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Kristin Malone opened Kristins Maids Cleaning Service on July 1, 2014.

During July, the


company completed the following transactions.
July 1 Invested $14,000 cash in the business.
1 Purchased a used truck for $10,000, paying $3,000 cash and the balance on account.
3 Purchased cleaning supplies for $800 on account.
5 Paid $1,800 on a 1-year insurance policy, effective July 1.
12 Billed customers $3,800 for cleaning services.
18 Paid $1,000 of amount owed on truck, and $400 of amount owed on cleaning supplies.
20 Paid $1,600 for employee salaries.
21 Collected $1,400 from customers billed on July 12.
25 Billed customers $1,500 for cleaning services.
31 Paid gasoline for the month on the truck, $400.
31 Withdrew $600 cash for personal use.
The chart of accounts for Kristins Maids 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 DepreciationEquipment, No. 201 Accounts Payable, No. 212
Salaries and Wages Payable, No. 301 Owners Capital, No. 306 Owners Drawings, No. 350
Income Summary, No. 400 Service Revenue, No. 631 Supplies Expense, No. 633 Gasoline
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.
(b) Prepare a trial balance at July 31 on a worksheet.
(c) Enter the following adjustments on the worksheet, and complete the worksheet.
(1) Unbilled fees for services performed at July 31 were $1,300.
(2) Depreciation on equipment for the month was $200.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $100 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $500.

(d) Prepare the income statement and owners equity statement for July, and a classified balance
sheet at July 31, 2014.
(e) Journalize and post the adjusting entries. Use page J2 for the journal.
(f) Journalize and post the closing entries, and complete the closing process. Use page J3 for the
journal.
(g) Prepare a post-closing trial balance at July 31.
SOLUTION
(a)
General Journal
Date
July

1
1

3
5
12
18
20
21

25

Account Titles and Explanation


Cash..........................................................................
Owners Capital..........................................

Ref.
101
301

Debit
14,000

Equipment................................................................
Cash.............................................................
Accounts Payable........................................

157
101
201

10,000

Supplies....................................................................
Accounts Payable........................................

126
201

800

Prepaid Insurance.....................................................
Cash.............................................................

130
101

1,800

Accounts Receivable................................................
Service Revenue..........................................

112
400

3,800

Accounts Payable.....................................................
Cash.............................................................

201
101

1,400

Salaries and Wages Expense....................................


Cash.............................................................

726
101

1,600

Cash..........................................................................
..................................................................................
Accounts Receivable...................................

101

1,400

Accounts Receivable................................................
Service Revenue..........................................

112
400

Credit
14,000
3,000
7,000
800
1,800
3,800
1,400
1,600

112

1,400
1,500
1,500

31
31

Gasoline Expense.....................................................
Cash.............................................................

633
101

400

Owners Drawings...................................................
Cash.............................................................

306
101

600

(b) & (c)


KRISTINS MAIDS CLEANING SERVICE
Worksheet
For the Month Ended July 31, 2014

400
600

Account Titles

Trial Balance
Dr.

Cr.

Adjustments
Dr.

Cr.

Cash

6,600

Accounts Receivable

3,900

Supplies

800

(d) 700

Prepaid Insurance

1,800

(c) 150

Equipment

10,000

(a) 1,300

Adjusted

Income

Trial Balance

Statement

Dr.

Cr.

Dr.

Cr.

Balance Sheet
Dr.

6,600

6,600

5,200

5,200

100

Cr.

100

1,650

1,650

10,000

10,000

Accounts Payable

6,400

6,400

6,400

Owners Capital

14,000

14,000

14,000

Owners Drawings

600

Service Revenue

5,300

Gasoline Expense

400

Salaries and Wages Expense

1,600

Total
Depreciation Expense

600

25,700

(a) 1,300

600
6,600

6,600

400

400

(e) 500

2,100

2,100

(b) 200

200

200

25,700

Accum. Depr.Equipment

(b) 200

200

200

Insurance Expense

(c) 150

150

150

Supplies Expense

(d) 700

700

700

Salaries and Wages Payable


Totals
Net Income
Totals

(e) 500
2,850

2,850

500
27,700

27,700

500
3,550

6,600

24,150

3,050
6,600

Key: (a) Service Revenue; (b) Depreciation Expense; (c) Insurance Expired; (d) Supplies Used; (e) Unpaid Salaries.

21,100
3,050

6,600

24,150

24,150

(a), (e) & (f)


