Reference no: EM132470700

Problem - For the past several years, ALEX CA has operated a part-time consulting business from his home. As of October 1, 2010, Alex decided to move to rented quarters and to operate the business, which was to be known as ATAHA Consulting, on a full-time basis. ATAHA Consulting entered into the following transactions during October:

Oct. 1. The following assets were received from ALEX CA: cash, $18,000 accounts receivable, $5,000 supplies, $1,500; and office equipment, $10,750. There were no liabilities received.

Oct 1. Paid three months' rent on a lease rental contract, $4,800.

Oct 2. Paid the premiums on property and casualty insurance policies, $2,700.

Oct 4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $3,150.

Oct 5. Purchased additional office equipment on account from Office Station Co., $1,250.

Oct 6. Received cash from clients on account, $2,000.

Oct 10. Paid cash for a newspaper advertisement, $325.

Oct 12. Paid Office Station Co. for part of the debt incurred on October 5, $750.

Oct 12. Recorded services provided on account for the period October 1-12, $5,750.

Oct 14. Paid part-time receptionist for two weeks' salary, $900.

Oct 17. Recorded cash from cash clients for fees earned during the period October 1-17, $9,250.

Oct 18. Paid cash for supplies, $600.

Oct 20. Recorded services provided on account for the period October 13-20, $4,100.

Oct 24. Recorded cash from cash clients for fees earned for the period October 17-24, $4,850.

Oct 26. Received cash from clients on account, $3,450.

Oct 27. Paid part-time receptionist for two weeks' salary, $900.

Oct 29. Paid telephone bill for October, $250.

Oct 31. Paid electricity bill for October, $300.

Oct 31. Recorded cash from cash clients for fees earned for the period October 25-31,$3,975.

Oct 31. Recorded services provided on account for the remainder of October, $2,500.

Oct 31. ALEX CA withdrew $7,500 for personal use.

Required -

1. Journalize each transaction in a two-column journal, referring to the following chart of accounts in selecting the accounts to be debited and credited.

2. Post the journal to a ledger of four-column accounts.

3. Prepare an unadjusted trial balance.

4. At the end of October, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6).

a) Insurance expired during October is $225.

b) Supplies on hand on October 31 are $875.

c) Depreciation of office equipment for October is $400.

d) Accrued receptionist salary on October 31 is $200.

e) Rent expired during October is $1,600.

f) Unearned fees on October 31 are $1,150.

5. Optional: Enter the unadjusted trial balance on an end-of-period spreadsheet (work sheet) and complete the spreadsheet.

6. Journalize and post the adjusting entries.

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. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.

10. Prepare a post-closing trial balance.