Reference no: EM132325767

Question

You need help working through and recording the following:

1. journal entries to summarize the transactions from August 18 (start of business) to October 31.

2. Setting up a T account to post the entries with proper reference.

3. An adjusted trial balance at October 31 from the T accounts. Trial balance should have extra columns to ppst adjusting entries and references to come up with an adjusted trial balance.

4. Adjusting entries and post them to the trial balance and T accounts

5. An income statement and a classified balance sheet.

8/18/19 - borrowed $28,000

8/21/19 - deposited loan and $30,500 of own money into a bank account

8/26/19 - signed one year lease on building ($3,200 per month, requires one month payment in August for September's rent, plus $3,500 security deposit).

8/28/19 - Purchased computer equipment$17,000, software $6,200, office furniture $8,500.

8/28/19 - Business stationary, business cards, and various other office supplies costing $1,550.

8/30/19 - signed a one year umbrella business insurance policy for $2,100 for liability insurance and renters insurance.

9/1/19 - Opened for business.

9/1/19 - Spent all but $16,450 of the company's cash.

2 Month Operation Results

1. Clients paid $49,500 for completed work. Company A still owed $10,500 for completed work delivered in October. No current projects.

2. Purchased additional office supplies for cash $1,500, with supplies that cost $1,300 still on hand.

3. Paid two months rent of $6,400 for September and October, utility bills of $1,975, repair of equipment paid of $3,800, and $36,000 of four peoples salary paid (plus $6,00 paid to owner).

4. Additional office equipment for $7,000 and a one year software lease for $1,300 purchased on 10/30/19. Half of that amount was paid for, and remainder due one month later.

5. Loan has 3 % interest, no payment made yet.

The computers and software have a technological life of no more than three years. Furniture had a 5 year useful life, while equipment and other assets had a 4 year useful life. Uncertain about how to handle the software lease.

Assumptions

· The books are to be prepared using the accrual method of accounting.

· The average tax rate is 21%.

· Depreciation is computed using the straight line method.