Reference no: EM132213293

Question: Complete accounting cycle ObJ. 4, 5 For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 2016, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond Consulting entered into the following transactions during July:

July 1.

The following assets were received from Steffy Lopez: cash, $13,500; accounts receivable, $20,800; supplies, $3,200; and office equipment, $7,500. There were no liabilities received.

Chapter 4 Completing the Accounting Cycle 203

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

2. Paid the premiums on property and casualty insurance policies, $4,500.

4. Received cash from clients as an advance payment for services to be provided, and recorded it as unearned fees, $5,500.

5. Purchased additional office equipment on account from Office Station Co., $6,500.

6. Received cash from clients on account, $15,300. 10. Paid cash for a newspaper advertisement, $400. 12. Paid Office Station Co. for part of the debt incurred on July 5, $5,200. 12. Recorded services provided on account for the period July 1â€"12, $13,300. 14. Paid receptionist for two weeks' salary, $1,750.

Record the following transactions on Page 2 of the journal:

17. Recorded cash from cash clients for fees earned during the period July 1â€"17, $9,450.

18. Paid cash for supplies, $600.

20. Recorded services provided on account for the period July 13â€"20, $6,650.

26. Received cash from clients on account, $12,000. 27. Paid receptionist for two weeks' salary, $1,750. 29. Paid telephone bill for July, $325.

31. Paid electricity bill for July, $675. 31. Recorded cash from cash clients for fees earned for the period July 25â€"31, $5,200.

July 31. Recorded services provided on account for the remainder of July, $3,000.

31. Steffy withdrew $12,500 for personal use.

Instructions: 1. Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.)

11 Cash 12 Accounts Receivable 14 Supplies 15 Prepaid Rent 16 Prepaid Insurance 18 Office Equipment 19 Accumulated Depreciation 21 Accounts Payable 22 Salaries Payable 23 Unearned Fees

31 Steffy Lopez, Capital 32 Steffy Lopez, Drawing 41 Fees Earned 51 Salary Expense 52 Rent Expense 53 Supplies Expense 54 Depreciation Expense 55 Insurance Expense 59 Miscellaneous Expense

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

3. Prepare an unadjusted trial balance.

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

a. Insurance expired during July is $375. b. Supplies on hand on July 31 are $1,525. c. Depreciation of office equipment for July is $750. d. Accrued receptionist salary on July 31 is $17 e. Rent expired during July is $2,400. f. Unearned fees on July 31 are $2,750.

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

6. Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal.

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.) Record the closing entries on Page 4 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.

10. Prepare a post-closing trial balance.