For the past several years, Jeff Horton has operated a part-time consulting business from his home. As of April 1, 2019, Jeff decided to move to rented quarters and to operate the business, which was to be known as Rosebud Consulting, on a full-time basis. Rosebud Consulting entered into the following transactions during April:
Apr. 1. The following assets were received from Jeff Horton: cash, $20,000; accounts receivable, $14,700; supplies, $3,300; and office equipment, $12,000. There were no liabilities received.
1. Paid three months’ rent on a lease rental contract, $6,000.
2. Paid the premiums on property and casualty insurance policies, $4,200.
4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $9,400.
5. Purchased additional office equipment on account from Smith Office Supply Co., $8,000.
6. Received cash from clients on account, $11,700.
10. Paid cash for a newspaper advertisement, $350.
12. Paid Smith Office Supply Co. for part of the debt incurred on April 5, $6,400.
12. Provided services on account for the period April 1–12, $21,900.
14. Paid receptionist for two weeks’ salary, $1,650.
Record the following transactions on Page 2 of the journal:
17. Received cash from cash clients for fees earned during the period April 1–16, $6,600.
18. Paid cash for supplies, $725.
20. Provided services on account for the period April 13–20, $16,800.
24. Received cash from cash clients for fees earned for the period April 17–24, $4,450.
26. Received cash from clients on account, $26,500.
27. Paid receptionist for two weeks’ salary, $1,650.
29. Paid telephone bill for April, $540.
30. Paid electricity bill for April, $760.
30. Received cash from cash clients for fees earned for the period April 25–30, $5,160.
30. Provided services on account for the remainder of April, $2,590.
30. Jeff withdrew $18,000 for personal use.
Instructions
1. Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited.
(Do not insert the account numbers in the journal at this time.)
11 Cash31 Jeff Horton, Capital
12 Accounts Receivable 32 Jeff Horton, Drawing
14 Supplies41 Fees Earned
15 Prepaid Rent51 Salary Expense
16 Prepaid Insurance52 Supplies Expense
18 Office Equipment53 Rent Expense
19 Accumulated Depreciation—Office Equipment 54 Depreciation Expense
21 Accounts Payable55 Insurance Expense
22 Salaries Payable59 Miscellaneous Expense
23 Unearned Fees
2. Post the journal to a ledger of four-column accounts.
3. Prepare an unadjusted trial balance.
4. At the end of April, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6).
a. Insurance expired during April is $350.
b. Supplies on hand on April 30 are $1,225.
c. Depreciation of office equipment for April is $400.
d. Accrued receptionist salary on April 30 is $275.
e. Rent expired during April is $2,000.
f. Unearned fees on April 30 are $2,350.
5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet.
6. Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal.
7. Prepare an adjusted trial balance.
8. Prepare an income statement, a statement of owner’s equity, and a balance sheet.
9. Prepare and post the closing entries. Record the closing entries on Page 4 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry.
10. Prepare a post-closing trial balance.
Answer:
1. and 2.
Page 1
Post.
Ref. Debit Credit
2019
Apr. 1 Cash11 20,000
Accounts Receivable 12 14,700
Supplies14 3,300
Office Equipment18 12,000
Jeff Horton, Capital 31 50,000
1 Prepaid Rent15 6,000
Cash11 6,000
2 Prepaid Insurance16 4,200
Cash11 4,200
4 Cash11 9,400
Unearned Fees23 9,400
5 Office Equipment18 8,000
Accounts Payable 21 8,000
6 Cash11 11,700
Accounts Receivable 12 11,700
10 Miscellaneous Expense 59 350
Cash11 350
12 Accounts Payable21 6,400
Cash11 6,400
12 Accounts Receivable 12 21,900
Fees Earned41 21,900
14 Salary Expense51 1,650
Cash11 1,650
Page 2
Post.
