Janine Jones opens JJ Consulting Services on January 2 of the current month; and

Question

Janine Jones opens JJ Consulting Services on January 2 of the current month; and three months thereafter, its Trial Balance is as follows:

JJ Consulting Services

For the Quarter Ended March 31

                                                    Trial Balance

Account Titles                       Debit              Credit

Cash                                        11,400

Account Receivable                5,620

Prepaid Insurance                   2,400

Supplies                                  1,050

Equipment                              30,000

Account payable                                             12,350

Note Payable                                                  10,000

Janine Jones’s Capital 20,000

Janine Jones’s Drawing          600

Consulting Fees                                              13,620

Rent expenses                         1,200

Wages Expenses                      2,200

Travel expenses                      1,300

Miscellaneous expenses          200                             

                                                55,970             55,970                                    

Additional (adjustment) data:

Supplies on hand total $480

Annual depreciation of the equipment is $3200

The annual interest rate on the 24-month note issued on January 1 is 12%

The insurance policy is for one year.

Consulting serviced provided but unbilled by end of the quarter amounts to $1030

Requirements (100 points)

Record the adjusting entries and complete the Work Sheet

Prepare the financial statements (Income Statement, Statement of Owner’s Equity, and Balance Sheet)

Record the closing entries and compute the Post-closing Trial Balance

Answer Key: Adjusted Trial Balance $58,100           Net Income $7,480      Total Assets $49,530

Explanation / Answer

Part-1

Part-2

Part-3

Worksheet Adjusting Journal Entry Adjustment Balance Date Account Title & Explanation Debit Credit Account Title Debit Credit Increase Decrease Debit Credit 31-Mar Suplies Consumed $570.00 Cash $11,400.00 $11,400.00 Suplies $570.00 Account Receivable $5,620.00 $1,030.00 $6,650.00 ( Being Supplies Consumed, (1050-480) Prepaid Insurance $2,400.00 $600.00 $1,800.00 Supplies $1,050.00 $570.00 $480.00 Depreciation $800.00 Equipment $30,000.00 $30,000.00 Accumulated Depreciation $800.00 Accumulated Depreciation 800 800 ( Being Deprecation Expense Booked) Account Payable $12,350.00 $12,350.00 Notes Payable $10,000.00 $10,000.00 Interest Expense $300.00 Interets on Note Payable $300.00 Interest payable on Note $300.00 Janine Jones's Capital $20,000.00 $20,000.00 ( Being Interest Expense booked) Janine Jones's Drawing $600.00 $600.00 Consulting Fees $13,620.00 $1,030.00 $14,650.00 Insurance Expense $600.00 Rent Expense $1,200.00 $1,200.00 Prepaid Insurance $600.00 Wages Expense $2,200.00 $2,200.00 ( Being Insurance expense adjusted from prepaid Insurance) Travel Expense $1,300.00 $1,300.00 Misc. Expense $200.00 $200.00 Account Receivable $1,030.00 Supplies Consumed $570.00 $570.00 Consulting Fees $1,030.00 Depreciation expense $800.00 $800.00 ( Being Consulting Service revenue booked) Interest Expense $300.00 $300.00 Insurance expense $600.00 $600.00 Total $55,970.00 $55,970.00 $5,130.00 $1,170.00 $58,100.00 $58,100.00

Part-2

JJ Consulting Services Balance Sheet for Year ended on 31st Dec Assets Current Asset Cash $11,400.00 Account Receivable $6,650.00 Prepaid Insurance 1800 Supplies 480 Total Current Asset $20,330.00 Property, Plant & Equipment Equipment $30,000.00 Less: Accumulated Depreciation $800.00 $29,200.00 Total Asset $49,530.00 Liability & Equity Current Liabilities Account Payable $12,350.00 Note Payable $10,000.00 Interest on Notes Payable $300.00 $22,650.00 Long term Liabilities Total Liabilities $22,650.00 Owner Equity $26,880.00 Total Liability & Equity $49,530.00 JJ Consulting Services Income Statement for year ended on 31st Dec Consulting Fees $14,650.00 Expenses Rent Expense $1,200.00 Wages Expense $2,200.00 Travel Expense $1,300.00 Misc. Expense $200.00 Supplies Consumed $570.00 Depreciation expense $800.00 Interest Expense $300.00 Insurance expense $600.00 $7,170.00 Income for the Year $7,480.00 Statement of Owner Equity For the year ended 31 Decmeber Capital Balance $20,000.00 Add: Income for the year $7,480.00 Less: Drawing -$600.00 Net closing Balance $26,880.00

Part-3

Closing Entries Date Account Title & Explanation Debit Credit 31-Mar Consulting Fees $14,650.00 Income Summary $14,650.00 Being Consultancy fees trf to Income summary) Income Summary $57,170.00 Rent Expense $1,200.00 Wages Expense $2,200.00 Travel Expense $1,300.00 Misc. Expense $200.00 Supplies Consumed $570.00 Depreciation expense $800.00 Interest Expense $300.00 Insurance expense $600.00 ( Being Expenses trf in Income Summary Income Summary $7,480.00 Owner's Equity $7,480.00 ( being Income Summary bal trf to Owner's Equity) JJ Consulting Services Post Closing Trial Balance ended on 31 dec Account Title Debit Credit Cash $11,400 Account Receivable $6,650 Prepaid Insurance $1,800 Supplies $480 Equipment $30,000 Accumulated Deprecation $800 Account Payable $12,350 Notes Payable $10,000 Interets on Note Payable $300 Janine Jones's Capital $20,000 Janine Jones's Drawing $600 Consulting Fees $14,650 Rent Expense $1,200 Wages Expense $2,200 Travel Expense $1,300 Misc. Expense $200 Supplies Consumed $570 Depreciation expense $800 Interest Expense $300 Insurance expense $600 $58,100 $58,100

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