Cash
Date
July

Explanation
1
1
5
18
20
21
31
31

Ref.
J1
J1
J1
J1
J1
J1
J1
J1

No. 101
Debit
14,000

Credit
3,000
1,800
1,400
1,600

1,400
400
600

Accounts Receivable
Date
July

Explanation
12
21
25
31

Adjusting

Ref.
J1
J1
J1
J2

No. 112
Debit
3,800

Credit
1,400

1,500
1,300

Supplies
Date
July

Explanation
3
31

Adjusting

Ref.
J1
J2

Explanation
5
31

Adjusting

Ref.
J1
J2

Debit
800

Credit
700

Explanation
1

Ref.
J1

Debit
1,800

Credit
150

31

Explanation
Adjusting

Ref.
J2

Balance
1,800
1,650

No. 157
Debit
10,000

Credit

Accumulated DepreciationEquipment
Date
July

Balance
800
100
No. 130

Equipment
Date
July

Balance
3,800
2,400
3,900
5,200
No. 126

Prepaid Insurance
Date
July

Balance
14,000
11,000
9,200
7,800
6,200
7,600
7,200
6,600

Debit

Balance
10,000
No. 158

Credit
200

Balance
200

Accounts Payable
Date
July

Explanation
1
3
18

Ref.
J1
J1
J1

No. 201
Debit

Credit
7,000
800

1,400

Salaries and Wages Payable


Date
July 31

Explanation
Adjusting

Ref.
J2

Debit

No. 212
Credit
500

Owners Capital
Date
July

Explanation
1
31
31

Closing
Closing

Ref.
J1
J3
J3

Explanation
31
31

Closing

Ref.
J1
J3

Debit

Credit
14,000
3,050

600

31
31
31

Explanation
Closing
Closing
Closing

Ref.
J3
J3
J3

Debit
600

Credit
600

Explanation
12
25
31
31

Adjusting
Closing

Ref.
J1
J1
J2
J3

Debit

Credit
6,600

3,550
3,050

31
31

Explanation
Adjusting
Closing

Ref.
J2
J3
Gasoline Expense

Balance
6,600
3,050
0
No. 400

Debit

Credit
3,800
1,500
1,300

6,600

Supplies Expense
Date
July

Balance
600
0
No. 350

Service Revenue
Date
July

Balance
14,000
17,050
16,450
No. 306

Income Summary
Date
July

Balance
500
No. 301

Owners Drawings
Date
July

Balance
7,000
7,800
6,400

Balance
3,800
5,300
6,600
0
No. 631

Debit
700

Credit
700

Balance
700
0
No. 633

Date
July

Explanation
31
31

Closing

Ref.
J1
J3

Debit
400

Credit

Balance
400
0

400

Depreciation Expense
Date
July

31
31

Explanation
Adjusting
Closing

Ref.
J2
J3

No. 711
Debit
200

Credit

Balance
200
0

200

Insurance Expense
Date
July

31
31

Explanation
Adjusting
Closing

Ref.
J2
J3

No. 722
Debit
150

Credit

Balance
150
0

150

Salaries and Wages Expense


Date
July 20
31
31

Explanation
Adjusting
Closing

Ref.
J1
J2
J3

Debit
1,600
500

No. 726
Credit

Balance
1,600
2,100
0

2,100

(d)
KRISTINS MAIDS CLEANING SERVICE
Income Statement
For the Month Ended July 31, 2014

Revenues
Service revenue........................................................................

$6,600

Expenses
Salaries and wages expense.....................................................

$2,100

Supplies expense......................................................................

700

Gasoline expense.....................................................................

400

Depreciation expense...............................................................

200

Insurance expense....................................................................

150

Total expenses................................................................

3,550

Net income ........................................................................................

$3,050

KRISTINS MAIDS CLEANING SERVICE


Owners Equity Statement
For the Month Ended July 31, 2014

Owners Capital, July 1......................................................................

Add: Investments.............................................................................

$14,000

Net income..........................................................................

3,050

0
17,050
17,050

Less: Drawings..................................................................................

600

Owners Capital, July 31....................................................................

$16,450

KRISTINS MAIDS CLEANING SERVICE


Balance Sheet
July 31, 2014

Assets
Current assets
Cash ........................................................................................

$6,600

Accounts receivable.................................................................

5,200

Supplies....................................................................................

100

Prepaid insurance.....................................................................

1,650

Total current assets.........................................................


Property, plant, and equipment

$13,550

Equipment................................................................................

10,000

Less: Accumulated depreciation


equipment.....................................................................

200

Total assets.....................................................................

9,800
$23,350

Liabilities and Owners Equity


Current liabilities
Accounts payable.....................................................................

$6,400

Salaries and wages payable......................................................

500

Total current liabilities...................................................

$ 6,900

Owners equity
Owners capital........................................................................

16,450

Total liabilities and owners equity................................

$23,350

(e)
General Journal
Date
July 31
31

31
31
31

J2

Account Titles and Explanation


Accounts Receivable..............................................
Service Revenue.........................................

Ref.
112
400

Debit
1,300

Depreciation Expense.............................................
Accumulated Depreciation
Equipment...............................................

711

200

158

Insurance Expense..................................................
Prepaid Insurance........................................

722
130

150

Supplies Expense....................................................
Supplies.......................................................

631
126

700

Salaries and Wages Expense...................................


Salaries and Wages Payable........................

726
212

500

Credit
1,300

200
150
700
500

(f)
General Journal
Date
July 31

Account Titles and Explanation


Service Revenue.....................................................

J3
Ref.
400

Debit
6,600

Credit

31

31
31

Income Summary........................................

350

6,600

Income Summary....................................................
Salaries and Wages Expense.......................
Depreciation Expense.................................
Insurance Expense......................................
Supplies Expense........................................
Gasoline Expense........................................

350
726
711
722
631
633

3,550

Income Summary....................................................
Owners Capital..........................................

350
301

3,050

Owners Capital......................................................
Owners Drawings......................................

301
306

600

2,100
200
150
700
400
3,050
600

(g)
KRISTINS MAIDS CLEANING SERVICE
Post-Closing Trial Balance
July 31, 2014

Cash..............................................................................................

Debit
$ 6,600

Accounts Receivable....................................................................

5,200

Supplies........................................................................................

100

Prepaid Insurance.........................................................................

1,650

Equipment.....................................................................................

10,000

Accumulated DepreciationEquipment......................................

Credit

200

Accounts Payable.........................................................................

6,400

Salaries and Wages Payable..........................................................

500

Owners Capital............................................................................

16,450
$23,550

$23,550

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