Kelly pitney began her consulting business, Kelly ...



Kelly pitney began her consulting business, Kelly Consulting, on April 1, 2010. The accounting cylcle for Kelly Consulting for April , including financial statements was illistrated on page 157-168. During May, kelly consulting entered the following transactions:

May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $2,500.

5. Received cash from clients on account, $1,750.

9. Paid cash for a newspaper advertisement, $300.

13. Paid office station company for part of the debt incurred on april 5, $400.

15. Recorded services provided on account for the period May 1-15, $6,100.

16. paid part-time receptionist for two weeks' salary including the amount owed on April 30, $750.

17. Recorded cash from cash clients for fees earned during the period May 1-16, $8,200.

20. Purchased supplies on account, $400

21. Recorded services provided on account for the period May 16-20, $3,900.

25. Recorded cash from cash clients for fees earned for the period May 17-23, $5,100.

27. Recieved cash from clients on account, $9,500.

28. Paid part-time receptionist for two weeks salary, $750.

30. Paid telephone bill for May, $120.

31. Paid electricity bill for May $290.

31. Recorded cash from cash clients for fees earned for the period May 26-31, $3,875.

31. Recorded services provided on account for the remainder of May, $3,200.

31. Kelly withdrew $8,000 for personal use.

 

Pg. 158 Chart of Accounts:

April 1. The following assets were recieved from Kelly Pitney: Cash, $13,100; Accounts receivable, $3,000; Supplies, $1,400; and office equipment, $12,500. there were no liabilities recieved.

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

2. Paid the premiums on property and casualty insurance policies, $1,800.

4. Recieved cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $5,000.

5. Purchased additional office equipment on account from Office Station Co., $2,000.

6. Recieved cash from clients on account, $1,800.

10. Paid cash for a newspaper advertisement, $120.

12. paid Office Station Co. for part of the debt incurred on April 5, $1,200.

12. Recorded services provided on account for the period April 1-12, $4,200.

14. Paid part-time receptionist for two weeks' salary, $750.

17. Recorded cash from cash clients for fees earned during the period April 1-16, $6,250.

18. Paid cash for supplies, $800.

20. Recorded services provided on account for the period April 13-20, $2,100.

24. Recorded cash from cash clients for fees earned for the period April 17-24, $3,850.

26. Recieved cash from clients on account, $5,600.

27. Paid part-time receptionist for two weeks' salary, $750.

29. Paid telephone bill for April, $130.

30. paid electricity bill for April, $200.

30. Recorded cash from clients for fees earned for the period April 25-30, $3,050.

30. Recorded services provided on account for the remainder of April, $1,500.

30. kelly withdrew $6,000 for personal use.

 

Pg. 166 Post-closing trial balance

Debit Credit

cash................................22,100

Accounts receivable.......3,400

Supplies...........................1,350

Prepaid rent......................3,200

Prepaid insurance.............1,500

office equipment...............14,500

Accumualted depreciation.. 330

Accounts payable.............. 800

Salaries Payable.............. 120

Unearned Fees................ 2,500

kelly pitney, Capital.......... 42,300

46,050 46,050

 

Instructions:

1. The chart of accounts for Kelly Consulting is shown on page 158, and the post-closing trail balance as of April 30, 2010 is shown on page 166. For each account in the post-closing trial balance, enter the balance in the appropriate balance column of a four column account. Date the balances May 1, 2010, and place a check mark in the posting referece column. Journalize each of the May transactions in a two column journal using Kelly Consulting's chart of accounts. (do not insert the account numbers in the journal at this time.)

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

3. Prepare an unadjusted trail balance

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

a. Insurance expired during May is $300.

b. Supplies on hand on May 31 are $600.

c. Depreciation of office equipment for May is $330.

d. Accrued receptionist salary on May 31 is $240.

e. Rent expired during May is $1,600.

f. Unearned fees on May 31 are $2,000

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

1  COMPREHENSIVE PROBLEM 1

1. and 2. JOURNAL Pages 5 and 6

Post.

