Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 20Y5. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $4,500. 5. Received cash from clients on account, $2,450. 9. Paid cash for a newspaper advertisement, $225. 13. Paid Office Station Co. for part of the debt incurred on April 5, $640. 15. Provided services on account for the period May 1–15, $9,180. 16. Paid part-time receptionist for two weeks’ salary including the amount owed on April 30, $750. 17. Received cash from cash clients for fees earned during the period May 1–16, $8,360. Record the following transactions of the journal: 20. Purchased supplies on account, $735. 21. Provided services on account for the period May 16–20, $4,820. 25. Received cash from cash clients for fees earned for the period May 17–23, $7,900. 27. Received cash from clients on account, $9,520. 28. Paid part-time receptionist for two weeks’ salary, $750. 30. Paid telephone bill for May, $260. 31. Paid electricity bill for May, $810. 31. Received cash from cash clients for fees earned for the period May 26–31, $3,300. 31. Provided services on account for the remainder of May, $2,650. 31. Kelly withdrew $10,500 for personal use. Instructions The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing trial balance as of April 30, 20Y5, is shown in Exhibit 17. 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, 20Y5, and place a check mark (✓) in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting of the journal and using Kelly Consulting’s chart of accounts. (Do not insert the account numbers in the journal at this time.) Post the journal to a ledger of four-column accounts. Prepare an unadjusted trial balance. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). Insurance expired during May is $275. Supplies on hand on May 31 are $715. Depreciation of office equipment for May is $330. Accrued receptionist salary on May 31 is $325. Rent expired during May is $1,600. Unearned fees on May 31 are $3,210. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Journalize and post the adjusting entries. Record the adjusting entries of the journal. Prepare an adjusted trial balance. Prepare an income statement, a statement of owner’s equity, and a balance sheet. Answer Check Figure: Net income, $33,425 Prepare and post the closing entries. Record the closing entries of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. Prepare a post-closing trial balance
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 20Y5. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions:
| May | 3. | Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $4,500. |
| 5. | Received cash from clients on account, $2,450. | |
| 9. | Paid cash for a newspaper advertisement, $225. | |
| 13. | Paid Office Station Co. for part of the debt incurred on April 5, $640. | |
| 15. | Provided services on account for the period May 1–15, $9,180. | |
| 16. | Paid part-time receptionist for two weeks’ salary including the amount owed on April 30, $750. | |
| 17. | Received cash from cash clients for fees earned during the period May 1–16, $8,360. |
Record the following transactions of the journal:
| 20. | Purchased supplies on account, $735. | |
| 21. | Provided services on account for the period May 16–20, $4,820. | |
| 25. | Received cash from cash clients for fees earned for the period May 17–23, $7,900. | |
| 27. | Received cash from clients on account, $9,520. | |
| 28. | Paid part-time receptionist for two weeks’ salary, $750. | |
| 30. | Paid telephone bill for May, $260. | |
| 31. | Paid electricity bill for May, $810. | |
| 31. | Received cash from cash clients for fees earned for the period May 26–31, $3,300. | |
| 31. | Provided services on account for the remainder of May, $2,650. | |
| 31. | Kelly withdrew $10,500 for personal use. |
Instructions
-
The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing
trial balance as of April 30, 20Y5, is shown in Exhibit 17. 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, 20Y5, and place a check mark (✓) in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting of the journal and using Kelly Consulting’s chart of accounts. (Do not insert the account numbers in the journal at this time.) -
Post the journal to a ledger of four-column accounts.
-
Prepare an unadjusted trial balance.
-
At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6).
-
Insurance expired during May is $275.
-
Supplies on hand on May 31 are $715.
-
Depreciation of office equipment for May is $330. -
Accrued receptionist salary on May 31 is $325.
-
Rent expired during May is $1,600.
-
Unearned fees on May 31 are $3,210.
-
-
(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet.
-
Journalize and post the
adjusting entries . Record the adjusting entries of the journal. -
Prepare an adjusted trial balance.
-
Prepare an income statement, a statement of owner’s equity, and a
balance sheet .AnswerCheck Figure: Net income, $33,425
-
Prepare and
post the closing entries. Record the closing entries of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. -
Prepare a post-closing trial balance.
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