Daniel Grimm & Tim Turensek opened Clean Window Washing Inc. on July 1, 2015. Du
ID: 2498477 • Letter: D
Question
Daniel Grimm & Tim Turensek opened Clean Window Washing Inc. on July 1, 2015. During July, the following transactions were completed.
July 1
Issued 12,000 shares of common stock for $12,000 cash.
1
Purchased used truck for $8,000, paying $2,000 cash and the balance on account (AP).
3
Purchased cleaning supplies (asset) for $900 on account.
5
Paid $1,800 cash on a 1-year insurance policy effective July 1.
12
Billed customers $3,700 for cleaning services.
18
Paid $1,000 cash on amount owed on truck and $500 on amount owed on cleaning supplies.
20
Paid $2,000 cash for employee salaries. (Salaries and Wages Expense)
21
Collected $1,600 cash from customers billed on July 12.
25
Billed customers $2,500 for cleaning services.
31
Paid $290 for maintenance of the truck during month. (Maintenance and Repairs Expense)
31
Declared and paid $600 cash dividend.
4.
Journalize the following adjustments (adjusting journal entries)
1.
Services performed but unbilled and uncollected at July 31 were $1,700. (Need to bill the client.)
2.
Depreciation on equipment for the month was $180. (Don’t need to calculate depreciation, use the amount given.)
3.
One-twelfth of the insurance expired.
4.
An inventory count shows $320 of cleaning supplies on hand at July 31.
5.
Accrued, but unpaid employee salaries were $400. (We need to record the expense and the amount due to the employees.)
7.
Prepare the income statement and a retained earnings statement for July and a classified balance sheet at July 31.
(Net Income = $4,300, Total Assets = $21,500)
July 1
Issued 12,000 shares of common stock for $12,000 cash.
1
Purchased used truck for $8,000, paying $2,000 cash and the balance on account (AP).
3
Purchased cleaning supplies (asset) for $900 on account.
5
Paid $1,800 cash on a 1-year insurance policy effective July 1.
12
Billed customers $3,700 for cleaning services.
18
Paid $1,000 cash on amount owed on truck and $500 on amount owed on cleaning supplies.
20
Paid $2,000 cash for employee salaries. (Salaries and Wages Expense)
21
Collected $1,600 cash from customers billed on July 12.
25
Billed customers $2,500 for cleaning services.
31
Paid $290 for maintenance of the truck during month. (Maintenance and Repairs Expense)
31
Declared and paid $600 cash dividend.
Explanation / Answer
Solution - To solve this while making the journal entries simultaneously give effect to P&L & Balance Sheet and keep them tallying -
Journal Entries
adjusting journal entries)
for Services performed but unbilled and uncollected we will add them to the Sales revenue however instead of accounts receivable will be debit Revenue Receivable and dd them as an asset in Balance sheet
Supplies Expenses is the difference in the Purchased Supplies & the Closing Supplies ( Closing supplies will be shown in Balance sheet as an asset )
Salaries payable will be added to the salaries paid in the month and the remaining Salary payable will be shown as laibilities in Balance sheet
Retained Earning = Profit - Dividend
income statement
Retained earnings statement
Classified balance sheet at July 31.
Cash 12000 common stock 12000 Vehicle 8000 Cash 2000 Accounts Payable 6000 Cleaning Supplies 900 Accounts Payable 900 Prepaid Insurance 1800 Cash 1800 Accounts receivable 3700 Service Revenue 3700 Accounts payable 1500 Cash 1500 Salaries and Wages Expense 2000 Cash 2000 Cash 1600 Accounts receivable 1600 Accounts receivable 2500 Service Revenue 2500 Maintenance and Repairs Expense 290 Cash 290Related Questions
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