Date Description Ref. Debit Credit

2010

May 3 Cash 11 2,500

Unearned Fees 23 2,500

5 Cash 11 1,750

Accounts Receivable 12 1,750

9 Miscellaneous Expense 59 300

Cash 11 300

13 Accounts Payable 21 400

Cash 11 400

15 Accounts Receivable 12 6,100

Fees Earned 41 6,100

16 Salary Expense 51 630

Salaries Payable 22 120

Cash 11 750

17 Cash 11 8,200

Fees Earned 41 8,200

20 Supplies 14 400

Accounts Payable 21 400

21 Accounts Receivable 12 3,900

Fees Earned 41 3,900

25 Cash 11 5,100

Fees Earned 41 5,100

27 Cash 11 9,500

Accounts Receivable 12 9,500

28 Salary Expense 51 750

Cash 11 750

30 Miscellaneous Expense 59 120

Cash 11 120

31 Miscellaneous Expense 59 290

Cash 11 290

31 Cash 11 3,875

Fees Earned 41 3,875

1. and 2. JOURNAL Pages 5 and 6

Post.

Date Description Ref. Debit Credit

2010

May 31 Accounts Receivable 12 3,200

Fees Earned 41 3,200

31 Kelly Pitney, Drawing 32 8,000

Cash 11 8,000

2., 6., and 9.

Cash 11

Post. Balance

Date Item Ref. Dr. Cr. Dr. Cr.

2010

May 1 Balance ( 22,100

3 5 2,500 24,600

5 5 1,750 26,350

9 5 300 26,050

13 5 400 25,650

16 5 750 24,900

17 6 8,200 33,100

25 6 5,100 38,200

27 6 9,500 47,700

28 6 750 46,950

30 6 120 46,830

31 6 290 46,540

31 6 3,875 50,415

31 6 8,000 42,415

Accounts Receivable 12

2010

May 1 Balance ( 3,400

5 5 1,750 1,650

15 5 6,100 7,750

21 6 3,900 11,650

27 6 9,500 2,150

31 6 3,200 5,350

Supplies 14

2010

May 1 Balance ( 1,350

20 6 400 1,750

31 Adjusting 7 1,150 600

Prepaid Rent 15

Post. Balance

Date Item Ref. Dr. Cr. Dr. Cr.

2010

May 1 Balance ( 3,200

31 Adjusting 7 1,600 1,600

Prepaid Insurance 16

2010

May 1 Balance ( 1,500

31 Adjusting 7 300 1,200

Office Equipment 18

2010

May 1 Balance 5 14,500

Accumulated Depreciation 19

2010

May 1 Balance ( 330

31 Adjusting 7 330 660

Accounts Payable 21

2010

May 1 Balance ( 800

13 5 400 400

20 6 400 800

Salaries Payable 22

2010

May 1 Balance ( 120

16 5 120 —

31 Adjusting 7 240 240

Unearned Fees 23

2010

May 1 Balance ( 2,500

3 5 2,500 5,000

31 Adjusting 7 3,000 2,000

Kelly Pitney, Capital 31

Post. Balance

Date Item Ref. Dr. Cr. Dr. Cr.

2010

May 1 Balance ( 42,300

31 Closing 8 27,665 69,965

31 Closing 8 8,000 61,965

Kelly Pitney, Drawing 32

2010

May 31 6 8,000 8,000

31 Closing 8 8,000 — —

Income Summary 33

2010

May 31 Closing 8 33,375 33,375

31 Closing 8 5,710 27,665

31 Closing 8 27,665 — —

Fees Earned 41

2010

May 15 5 6,100 6,100

17 6 8,200 14,300

21 6 3,900 18,200

25 6 5,100 23,300

31 6 3,875 27,175

31 6 3,200 30,375

31 Adjusting 7 3,000 33,375

31 Closing 8 33,375 — —

Salary Expense 51

2010

May 16 5 630 630

28 6 750 1,380

31 Adjusting 7 240 1,620

31 Closing 8 1,620 — —

Rent Expense 52

Post. Balance

Date Item Ref. Dr. Cr. Dr. Cr.

