Question

Donna Jones opened Wonder Clean, Inc. on July 1, 2017. During July, the following transactions were completed.

July 1 Issued 18,000 shares of common stock for $18,000 cash.

1          Purchased used truck for $14,000, paying $5,000 cash and the balance on a three-month note payable with an annual interest rate of 6%.

1          Paid $1,200.00 rent in cash for July rent.

3          Purchased cleaning supplies for $950 on account.

5          Paid $3,360 cash on a 1-year insurance policy effective July 1.

12         Billed customers $9,350 for cleaning services.

18        Paid $450 cash on amount owed on cleaning supplies.

20        Paid $2,750 cash for employee salaries.

21        Collected $4,000 cash from customers billed on July 12.

25        Billed customers $3,495 for cleaning services.

31        Paid $400 cash for maintenance of the truck during month.

31        Declared and paid $1,800 cash dividend.

The chart of accounts for Wonder Clean contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Equipment, Accumulated Depreciation—Equipment, Accounts Payable, Notes Payable, Salaries and Wages Payable, Interest Payable, Common Stock, Retained Earnings, Dividends, Income Summary, Service Revenue, Maintenance and Repairs Expense, Supplies Expense, Depreciation Expense, Interest Expense, Rent Expense, Insurance Expense, Salaries and Wages Expense.

Instructions

(a)       Journalize the July transactions.

(b)       Post to the ledger accounts. (Use T-accounts.)

(c)       Prepare a trial balance at July 31.

(d)       Journalize the following adjustments.

            (1) Services performed but unbilled and uncollected at July 31 were $2,100.

(2) Depreciation on equipment for the month was $250.

(3) One-twelfth of the insurance expired.

(4) An inventory count shows $360 of cleaning supplies on hand at July 31.

(5) Accrued but unpaid employee salaries were $450.

(6) Accrued interest on Note Payable.

(e)       Post adjusting entries to the T-accounts.

(f)        Prepare an adjusted trial balance.

(g)       Prepare the income statement and a retained earnings statement for July and a classified balance sheet at July 31.

(h)       Journalize and post closing entries and complete the closing process.

(i)        Prepare a post-closing trial balance at July 31.

Check Figures

Tot. assets          $35,175

Cash                 $7,040

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