question no.1 is not necessary so don\'t make journal Start from the adjusted tr
ID: 2414269 • Letter: Q
Question
question no.1 is not necessary so don't make journal
Start from the adjusted trial balance shown below that Lee Management Cansulting pre ting the acocuning cyde pared at June 30, 2016 2.Totel essets, $31,541 LEE MANAGEMENT CONSULTING Adjusted Trial Balance June 30, 2016 Cash Accounts receivable Supplies 23,750 1,900 1,000 S 42 5,000 Accounts payable Salaries payabe Unearned revemue Michael Lee, capital Michael Lee, withdrawals Service revenue 5,000 500 2,000 167 3,000 500 Rent expense Salaries expense Supplies expense Utilities experse 250 1. Joumalize, with explanations, and post to T-accounts the csing entries at June 30, 6 Denote each cloeing amount as Clo and account balance as Be 2. Prepare a classified balance sheet in report format at June 30,3016 3. Compute the current ratio and the debt ratio of Loe Management Consulting and evalu ate these ratio values as indicative of a strong or weak tinancial position 4. Prepare a post-dlosing trial balanoe at June 30, 2016.Explanation / Answer
Answer
Revenue:
Service Revenue
$ 6,200.00
Expenses:
Amortisation expenses Equipment
$ 42.00
Amortisation expense Furniture
$ 167.00
Rent Expenses
$ 3,000.00
Salaries expenses
$ 500.00
Supplies expenses
$ 400.00
Utilities Expenses
$ 250.00
Total Expenses
$ 4,359.00
Net Income
$ 1,841.00
Michael Capital Beginning Balance
$ 25,000.00
Net Income
$ 1,841.00
Withdrawls
$ (2,000.00)
Michael Capital Ending Balance
$ 24,841.00
ASSETS
Current Assets:
Cash
$ 23,750.00
Accounts receivables
$ 1,900.00
Supplies
$ 100.00
Total Current Assets
$ 25,750.00
Property, Plant Equipment:
Equipment
$ 1,000.00
Accumulated Depreciation Equipment
$ (42.00)
$ 958.00
Furniture
$ 5,000.00
Accumulated Depreciation Furniture
$ (167.00)
$ 4,833.00
Total Property plant Equipment
$ 5,791.00
Total ASSETS
$ 31,541.00
LIABILITIES
Accounts Payable
$ 5,000.00
Salaries Payable
$ 500.00
Unearned revenue
$ 1,200.00
Total Liabilities
$ 6,700.00
OWNERS' EQUITY
Michael Lee Capital (ending balance)
$ 24,841.00
Total LIABILITIES & EQUITY
$ 31,541.00
Current Assets
/
Current Liabilities (all liabilities are current in question)
=
Current Ratio
$ 25,750.00
$ 6,700.00
3.84
Total Liabilities
/
Total Assets
=
Debt ratio
$ 6,700.00
$ 31,541.00
0.21
---Current Ratio should not be lower than 2:1. The company has around 3.84:1 which makes us understand that company is solvent in the short run and has enough working capital to pay off its short term obligations.
---Debt Ratio state the burden of Liabilities over Assets. The ratio is only 0.21 which is above average. The company has sufficient ASSETs as compared to its Liabilities.
Post Closing Trail
Post Closing Trail Balance
Accounts Name
Debit
Credit
Cash
$ 23,750.00
Accounts receivables
$ 1,900.00
Supplies
$ 100.00
Equipment
$ 1,000.00
Accumulated Depreciation Equipment
$ 42.00
Furniture
$ 5,000.00
Accumulated Depreciation Furniture
$ 167.00
Accounts Payable
$ 5,000.00
Salaries Payable
$ 500.00
Unearned revenue
$ 1,200.00
Michael Capital
$ 24,841.00
Total
$ 31,750.00
$ 31,750.00
Revenue:
Service Revenue
$ 6,200.00
Expenses:
Amortisation expenses Equipment
$ 42.00
Amortisation expense Furniture
$ 167.00
Rent Expenses
$ 3,000.00
Salaries expenses
$ 500.00
Supplies expenses
$ 400.00
Utilities Expenses
$ 250.00
Total Expenses
$ 4,359.00
Net Income
$ 1,841.00
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