2010

May 31 Adjusting 7 1,600 1,600

31 Closing 8 1,600 — —

Supplies Expense 53

2010

May 31 Adjusting 7 1,150 1,150

31 Closing 8 1,150 — —

Depreciation Expense 54

2010

May 31 Adjusting 7 330 330

31 Closing 8 330 — —

Insurance Expense 55

2010

May 31 Adjusting 7 300 300

31 Closing 8 300 — —

Miscellaneous Expense 59

2010

May 9 5 300 300

30 6 120 420

31 6 290 710

31 Closing 8 710 — —

3.

KELLY CONSULTING

Unadjusted Trial Balance

May 31, 2010

Debit Credit

Balances Balances

Cash 42,415

Accounts Receivable 5,350

Supplies 1,750

Prepaid Rent 3,200

Prepaid Insurance 1,500

Office Equipment 14,500

Accumulated Depreciation 330

Accounts Payable 800

Salaries Payable

Unearned Fees 5,000

Kelly Pitney, Capital 42,300

Kelly Pitney, Drawing 8,000

Fees Earned 30,375

Salary Expense 1,380

Rent Expense

Supplies Expense

Depreciation Expense

Insurance Expense

Miscellaneous Expense 710

78,805 78,805

5.

A |B |C |D |E |F |G |H |I |J |K |L |M | |  |  |  |  |  |  |  |  |  |  |  |  |  | |  |  |  |KELLY CONSULTING |  |  |  |  |  | |  |  |  |End-of-Period Spreadsheet (Work Sheet) |  |  |  |  |  | |  |  |  |For the Month Ended May 31, 2010 |  |  |  |  |  | |  |  |  |  |  |  |  |  |  |  |  |  |  | |  |  |Unadjusted |  |Adjusted |Income |Balance |  | | | |Trial Balance |Adjustments |Trial Balance |Statement |Sheet | | |  |Account Title |Dr. |Cr. |Dr. |Cr. |Dr. |Cr. |Dr. |Cr. |Dr. |Cr. |  | |1 | Cash |42,415 |  |  |  |42,415 |  |  |  |42,415 |  |1 | |2 | Accounts Receivable |5,350 |  |  |  |5,350 |  |  |  |5,350 |  |2 | |3 | Supplies |1,750 |  |  |(b) 1,150 |600 |  |  |  |600 |  |3 | |4 | Prepaid Rent |3,200 |  |  |(e) 1,600 |1,600 |  |  |  |1,600 |  |4 | |5 | Prepaid Insurance |1,500 |  |  |(a) 300 |1,200 |  |  |  |1,200 |  |5 | |6 | Office Equipment |14,500 |  |  |  |14,500 |  |  |  |14,500 |  |6 | |7 | Accum. Depreciation |  |330 |  |(c) 330 |  |660 |  |  |  |660 |7 | |8 | Accounts Payable |  |800 |  |  |  |800 |  |  |  |800 |8 | |9 | Salaries Payable |  |  |  |(d) 240 |  |240 |  |  |  |240 |9 | |10 | Unearned Fees |  |5,000 |(f) 3,000 |  |  |2,000 |  |  |  |2,000 |10 | |11 | Kelly Pitney, Capital |  |42,300 |  |  |  |42,300 |  |  |  |42,300 |11 | |12 | Kelly Pitney, Drawing |8,000 |  |  |  |8,000 |  |  |  |8,000 |  |12 | |13 | Fees Earned |  |30,375 |  |(f) 3,000 |  |33,375 |  |33,375 |  |  |13 | |14 | Salary Expense |1,380 |  |(d) 240 |  |1,620 |  |1,620 |  |  |  |14 | |15 | Rent Expense |  |  |(e) 1,600 |  |1,600 |  |1,600 |  |  |  |15 | |16 | Supplies Expense |  |  |(b) 1,150 |  |1,150 |  |1,150 |  |  |  |16 | |17 | Depreciation Expense |  |  |(c) 330 |  |330 |  |330 |  |  |  |17 | |18 | Insurance Expense |  |  |(a) 300 |  |300 |  |300 |  |  |  |18 | |19 | Miscellaneous Expense |710 |  |  |  |710 |  |710 |  |  |  |19 | |20 |  |78,805 |78,805 |6,620 |6,620 |79,375 |79,375 |5,710 |33,375 |73,665 |46,000 |20 | |21 | Net income |  |  |  |  |  |  |27,665 |  |  |27,665 |21 | |22 |  |  |  |  |  |  |  |33,375 |33,375 |73,665 |73,665 |22 | |

6. JOURNAL Page 7

Post.

