Question

Rhoades Tax Services began business on December 1, 2015. Its December transactions are as follows. Dec Rhoades invested $20,000 in the business in exchange for common stock. Paid $1,200 cash for December rent to Bomba Realty. 2 Purchased $1,080 of supplies on account. 2 Purchased $9,500 of office equipment; paying $4,700 cash with the balance due in 30 days. Paid $1,080 cash on account for supplies purchased December 2. 14 Paid $900 cash for assistant's wages for 2 weeks' work 20 Performed consulting services for $3,000 cash. 28 Paid $900 cash for assistant's wages for 2 weeks' work. 30 Billed clients $7,200 for December consulting services. Paid $1,800 cash for dividends. 31 1. Supplies available at December 31 are $710. 2. Accrued wages payable at December 31 are $270. 3. Depreciation for December is $120. 4. Rhoades has spent 30 hours on an involved tax fraud case during December. When completed in January, his work will be billed at $75 per hour. (It uses the account Fees Receivable to reflect amounts earned but not yet billed.) Then post adjusting entries to their T-accounts. a (2). Record any adjusting entries using the financial statement effects template. Balance Sheet Contributed Earned Noncash Transaction Cash Asset Liabilities Contra-Assets Capital Capital Assets 1 $ 2 3 4 TOTALS Income Statement Revenues Expenses Net Income $ $ $ II e. Journalize the adjusting entries at December 31 in journal entry form, drawing on the information above. Then post adjusting entries to their T-accounts and prepare an adjusted trial balance at December 31, 2015 c. Record the above transactions in journal entry form and post these entries to their T-accounts (key numbers in T-accounts by date). GENERAL JOURNAL Debit Credit Date Description 12/1 To record investment in the business. 12/2 a To record December rent payment 12/2 b To record purchases of various supplies on account 12/3 Accounts Payable To record purchase of office equipment. иь иь 12/8 To record payments on account. 12/14 To record payment of assistant's wages 12/20 To record cash received for services 12/28 To record payment of assistant's wages. 12/30 To record customers billed for services. f. Prepare a December 2015 income statement and statement of stockholders' equity, and a December 31, 2015, balance sheet. RHOADES TAX SERVICES Income Statement For the Month of December 31, 2015 Revenue Consulting Revenue Expenses: Wages Expense Rent Expense Supplies Expense Depreciation Expense Total Expenses Net Income RHOADES TAX SERVICES Statement of Stockholders' Equity December 31, 2015 Total Retained Stockholders' Common Stock Earnings Equity Balance at December 1, 2015 Stock Issuance Dividends (enter as negative) Net Income Balance at December 31, 2015 tA A RHOADES TAX SERVICES Balance Sheet December 31, 2015 Liabilities and Equity Assets Fees Receivable Wages Payable Supplies Total Liabilities Total Current Assets Stockholders' Equity Less Accum. Depreciation Total Assets Total Liabilities and Stockholders' Equit g. Record its closing entries in journal entry form. Post these entries to their T-accounts above in part e. GENERAL JOURNAL Description Debit Credit Date 12/31 To close the revenue account 12/31 6 Wages Expense Rent Expense Supplies Expense To close the expense accounts. h. Prepare a post-closing trial balance at December 31, 2015 RHOADES TAX SERVICES Post-Closing Trial Balance December 31, 2015 Debit Credit Cash Fees Receivable Supplies Office Equipment Accumulated Depreciation Accounts Payable Wages Payable Retained Earnings Common Stock A

Answer 1

Journal entries Particulars Credit Debit Date 1-Dec Cash 20,000 To Common Stock 20,000 2-Dec Rent expense 1,200 To Cash 1,200 2-Dec Supplies 1,080 To Accounts Payable 1,080 3-Dec Office Equipment 9,500 To Cash 4,700 To Accounts Payable 4,800 8-Dec Accounts Payable 1,080 To Cash 1,080

