Question

xercise 1 For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 2014, 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 Consulting entered into the following transactions during July July 1. The following assets were received from Steffy Lopez: cash, $13,500; accountseceivable, 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. 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, S5,200. 31. Recorded services provided on account for the remainder of July, $3,000. 31.Steffy withdrew $12,500 for personal use. Instructions 1 Journalize each transaction, referring to the following chart of accounts in selecting the accounts to be debited and credited. Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Office Equipment Accumulated Depreciation Accounts Payable Salaries Payable Unearned Fees Steffy Lopez, Capital Steffy Lopez, Drawing Fees Earned Salary Expense Rent Expense Supplies Expense Depreciation Expense Insurance Expense Miscellaneous Expense 2. 3. Prepare an unadjusted trial balance. At the end of July, the following adjustment data were assembled. Journalize and post the adjusting entries. (a) Insurance expired during July is $375

Answer 1

Date Accounts Title Debit S4,800 Credit Jul-01 Prepaid Rent Cash $4,800 Jul-02 Prepaid Insurnace Cash 4,500 4,500 Jul-04 Cash S5,500 Unearned Revnue 55,500 Jul-05 Equipment 6,500 Accounts Payable 6,500 Jul-06 Cash 15,300 Accounts receiveable 15,300 Jul-10 Advertisment Expenses 400 Cash Jul-12 Accounts payable S 5,200 Cash $5,200 Jul-12 Accounts receiveable 13,300 Services Revenue 13,300 Jul-14 Salary Expenses $1,750 Cash 1,750 Jul-17 Cash S9,450 Services Revenue 9,450 Jul-18 Supplies Cash 600 600 Jul-20 Accounts receiveable 6,650 Services Revenue 6,650 Jul-24 Cash S4,000 Services Revenue 4,000 Jul-26 Cash 12,000 Accounts receiveable 12,000 Jul-27 Salary Expenses $1,750 Cash 1,750 Jul-29 Telephone Expenses Cash 325 $325 Jul-31 Electricity Expenses Cash 675 675 Jul-31 Cash $5,200 Services Revenue 55,200 Jul-31 Accounts receiveable 3,000 Services Revenue $3,000 Jul-31 Steffy Lopez, Drawing Cash S 12,500 12,500

Date Accounts Title Debit Credit Jul-31 Insurance Expenses 375 Prepaid Insurance 375 Jul-31 Rent Expenses $ 2,400 Prepaid Rent $ 2,400 Jul-31 Supplies Expenses $2,275 Supplies $2,275 Jul-31 Depreciation Expenses 750 Accumulated Depreciation 750 Jul-31 Salary Expenses 175 Salary payable 175 Jul-31 Unearned Revenue $ 2,750 Services Revenue $ 2,750

Particulars Opening balance Accounts payable Equipment Amount Particulars $ 7,500 S 6,500 Amount Closing balance S14,000 Total S 14,000 Total 14,000 Accounts Payable Amount Particulars S 5,200 Equipment Particulars Cash Closing balance Total Amount 6,500 1,300 $ 6,500 Total $ 6,500 Accounts Receivable Amount Particulars Particulars Opening balance fee earned fee earned fee earned Amount $15,300 $12,000 20,800 Cash 13,300 Cash S 6,650 $ 3,000 Closing balance$16,450 $43,750 Total S 43,750 Total Advertsiment Expenses Amount Particulars Particulars Cash Amount 400 Income Statement400 S 400 Total 400 Total Particulars Cash Cash Salary Payable Salary Expenses Amount Particulars S1,750 $ 1,750 $175 Amount Income Statement 3,675 $3,675 Total $ 3,675 Total Salary payable Amount Particulars $175 Particulars Amount Salary Expenses Closing Balance175 $ 175 Total 175 Tota Depreciation Expenses Amount Particulars Particulars Amount Accumulated depreciation 750 Income Statement 750 $750 Total $ 750 Total Accmulated Depreciation Amount Particulars Particulars Depreciation Expenses $750 Amount Closing Balance 750 $ 750 Total 750 Total

Supplies Amount Particulars Particulars Opening balance Cash Total Amount 3,200 Supplies Expenses 600 Closing balance $2,275 S1,525 3,800 $3,800 Total Supplies Expenses Amount Particulars S 2,275 Particulars Amount Supplies Income Statement S2,275 $2,275 Total $ 2,275 Total Particulars Cash Telephone Expenses Amount Particulars $325 Amount Income Statement $ 325 Total $325 Total 325 Particulars Cash Electricity Expenses Amount Particulars S675 Amount Income Statement $ 675 675 Total 675 Total Steffy Lopez, Drawing Amount Particulars Particulars Cash Amount 12,500 Steffy Lopez, Capital12,500 12,500 Total 12,500 Total Steffy Lopez, Capital Amount Particulars Particulars Amount Steffy Lopez, Drawing $ 12,500 Opening balance $45,000 Closing balance Total 32,500 32,500 Total $ 45,000 fee earned Amount Particulars Particulars Amount Unearned Revenue$2,750 Accounts Receivable $ 13,300 S9,450 Accounts Receivable $6,650 4,000 $ 5,200 Income Statement $ 44,350 Accounts Receivable3,000 44,350 Cash Cash Cash Total S 44,350 Total

Adjusted trail Balance Particulars Debit $ 32,450 $ 16,450 $2,400 S 2,400 $4,125 Credit Cash Accounts Receivable Prepaid Rent Rent Expenses Prepaid Insurance Insurance Expenses Unearned Revenue Accmulated Depreciation Depreciation Expenses Salary payable Salary Expenses Advertsiment Expenses Accounts Payable Equipment Supplies Supplies Expenses Telephone Expenses Electricity Expenses Steffy Lopez, Capital fee earned 375 $2,750 750 750 175 $3,675 400 $1,300 14,000 $1,525 $2,275 325 675 $32,500 $ 44,350 $ 81,825 81,825 Calculation of Opening Capital Total Assets Total Liabilities+Capital 13500+20800+3200+7500 0 +Capital Therefore total Capital 45000

Balance Sheet Assets Cash Accounts Receivable $ 16,450 Accmulated Depreciation $ 750 Prepaid Rent Prepaid Insurance 4,125 Accounts Payable Supplies Total Assets Amount Liabilities Amount $ 32,450 Unearned Revenue S 2,400 Salary payable $ 1,525 $ 2,750 $ 175 1,300 56,950 Total liabilities $ 14,000 Steffy Lopez, Capital $ 4,975 $32,500 $33,475 Equipment Retained earnings $ 70,950 $70,950