Question

You are going to prepare the journal entries, trial balances, and financial statements related to the Winston Delivery Company for the month ended June 30, 2018.  Based on the information below, prepare the recording of transactions for the company during the month of June, then prepare the unadjusted trial balance, then the adjusting entries, the adjusted trial balance, the financial statements (Income Statement, Statement of Stockholders’ Equity, Balance Sheet and Cash Flow Statement), closing entries, and Post-closing trial balance.

You will prepare the above on an Excel spreadsheet which is attached, using different sheets for each requirement listed above.  

Record the following transactions in your journal, then (using t-accounts or similar) compute the ending balances in the accounts for the company and record them in the unadjusted trial balance.

June 1 Winston Delivery Company began operations by receiving $10000 cash and a truck with a fair value of $20,000 from Bob Winston.  The business issued Winston shares of common stock in exchange for the contribution.

June 1 Paid $1000 cash for a 4-month insurance policy.  The policy begins June 1.

June 4 Paid $500 cash for office supplies.

June 12Performed delivery services for a customer and received $2000 cash.

June 15Completed a large delivery job, billed the customer, $2500, and received a promise to college the $2500 in one week.

June 18 Paid employee salary of $1000.

June 20 Received $15000 for performing delivery services.

June 22 collected $800 in advance for delivery services to be performed later.

June 25 Collected $2500 cash from customer on account from June 15.

June 27 Purchased gas for the truck, paying $300 on account (Accounts Payable)

June 28 Performed delivery services on account $700

June 29 Paid office rent $1600 for month of June.

June 30 Paid $300 on account.

June 30Cash dividends of $3000 were paid to stockholder.

Use the following accounting from the chart of accounts to record the transactions in the journal. Explanations are not required.

Cash

Retained Earnings

Accounts Receivable

Dividends

Office Supplies

Income Summary

Prepaid Insurance

Service Revenues

Truck

Salaries Expense

Accum. Dep. – Truck

Depreciation Expense – Truck

Accounts Payable

Insurance Expense

Salaries Payable

Fuel Expense

Unearned Revenue

Rent Expense

Common Stock

Supplies Expense

After preparing the unadjusted trial balance, 6 adjusting entries on June 30 will be needed related to the following information:

-Accrued Salaries Expense $1000

-Depreciation on the truck uses straight line depreciation method with a useful life of five years and salvage or residual value of $5000

-Prepaid insurance for the month has expired

-office supplies on hand on June 30 is $100

-Unearned revenue earned during the month is $300

-accrued service revenues $650 not previously recorded

After recording the adjusting entries immediately above, the

adjusted trial balance should be prepared with the ledger accounts (cash, accounts receivable, etc.) with the resulting debit or credit balances.

After preparing the adjusted trial balance

the financial statements should be prepared in the following order using good form (including headings, dollar signs, double underlines, etc.):

Income Statement

Stmt. Of Stockholder’s Equity

Balance Sheet

Stmt of Cash Flows

Next, prepare the closing journal entries to close any temporary revenue, expense, and dividend accounts to adjust the ending retained earnings balance.

Finally prepare the post-closing Trial Balance with the remaining account balances (after closing) indicating their debit or credit balance.

Answer 1

Transaction Entries
Date/No	Account	Dr/Cr	Amount
Jun-01	Cash	Debit	$     10,000
	Truck	Debit	$     20,000
	Common Stock	Credit	$     30,000
Jun-01	Prepaid Insurance	Debit	$       1,000
	Cash	Credit	$       1,000
Jun-04	Office Supplies	Debit	$           500
	Cash	Credit	$           500
Jun-12	Cash	Debit	$       2,000
	Service Revenues	Credit	$       2,000
Jun-15	Accounts Receivable	Debit	$       2,500
	Service Revenues	Credit	$       2,500
Jun-18	Salaries Expense	Debit	$       1,000
	Cash	Credit	$       1,000
Jun-20	Cash	Debit	$     15,000
	Service Revenues	Credit	$     15,000
Jun-22	Cash	Debit	$           800
	Service Revenues	Credit	$           800
Jun-25	Cash	Debit	$       2,500
	Accounts Receivable	Credit	$       2,500
Jun-27	Fuel Expense	Debit	$           300
	Accounts Payable	Credit	$           300
Jun-28	Accounts Receivable	Debit	$           700
	Service Revenues	Credit	$           700
Jun-29	Rent Expense	Debit	$       1,600
	Cash	Credit	$       1,600
Jun-30	Accounts Payable	Debit	$           300
	Cash	Credit	$           300
Jun-30	Dividends	Debit	$       3,000
	Cash	Credit	$       3,000

Un-adjusted Trial Balance

Trial Balance	Trail Balance - Unadjusted
Account	Unadjusted Debit	Unadjusted Credit
Cash	22900
Retained Earnings		0
Accounts Receivable	700
Dividends	3000
Office Supplies	500
Income Summary
Prepaid Insurance	1000
Service Revenues		21000
Truck	20000
Salaries Expense	1000
Accum. Dep. – Truck		0
Depreciation Expense – Truck	0
Accounts Payable		0
Insurance Expense	0
Salaries Payable		0
Fuel Expense	300
Unearned Revenue		0
Rent Expense	1600
Common Stock		30000
Supplies Expense	0
Total	51000	51000

Adjustment Entries

Adjustment Entries
Date/No	Account	Dr/Cr	Amount
1	Salaries Expense	Debit	1000
	Salaries Payable	Credit	1000
2	Depreciation Expense – Truck	Debit	3000
	Accum. Dep. – Truck	Credit	3000
3	Insurance Expense	Debit	250
	Prepaid Insurance	Credit	250
4	Supplies Expense	Debit	400
	Office Supplies	Credit	400
5	Service Revenue	Debit	300
	Unearned Revenue	Credit	300
6	Accounts Receivable	Debit	650
	Service Revenue	Credit	650

Trial - Adjusted

Trial Balance	Trail Balance - Adjusted
Account	Adjusted Debit	Adjusted Credit
Cash	22900
Retained Earnings		0
Accounts Receivable	1350
Dividends	3000
Office Supplies	100
Income Summary
Prepaid Insurance	750
Service Revenues		21350
Truck	20000
Salaries Expense	2000
Accum. Dep. – Truck		3000
Depreciation Expense – Truck	3000
Accounts Payable		0
Insurance Expense	250
Salaries Payable		1000
Fuel Expense	300
Unearned Revenue		300
Rent Expense	1600
Common Stock		30000
Supplies Expense	400
Total	55650	55650

Income Statement - Single Step
Revenues & Gains
	Service Revenues	21350
	Total Revenues and Gains	21350
Expenses & Losses
	Salaries Expense	2000
	Depreciation Expense – Truck	3000
	Insurance Expense	250
	Fuel Expense	300
	Rent Expense	1600
	Supplies Expense	400
	Total Expenses & Losses	7550
Net Income		13800

Statement of Stock holder Equity
Beg. Balance	30000
Add: Net Profit	13800
Less: Dividend	3,000
Closing Balance	40,800

Closing Balance Sheet
Assets		Liability and Equity
Cash	22900	Retained Earnings	10,800
Accounts Receivable	1350	Accum. Dep. – Truck	3000
Office Supplies	100	Accounts Payable	0
Prepaid Insurance	750	Salaries Payable	1000
Truck	20000	Unearned Revenue	300
		Common Stock	30000
	45100		45100