invested $8,000 cash into the business Jul 2 Received $2.530 cash for work that will be provided in August Juls Received an advertising bill for $600, which will be paid next month Jul 8 Pald the $350 telephone bill with cash Jul 10 Provided 54,680 worth of services to customers who will pay later Jul 14 Purchased equipment with $8,200 cash Jul 20 Received $2,350 In payment from customers paying their accounts Jul 22 Pald 51.970 toward accounts payable Jul 24 Pald $1,300 toward principal of the note payable Jul 28 Pald salary of $2.400 to an employee Jul 30 The owner withdrew $2,200 cash for personal use 259

Answer 1

Prepare journal entry as follows:

Date	Account Titles	Debit	Credit
Jul. 01	Cash	$8,000
	Stone, capital		$8,000
Jul. 02	Cash	$2,530
	Unearned revenue		$2,530
Jul. 05	Advertising expense	$600
	Accounts payable		$600
Jul. 08	Telephone expense	$350
	Cash		$350
Jul. 10	Accounts receivable	$4,680
	Service revenue		$4,680
Jul. 14	Equipment	$8,200
	Cash		$8,200
Jul. 20	Cash	$2,350
	Accounts receivable		$2,350
Jul. 22	Accounts payable	$1,970
	Cash		$1,970
Jul. 24	Note payable	$1,300
	Cash		$1,300
Jul. 28	Salaries Expense	$2,400
	Cash		$2,400
Jul. 30	Stone, withdrawals	$2,200
	Cash		$2,200

_______________________________________________

Ledger posting as follows:

Date Accounts receivable Date Debit Credit Balance Beg Bal $6,000 $6,000 Jul. 10 $4.680 $10.680 Jul. 20 $2,350 $8.330 Beg. Bal Accounts payable Debit Credit Balance $15.800 $15,800 $600 $16,400 $1.970 $14,430 Jul. 05 Jul. 22 Cash Date Debit Credit Balance Beg Bal $7,580 $7,580 Jul. 01 $8.000 $15,580 Jul. 02 $2,530 $18.110 Jul. 08 $350 $17,760 Jul. 14 $8,200 $9,560 Jul. 20 $2.350 $11.910 Jul. 22 $1,970 $9.940 Jul. 24 $1,300 $8.640 Jul. 28 $2.400 $6.240 Jul. 30 $2,200 $4,040 Prepaid Insurance Date Debit Credit Balance Beg Bal $1,800 $1,800 Unearned revenue Date Debit Credit Balance Beg. Bal. $6,200 $6.200 Jul. 02 $2,530 $8.730 Date Jul. 05 Advertising expense Debit Credit Balance $600 $600 Notes payable Date Debit Credit Balance Beg. Bal. $22.000 $22.000 Jul. 24 $1,300 $20.700 Equipment Date Debit Credit Beg. Bal. $55,000 Jul. 14 $8.200 Balance $55.000 $63,200 Date Jul. 28 Salaries Expense Debit Credit Balance $2.400 $2.400

Date Jul. 28 Telephone expense Debit Credit Balance $350 $350 Date Jul. 30 Stone, withdrawals Debit Credit Balance $2,200 $2,200 Stone, capital Date Debit Credit Balance Beg. Bal. $26.380 $26.380 Jul. 01 $8,000 $34.380 Date Jul. 10 Service revenue Debit Credit Balance $4.680 $4.680
_______________________________________________________

Prepare adjusted entries as follows:

Date	Account Titles	Debit	Credit
Jul. 31	Insurance Expense	$100
	Prepaid Insurance		$100
Jul. 31	Depreciation expense	$450
	Accumulated depreciation		$450
Jul. 31	Unearned revenue	$620
	Service revenue		$620
Jul. 31	Interest Expense	$75
	Interest payable		$75
Jul. 31	Salaries Expense	$500
	Salaries payable		$500

_____________________________________________________

Worksheet as follows:

	Unadjusted T.B			Adjustments		Adjusted T.B
Account Title	DR	CR		DR	CR	DR	CR
Cash	$4,040					$4,040
Accounts receivable	$8,330					$8,330
Prepaid Insurance	$1,800				$100	$1,700
Equipment	$63,200					$63,200
Accumulated depreciation		$0			$450		$450
Accounts payable		$14,430					$14,430
Unearned revenue		$8,730		$620			$8,110
Note payable		$20,700					$20,700
Interest payable		$0			$75		$75
Salary payable		$0			$500		$500
Stone, capital		$34,380					$34,380
Stone, withdrawals	$2,200					$2,200
Service revenue		$4,680			$620		$5,300
Salaries Expense	$2,400			$500		$2,900
Advertising expense	$600					$600
Telephone expense	$350					$350
Depreciation expense	$0			$450		$450
Insurance expense	$0			$100		$100
Interest expense	$0			$75		$75
	$82,920	$82,920		$1,745	$1,745	$83,945	$83,945

____________________________________________________________

Prepare Income Statement:

5300 Income Statement Service revenue Less: Expenses Salaries Expense Advertising expense Telephone expense Depreciation expense Insurance expense Interest expense 2900 600 350 450 1001 75 4475 Net Income 825)

________________________________________________

Prepare owners' equity:

Statement of owners' equity
Beg bal.	$26,380
Additional contributed	$8,000
Add: Net Income	$825
Less: Withdrawals	($2,200)
End. Bal.	$33,005

Dear student, Please feel free to ask any query regarding the solution. Give your valuable rating. Thank You!