14-Dec Wages 900 To Cash 900 20-Dec Cash 3,000 To Consulting service revenue 3,000 28-Dec Wages 900 To Cash 900 30-Dec Accounts Receivable 7,200 To Consulting service revenue 7,200 31-Dec Retained Earnings 1,800 To Cash 1,800 31-Dec Supplies expense 370 To Supplies 370 31-Dec Wages 270 To Accrued Wages 270

31-Dec Depreciation 120 To Accumulated Depreciation 120 31-Dec No entry as no cash received in advance Taccounts Cash Account Particulars Particulars Amount Amount 20,000 By Rent expense 3,000 By Office Equipment By Accounts Payable To Common Stock 1,200 To Consulting service revenue 4,700 1,080 By Wages 900 By Wages 900 By Retained Earnings By Closing Balance 1,800 12,420 23,000 23,000 Common Stock account Particulars 20,000 By Cash Particulars Amount Amount To Closing Balance 20,000 20,000 20,000

Supplies Account Particulars 1,080 By Supplies expense Particulars Amount Amount To Accounts Payable 370 By Closing Blance 710 1,080 1,080 Accounts Payable Particulars 1,080 By Supplies 4,800 By Office Equipment Particulars Amount Amount To Cash 1,080 To Closing Balance 4,800 5,880 5,880 Office Equipment Particulars Particulars Amount Amount To Cash 4,700 By Closing Balance 9,500 To Accounts Payable 4,800 9,500 9,500 Accounts Receivable Particulars 7,200 By Closing Balance Particulars Amount Amount To Consulting service revenue 7,200 7,200 7,200

Retained Earnings Particulars 1,800 By Closing Balance Particulars Amount Amount To Cash 1,800 1,800 1,800 Accrued Wages Particulars 270 By Wages Particulars Amount Amount To Closing Balance 270 270 270 Accumulated Depreciation Particulars 120 By Depreciation Particulars Amount Amount To Closing Balance 120 120 120

Adjusted Trial Balance Accounts Debit Credit Cash Account 12,420 Accounts Receivable 7,200 Supplies Office Equipment Accumulated Depreciation Accounts Payable Accrued Wages 710 9,500 120 4,800 270 Common Stock 20,000 Retained Earnings Consulting service revenue Rent expense 1,800 10,200 1,200 Wages 2,070 Supplies expense Depreciation 370 120 35,390 35,390

Income Statement Revenue |Consulting Revenue Total Revenue 10,200 10,200 Expenses Wages Rent expense Supplies expense Depreciation Expense Total Expenses 2,070 1,200 370 120 3,760 Net Income 6,440

Statement of Stockholder's Equity Common Retained Earnings Stock Total Balance as at Dec 1 2015 Add: Issuance of shares 20,000 20,000 Less: Dividend paid (1,800) (1,800) Add: Net income 6,440 6,440 24,640 20,000 4,640 Balance Sheet Assets Current Assets Cash Account 12,420 Accounts Receivable Supplies 7,200 20,330 710 Non Current Assets Office Equipment Less: Accumulated Depreciation 9,500 (120) 9,380 Total Assets 29,710

Liabilities & Equity Current Liabilities Accounts Payable Accrued Wages 4,800 5,070 270 Equity Common Stock 20,000 Retained Earnings Total Liabilities & Equity 4,640 24,640 29,710 Closing entries Summary of Profit & Loss To Wages 3,760 2,070 To Rent expense 1,200 To Supplies expense To Depreciation Expense 370 120 Consulting Revenue To Summary of Profit & Loss 10,200 10,200

Summary of Profit & Loss To Retained Earnings 6,440 6,440 Post Closing Trial Balance Accounts Debit Credit Cash Account 12,420 Accounts Receivable 7,200 Supplies Office Equipment Accumulated Depreciation Accounts Payable Accrued Wages 710 9,500 120 4,800 270 Common Stock 20,000 Retained Earnings 4,640 29,830 29,830