210 4 Completing the Accounting Cycle Complete all steps in accounting cycle. P4
ID: 2512277 • Letter: 2
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210 4 Completing the Accounting Cycle Complete all steps in accounting cycle. P4-5B Lori Callebaut opened Callebaut Cleaning Service, AG on July 1, 2017. During July the following transactions were completed. July 1 Shareholders invested 20,000 cash in the business in exchange for ordinary shares. (LO 1,2, 3, 4, 6) 1 Purchased used truck for 12,000, paying 4,000 cash and the balance on account. 3 Purchased cleaning supplies for 2,100 on account. 5 Paid 3,600 cash on one-year insurance policy effective July 1. 12 Billed customers 5,900 for cleaning services performed. 18 Paid 1,500 cash on amount owed on truck and 1.400 on amount owed on cleaning supplies. 20 Paid 4,500 cash for employee salaries 21 Collected 4,400 cash from customers billed on July 12 25 Billed customers 9,400 for cleaning services performed. 31 Paid 400 for the monthly gasoline bill for the truck. 31 Declared and paid a 1,200 cash dividend. The chart of accounts for Callebaut Cleaning Service contains the following accounts No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation-Equipment, No. 201 Accounts Payable, No. 212 Salaries and Wages Payable, No. 311 Share Capital-Ordinary, No. 320 Retained Eamings, No. 332 Dividends, No. 350 Income Summary, No. 400 Service Revenue, No. 633 Gasoline Expense, No. 631 Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries and Wages Expense. Instructions (a) Journalize and post the July transactions. Use page J1 for the journal and the three- column form of account. (b) Trial balance 42,500 (b) Prepare a trial balance at July 31 on a worksheet. (c) Adjusted trial balance (c) Enter the following adjustments on the worksheet and complete the worksheet. (1) Services performed but unbilled and uncollected at July 31 were 3,300. (2) Depreciation on equipment for the month was 500. (3) One-twelfth of the insurance expired. (4) An inventory count shows 560 of cleaning supplies on hand at July 31. (5) Accrued but unpaid employee salaries were 2,200. 48,500 (d) Net income 9,160; (d) Prepare the income statement and retained eamings statement for July and a classi- Total assets 37,360 fied statement of financial position at July 31 (e) Journalize and post adjusting entries. Use page J2 for the journal. (f) Journalize and post closing entries and complete the closing process. Use page J3 for the journal. (g) Post-closing trial balance 37,860 (g) Prepare a post-closing trial balance at July 31.Explanation / Answer
JOURNAL ENTRY Date Account Title Debit Credit July1 Cash € 20,000 Share Capital-Ordinary € 20,000 July1 Equipment € 12,000 Cash € 4,000 Accounts payable € 8,000 (12000-4000) July3 Supplies € 2,100 Accounts payable € 2,100 July 5 Prepaid Insurance € 3,600 Cash € 3,600 July 12 Accounts receivable € 5,900 Service revenue € 5,900 July 18 Accounts Payable € 1,500 Accounts Payable € 1,400 Cash € 2,900 July 20 Salaries and wages expense € 4,500 Cash € 4,500 July 21 Cash € 4,400 Accounts receivable € 4,400 July 25 Accounts receivable € 9,400 Service revenue € 9,400 July 31 Gasoline expense € 400 Cash € 400 July 31 Dividends € 1,200 Cash € 1,200 CASH Date Debit Credit July1 Share Capital -Ordinary € 20,000 July1 Equipment € 4,000 July 5 Prepaid Insurance € 3,600 July 18 Accounts Payable € 2,900 July 20 Salaries and wages expense € 4,500 July 21 Accounts receivable € 4,400 July 31 Gasoline expense € 400 July 31 Dividends € 1,200 July 31 Balance carried forward € 7,800 Total € 24,400 € 24,400 Ending Balance € 7,800 TRIAL BALANCE ADJUSTMENT ENTRIES ADJUSTED TRIAL BALANCE ACCOUNT Debit Credit Ref Debit Credit ACCOUNT DEBIT CREDIT (20000-4000-3600-2900-4500+4400-400-1200) Cash € 7,800 Cash € 7,800 (5900-4400+9400) Account Receivable € 10,900 .(1) € 3,300 Account Receivable € 14,200 Supplies € 2,100 (2100-560) .(4) € 1,540 Supplies € 560 Prepaid insurance € 3,600 .(3600/12) .(3) € 300 Prepaid insurance € 3,300 Equipment € 12,000 Equipment € 12,000 Accumulated depreciation € - .(2) € 500 Accumulated depreciation € 500 (8000+2100-1500-1400) Accounts payable € 7,200 Accounts payable € 7,200 Salaries and wages payable € - .(5) € 2,200 Salaries and wages payable € 2,200 Share Capital-Ordinary € 20,000 Share Capital-Ordinary € 20,000 Retained earnings € - Retained earnings Dividends € 1,200 Dividends € 1,200 (9400+5900) Service Revenue € 15,300 .(1) € 3,300 Service Revenue € 18,600 Gasoline expense € 400 Gasoline expense € 400 Supplies expense € - .(4) € 1,540 Supplies expense € 1,540 Depreciation expense € - .(2) € 500 Depreciation expense € 500 Insurance expense € - .(3) € 300 Insurance expense € 300 Salaries and wages expense € 4,500 .(5) € 2,200 Salaries and wages expense € 6,700 TOTAL € 42,500 € 42,500 TOTAL € 48,500 € 48,500 INCOME STATEMENT Service Revenue € 18,600 Expenses: Gasoline expense € 400 Supplies expense € 1,540 Depreciation expense € 500 Insurance expense € 300 Salaries and wages expense € 6,700 Total Expenses € 9,440 Operating Income € 9,160 (18600-9440) RETAINED EARNING STATEMENT Operating Income € 9,160 Dividends € 1,200 Retained Earnings € 7,960 (9160-1200) STATEMENT OF FINANCIAL POSITION As on July 31 ASSETS: Cash € 7,800 Account Receivable € 14,200 Supplies € 560 Prepaid insurance € 3,300 Equipment € 12,000 Accumulated depreciation € (500) Total Assets € 37,360 LIABILITIES Accounts payable € 7,200 Salaries and wages payable € 2,200 Total Liabilities € 9,400 Owners'Equity Share Capital-Ordinary € 20,000 Retained earnings € 7,960 Total owners'equities € 27,960 Total liabilities and owners equity € 37,360 (9400+27960)
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