Laura Eddy opened Eddy’s Carpet Cleaners Inc. on March 1. During March, the following transactions were completed.
P4-5A Laura Eddy opened Eddy’s Carpet Cleaners Inc. on March 1. During
March, the following transactions were completed.
Mar. 1 Issued stock for
$10,000 in cash.
1 Purchased used truck
for $6,000, paying $3,000 cash and the balance on account.
3 Purchased cleaning
supplies for $1,200 on account.
5 Paid $1,200 cash on
one-year insurance policy effective March 1.
14 Billed customers
$4,800 for cleaning services.
18 Paid $1,500 cash on
amount owed on truck and $500 on amount owed on cleaning supplies.
20 Paid $1,800 cash for
employee salaries.
21 Collected $1,400 cash
from customers billed on March 14.
28 Billed customers
$2,500 for cleaning services.
31 Paid gas and oil for
month on truck $200.
31 Declared and paid a
$700 cash dividend.
The chart of accounts
for Eddy’s Carpet Cleaners contains the following accounts: No. 101
Cash, No. 112 Accounts
Receivable,No. 128 Cleaning Supplies,No. 130 Prepaid Insurance,No.
157 Equipment, No. 158
Accumulated Depreciation—Equipment, No. 201 Accounts Payable,
No. 212 Salaries
Payable, No. 311 Common Stock, No. 320 Retained Earnings, No. 332
Dividends, No. 350
Income Summary, No. 400 Service Revenue, No. 633 Gas & Oil Expense,
No. 634 Cleaning
Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and
No. 726 Salaries Expense.
Instructions
(a)
Journalize and post the March transactions. Use
page J1 for the journal and the three-column form of account.
(b)
Prepare a trial balance at March 31 on a
worksheet.
(c)
Enter the following adjustments on the worksheet
and complete the worksheet.
(1)
Earned but unbilled revenue at March 31 was
$700.
(2)
Depreciation on equipment for the month was
$250.
(3)
One-twelfth of the insurance expired.
(4)
An inventory count shows $400 of cleaning
supplies on hand at March 31.
(5)
Accrued but unpaid employee salaries were $500.
(d)
Prepare the income statement and a retained
earnings statement for March and a classified balance sheet at March 31.
(e)
Journalize and post adjusting entries. Use page
J2 for the journal.
(f)
Journalize and post closing entries and complete
the closing process. Use page J3 for the journal.
(g)
Prepare a post-closing trial balance at March
31.
SOLUTION
PREVIEW
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(b)&(c) EDDY’S CARPET CLEANERS
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Worksheet
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For the Month Ended March 31, 2010
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Adjusted
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Income
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Account Titles
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Trial Balance
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Adjustments
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Trial Balance
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Statement
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Balance Sheet
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Dr.
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Cr.
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Dr.
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Cr.
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Dr.
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Cr.
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Dr.
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Cr.
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Dr.
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Cr.
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Cash
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2,500
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2,500
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2,500
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Accounts Receivable
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5,900
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(a)
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700
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6,600
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6,600
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