Date Ref. Debit Credit

Adjusting Entries

2010

May 31 Insurance Expense 55 300

Prepaid Insurance 16 300

Insurance expired.

31 Supplies Expense 53 1,150

Supplies 14 1,150

Supplies used ($1,850 – $950).

31 Depreciation Expense 54 330

Accumulated Depreciation 19 330

Equipment depreciation.

31 Salary Expense 51 240

Salaries Payable 22 240

Accrued salaries.

31 Rent Expense 52 1,600

Prepaid Rent 15 1,600

Rent expired.

31 Unearned Fees 23 3,000

Fees Earned 41 3,000

Unearned fees ($4,050 – $1,300).

7.

KELLY CONSULTING

Adjusted Trial Balance

May 31, 2010

Debit Credit

Balances Balances

Cash 42,415

Accounts Receivable 5,350

Supplies 600

Prepaid Rent 1,600

Prepaid Insurance 1,200

Office Equipment 14,500

Accumulated Depreciation 660

Accounts Payable 800

Salaries Payable 240

Unearned Fees 2,000

Kelly Pitney, Capital 42,300

Kelly Pitney, Drawing 8,000

Fees Earned 33,375

Salary Expense 1,620

Rent Expense 1,600

Supplies Expense 1,150

Depreciation Expense 330

Insurance Expense 300

Miscellaneous Expense 710

79,375 79,375

8.

KELLY CONSULTING

Income Statement

For the Month Ended May 31, 2010

Fees earned $ 33,375

Expenses:

Salary expense $1,620

Rent expense 1,600

Supplies expense 1,150

Depreciation expense 330

Insurance expense 300

Miscellaneous expense 710

Total expenses 5,710

Net income $ 27,665

KELLY CONSULTING

Statement of Owner’s Equity

For the Month Ended May 31, 2010

Kelly Pitney, capital, May 1, 2008 $ 42,300

Net income for the month $ 27,665

Less withdrawals 8,000

Increase in owner’s equity 19,665

Kelly Pitney, capital, May 31, 2010 $ 61,965

KELLY CONSULTING

Balance Sheet

May 31, 2010

Assets Liabilities

Current assets: Current liabilities:

Cash $42,415 Accounts payable $ 800

Accounts receivable 5,350 Salaries payable 240

Supplies 600 Unearned fees 2,000

Prepaid rent 1,600 Total liabilities $ 3,040

Prepaid insurance 1,200

Total current assets $51,165

Property, plant, and Owner’s Equity

equipment: Kelly Pitney,

Office equipment $14,500 capital 61,965

Less accum. depr. 660 13,840 Total liabilities and

Total assets $ 65,005 owner’s equity $ 65,005

9. JOURNAL Page 8

Post.

Date Ref. Debit Credit

Closing Entries

2010

May 31 Fees Earned 41 33,375

Income Summary 33 33,375

31 Income Summary 33 5,710

Salary Expense 51 1,620

Rent Expense 52 1,600

Supplies Expense 53 1,150

Depreciation Expense 54 330

Insurance Expense 55 300

Miscellaneous Expense 59 710

31 Income Summary 33 27,665

Kelly Pitney, Capital 31 27,665

31 Kelly Pitney, Capital 31 8,000

Kelly Pitney, Drawing 32 8,000

10.

KELLY CONSULTING

Post-Closing Trial Balance

May 31, 2010

Debit Credit

Balances Balances

Cash 42,415

Accounts Receivable 5,350

Supplies 600

Prepaid Rent 1,600

Prepaid Insurance 1,200

Office Equipment 14,500

Accumulated Depreciation 660

Accounts Payable 800

Salaries Payable 240

Unearned Fees 2,000

Kelly Pitney, Capital 61,965

Totals 65,665 65,665

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