Ref. Debit Credit
2019
Apr. 17 Cash11 6,600
Fees Earned41 6,600
18 Supplies14 725
Cash11 725
20 Accounts Receivable 12 16,800
Fees Earned41 16,800
24 Cash11 4,450
Fees Earned41 4,450
26 Cash11 26,500
Accounts Receivable 12 26,500
27 Salary Expense51 1,650
Cash11 1,650
29 Miscellaneous Expense 59 540
Cash11 540
30 Miscellaneous Expense 59 760
Cash11 760
30 Cash11 5,160
Fees Earned41 5,160
30 Accounts Receivable 12 2,590
Fees Earned41 2,590
30 Jeff Horton, Drawing 32 18,000
Cash11 18,000
2., 6., and 9.
Account No. 11
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 1 1 20,000 20,000
1 1 6,000 14,000
2 1 4,200 9,800
4 1 9,400 19,200
6 1 11,700 30,900
10 1 350 30,550
12 1 6,400 24,150
14 1 1,650 22,500
17 2 6,600 29,100
18 2 725 28,375
24 2 4,450 32,825
26 2 26,500 59,325
27 2 1,650 57,675
29 2 540 57,135
30 2 760 56,375
30 2 5,160 61,535
30 2 18,000 43,535
Account No. 12
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 1 1 14,700 14,700
6 1 11,700 3,000
12 1 21,900 24,900
20 2 16,800 41,700
26 2 26,500 15,200
30 2 2,590 17,790
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 1 1 3,300 3,300
18 2 725 4,025
30 Adjusting 3 2,800 1,225
Account No. 15
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 1 1 6,000 6,000
30 Adjusting 3 2,000 4,000
Account No. 16
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 2 1 4,200 4,200
30 Adjusting 3 350 3,850
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 1 1 12,000 12,000
5 1 8,000 20,000
Account No. 19
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 30 Adjusting 3 400 400
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 5 1 8,000 8,000
12 1 6,4001,600
Account No. 22
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 30 Adjusting 3 275 275
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 4 1 9,400 9,400
30 Adjusting 3 7,0502,350
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 1 1 50,000 50,000
30 Closing 4 53,775 103,775
30 Closing 4 18,00085,775
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 30 2 18,000 18,000
30 Closing 4 18,000 — —
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 12 1 21,900 21,900
17 2 6,600 28,500
20 2 16,800 45,300
24 2 4,450 49,750
30 2 5,160 54,910
30 2 2,590 57,500
30 Adjusting 3 7,050 64,550
30 Closing 4 64,550
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 14 1 1,650 1,650
27 2 1,650 3,300
30 Adjusting 3 275 3,575
30 Closing 4 3,575 — —
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 30 Adjusting 3 2,800 2,800
30 Closing 4 2,800 — —
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 30 Adjusting 3 2,000 2,000
30 Closing 4 2,000 — —
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 30 Adjusting 3 400 400
30 Closing 4 400 — —
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 30 Adjusting 3 350 350
30 Closing 4 350
Account No. 59
Post.
Item Ref. Debit Credit Debit Credit
2019
Apr. 10 1 350 350
29 2 540 890
30 2 760 1,650
30 Closing 4 1,650 — —
3.
Account Debit Credit
No. Balances Balances
Cash11 43,535
Accounts Receivable12 17,790
Supplies14 4,025
Prepaid Rent15 6,000
Prepaid Insurance16 4,200
Office Equipment18 20,000
Accumulated Depreciation—Office Equipment 19 0
Accounts Payable21 1,600
Salaries Payable22 0
Unearned Fees23 9,400
Jeff Horton, Capital31 50,000
Jeff Horton, Drawing32 18,000
Fees Earned41 57,500
Salary Expense51 3,300
Supplies Expense52 0
Rent Expense53 0
Depreciation Expense54 0
Insurance Expense55 0
Miscellaneous Expense59 1,650
118,500 118,500
5. Optional (Appendix)
Account Title Debit Credit Debit Credit Debit Credit Debit Credit
Cash 43,53543,53543,535
Accounts Receivable 17,79017,79017,790
Supplies 4,025(b) 2,800 1,2251,225
Prepaid Rent 6,000(e) 2,000 4,0004,000
Prepaid Insurance 4,200(a) 350 3,8503,850
Office Equipment 20,00020,00020,000
Accum. Depreciation(c) 400 400400
Accounts Payable1,6001,6001,600
Salaries Payable(d) 275 275275
Unearned Fees9,400 (f) 7,0502,3502,350
Jeff Horton, Capital50,00050,00050,000
Jeff Horton, Drawing 18,00018,00018,000
Fees Earned57,500 (f) 7,050 64,550 64,550
Salary Expense 3,300 (d) 275 3,575 3,575
Supplies Expense(b) 2,800 2,800 2,800
Rent Expense(e) 2,000 2,000 2,000
Depreciation Expense(c) 400 400 400
Insurance Expense(a) 350 350 350
Miscellaneous Expense 1,6501,650 1,650
118,500 118,500 12,875 12,875 119,175 119,175 10,775 64,550 108,400 54,625
Net income53,77553,775
64,550 64,550 108,400 108,400
6.Page 3
Post.
