On July 1, 2017, Lula Plume created a new self-storage business, Safe Storage Co

Question

On July 1, 2017, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during the company’s first month.

Page 160

Required

Use the balance column format to set up each ledger account listed in its chart of accounts.

Prepare journal entries to record the transactions for July and post them to the ledger accounts. Record prepaid and unearned items in balance sheet accounts.

Prepare an unadjusted trial balance as of July 31.

Check? (3) Unadj. trial balance totals, $189,800

Use the following information to journalize and post adjusting entries for the month:

Two-thirds of one month’s insurance coverage has expired.

(4a) Dr. Insurance Expense, $400

At the end of the month, $1,525 of office supplies are still available.

This month’s depreciation on the buildings is $1,500.

An employee earned $100 of unpaid and unrecorded salary as of month-end.

The company earned $1,150 of storage fees that are not yet billed at month-end.

Prepare the adjusted trial balance as of July 31. Prepare the income statement and the statement of retained earnings for the month of July and the balance sheet at July 31, 2017.

(5) Net income, $2,725; Total assets, $180,825

Prepare journal entries to close the temporary accounts and post these entries to the ledger.

Prepare a post-closing trial balance.

(7) P-C trial balance totals, $182,325

July 1 Plume invested $30,000 cash and buildings worth $150,000 in the company in exchange for common stock. 2 The company rented equipment by paying $2,000 cash for the first month’s (July) rent. 5 The company purchased $2,400 of office supplies for cash. 10 The company paid $7,200 cash for the premium on a 12-month insurance policy. Coverage begins on July 11.

Explanation / Answer

1)Journal Entries

2)Ledgers

3)Unadjusted Trial Balance

189800

4)Adjusted Trial Balance

5)Income Statement

6)Balance Sheet

Note:1)Please Check Your answers with the above solutions, if you want to make changes make it accordingly
2)Rent when paid on July 2 for equipment is prepaid Rent which becomes an expense at the end of the month, if you want to keep it as a prepaid expense make changes accordingly

Date Particulars Debit Credit Jul-01 Cash 30000 Building 150000    Common Stock 180000 Jul-02 Prepaid rent 2000 Cash 2000 Jul-05 Office Supplies 2400    Cash 2400 Jul-11 Prepaid Insurance 7200     Cash 7200 Jul-14 Payroll Expense 1000     Cash 1000 Jul-24 Cash 9800    Sales-storage Fees 9800 Jul-28 Payroll Expense 1000    Cash 1000 Jul-29 Repair Expenses 950 Cash 950 Jul-30 Telephone Expenses 400 cash 400 Jul-31 Dividend Expense 2000    Cash 2000 Adjusting Entries Jul-31 Insurance Expense 400    Prepaid Insurance 400 Jul-31 Office Supplies Expense 875 Office Supplies 875 Jul-31 Depriciation 1500 Buildings 1500 Jul-31 Payroll Expense 100    Cash 100 Jul-31 Accounts Receivable 1150 Sales-Storage Services 1150 Jul-31 Rent Expense 2000 Prepaid Rent 2000

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