COMPREHENSIVE ACCOUNTING CASE

Basic Accounting
BUS 1102
 New Era Cleaning Service, Inc. opened for business on
July 1, 2010. During the month of July, the following transactions occurred:

July 1 Issued $18,000 of common stock for $18,000 cash.

July 1 Purchased a truck for $11,000. Paid $4,000 in cash and borrowed the rest (long term) from the bank.

July 3 Purchased cleaning supplies for $900 on account.

July 5 Paid $1,800 on a one-year insurance policy, effective July 1.

July 12 Billed customers $4,800 for cleaning services.

July 18 Paid $1,500 of the amount owed on the truck.

July 18 Paid $500 of the amount owed on cleaning supplies.

July 20 Paid $1,700 for employee salaries.

July 21 Collected $1,200 from customers billed on July 12.

July 25 Billed customers $1,900 for cleaning services.

July 31 Paid gas and oil for the month on the truck, $500.

July 31 Paid a $800 dividend.

Instructions:

Post July transactions to the general journal and general ledger 'T' accounts

Prepare an unadjusted trial balance

Post the following adjustments

(a) Earned but unbilled fees at July 31 were $1,400
(b) Depreciation for the month was $200
(c) One-twelfth of the insurance expired
(d) An inventory count showed $300 of cleaning supplies remaining on July 31.
(e) Accrued but unpaid employee salaries were $500.

Prepare an adjusted trial balance

Post closing entries

Prepare a classified balance sheet and an income statement as of July 31.

 Journal # Date Accounts and Description Debit Credit
Debit Credit

#1 7/1/2010 Cash $18,000 1 point

Common Stock $18,000 1 point
Initial investment: Cash received for stock ownership

#2 7/1/2010 Truck - Equipment 11000 1 point

Cash 4000 1 point
Bank Loan 7000 1 point
Purchase truck with cash and bank loan

#3 7/3/2010 Cleaning Supplies 900 1 point

Accounts Payable 900 1 point
Purchased supplies on account

#4 7/5/2010 Pre-paid Insurance 1800 1 point

Cash 1800 1 point
Paid annual premium for insurance policy - eff 7/1

#5 ### Accounts Receivable 4800 1 point

Service Revenue 4800 1 point
Billing for cleaning services rendered

#6 ### Bank Loan 1500 1 point

Cash 1500 1 point
Loan payment on truck loan

#7 ### Accounts Payable 500 1 point

Cash 500 1 point
Payment to cleaning supplies vendor

#8 ### Salaries Expense 1700 1 point

Cash 1700 1 point
Payment of salaries

#9 ### Cash 1200 1 point

 Accounts Receivable 1200 1 point
Collections of Accounts Receivable

#10 ### Accounts Receivable 1900 1 point

Service Revenue 1900 1 point
Billing for cleaning services rendered

#11 ### Gas & Oil Expense 500 1 point

Cash 500 1 point
Gas and Oil (expense)

#12 ### Dividend 800 1 point

Cash 800 1 point
Payment of dividend to shareholders

Adjusting entries:

(a)

(b)

(c )

(d)

(e)
 Cash Accounts Receivable Pre-Paid Insurance Supplies
Debit Credit Debit Credit Debit Credit Debit Credit
(1) 18000 1 pt (5) 4800 1 pt (4) 1800 1 pt (3) 900 1 pt Each entry is 1 point
4000 (2) 1 pt 1200(9) 1 pt
1800 (4) 1 pt (10) 1900 1 pt
1500 (6) 1 pt 5500
500 (7) 1 pt
1700 (8) 1 pt
(9) 1200 1 pt
500 (11) 1 pt
800 (12) 1 pt
8400

Equipment: Truck Accum. Depreciation Accounts Payable Bank Loan

Debit Credit Debit Credit Debit Credit Debit Credit
(2) 11000 1 pt 900 (3) 1 pt 7000 (2) 1 pt
(7) 500 1 pt (6) 1500 1 pt
400 5500

Revenue Gas & Oil Expense Salaries Expense

Salaries Payable Debit Credit Debit Credit Debit Credit
Debit Credit 4800 (5) 1 pt (11) 500 1 pt (8) 1700 1 pt
1900 (10) 1 pt
6700
Insurance Expense Supplies Expense Depreciation Expense Income Summary
Debit Credit Debit Credit Debit Credit Debit Credit

Common Stock Dividend Retained Earnings

Debit Credit Debit Credit Debit Credit
18000 (1) 1 pt (12) 800 1 pt
 Happy Workers Cleaning Service

Unadjusted Adjusted
Account Beginnng Balance Trial Balance Adjusting Entries Trial Balance
Debit Credit Debit Credit Debit Credit Debit Credit

Cash 9,400 9,400 9,400

Accounts Receivable 5,500 5,500 5,500
Cleaning Supplies 900 900 900
Prepaid Insurance 1,800 1,800 1,800
Equipment 11,000 11,000 11,000
Accumulated Deprec. 200 200 200

Accounts Payable 900 900 900

Salaries Payable 1,700 1,700 1,700
Bank Loan 5,500 5,500 5,500

Common Stock 18,000 18,000 18,000

Retained Earnings 0
Dividends 800 800 800

Service Revenue 6,700 6,700 6,700

Gas & Oil Expense 500 500 500
Cleaning Supplies Exp 1,400 1,400 1,400
Depreciation Expense 200
Insurance Expense 1,650 1,650 1,650
Salaries Expense 500 500 500
31,600 31,100 33,200 33,250
New Era Cleaning Service
Income Statement for period of July 1 through July 31, 2010

Revenue

Less: Expenses
Salaries
Cleaning Supplies
Gas & Oil
Depreciation
Insurance
Total Expenses

Net Income
 New Era Cleaning Service
Balance Sheet as of July 31, 2010

Assets
Current Assets
Cash
Accounts Receivable
Cleaning Supplies
Pre-paid Insurance
Total Current Assets

Long Term Assets

Truck-Equipment
less: Accumulated Depreciation
Total Long Term Assets

Total Assets

Liabilities
Current Liabilities
Accounts Payable
Salaries Payable
Total Current Liabilities

Long Term Liabilities

Bank Loan
Total Long Term Liabilities

Total Liabilities

Owners' Equity
Common Stock
Retained Earnings
Beginning Retained Earnings
Net Income
less: Dividends
Ending Retained Earnings
Total Owners' Equity

Total Liabilities and Owners' Equity