Ref. Debit Credit
2019
Apr. 30 Insurance Expense 55 350
Prepaid Insurance 16 350
Insurance expired.
30 Supplies Expense 52 2,800
Supplies14 2,800
Supplies used ($4,025 – $1,225).
30 Depreciation Expense 54 400
Accumulated Depreciation 19 400
Equipment depreciation.
30 Salary Expense 51 275
Salaries Payable 22 275
Accrued salaries.
30 Rent Expense53 2,000
Prepaid Rent 15 2,000
Rent expired.
30 Unearned Fees 23 7,050
Fees Earned 41 7,050
Unearned fees earned
($9,400 – $2,350).
7.
Account Debit Credit
No. Balances Balances
Cash11 43,535
Accounts Receivable12 17,790
Supplies14 1,225
Prepaid Rent15 4,000
Prepaid Insurance16 3,850
Office Equipment18 20,000
Accumulated Depreciation—Office Equipment 19 400
Accounts Payable21 1,600
Salaries Payable22 275
Unearned Fees23 2,350
Jeff Horton, Capital31 50,000
Jeff Horton, Drawing 32 18,000
Fees Earned41 64,550
Salary Expense51 3,575
Supplies Expense52 2,800
Rent Expense53 2,000
Depreciation Expense54 400
Insurance Expense55 350
Miscellaneous Expense 59 1,650
119,175 119,175
8.
Fees earned$64,550
Expenses:
Salary expense$3,575
Supplies expense2,800
Rent expense2,000
Depreciation expense400
Insurance expense350
Miscellaneous expense1,650
Total expenses10,775
Net income$53,775
Jeff Horton, capital, April 1, 2019$ 0
Investment during month$ 50,000
Net income53,775
Withdrawals(18,000)
Increase in owner’s equity85,775
Jeff Horton, capital, April 30, 2019$85,775
Current assets:
Cash$43,535
Accounts receivable17,790
Supplies1,225
Prepaid rent4,000
Prepaid insurance3,850
Total current assets$70,400
Property, plant, and equipment:
Office equipment$20,000
Less accumulated depreciation 400
Total property, plant, and equipment 19,600
Total assets$90,000
Current liabilities:
Accounts payable$ 1,600
Salaries payable275
Unearned fees2,350
Total liabilities$ 4,225
Jeff Horton, capital85,775
Total liabilities and owner’s equity$90,000
9.Page 4
Post.
Ref. Debit Credit
2019
Apr. 30 Fees Earned 41 64,550
Salary Expense 51 3,575
Supplies Expense 52 2,800
Rent Expense 53 2,000
Depreciation Expense 54 400
Insurance Expense 55 350
Miscellaneous Expense 59 1,650
Jeff Horton, Capital 31 53,775
30 Jeff Horton, Capital 31 18,000
Jeff Horton, Drawing 32 18,000
10.
Account Debit Credit
No. Balances Balances
Cash11 43,535
Accounts Receivable12 17,790
Supplies14 1,225
Prepaid Rent15 4,000
Prepaid Insurance16 3,850
Office Equipment18 20,000
Accumulated Depreciation—Office Equipment 19 400
Accounts Payable21 1,600
Salaries Payable22 275
Unearned Fees23 2,350
Jeff Horton, Capital31 85,775
90,400 90,400
