Journalizing purchase and sale transactions—perpetual inventory; making closing entries, a...

Journalizing purchase and sale transactions—perpetual inventory; making closing entries, and preparing financial statements

This exercise continues the Lawlor Lawn Service situation from Exercise of Chapter 4. Lawlor Lawn Service has also begun selling plants that it purchases from a wholesaler. During June, Lawlor Lawn Service completed the following transactions:

Requirements

1. Open the following selected T-accounts in the ledger: Cash; Accounts receivable; Lawn supplies; Plant inventory; Equipment; Accumulated depreciation—equipment; Accounts payable; Salary payable; Lawlor, capital; Lawlor, drawing; Income summary; Service revenue; Sales revenue; Cost of goods sold; Salary expense; Rent expense; Utilities expense; Depreciation expense—equipment; and Supplies expense.

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2. Journalize and post the June transactions. Key all items by date. Compute each account balance, and denote the balance as Bal.

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3. Journalize and post the closing entries. Denote each closing amount as Clo. After posting all closing entries, prove the equality of debits and credits in the ledger.

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4. Prepare the June income statement of Lawlor Lawn Service. Use the singlestep format.