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    Journalize and Post Transactions and Income Statements

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    VICTORIA CONSULTING, INC.
    INSTRUCTIONS:
    Complete the following steps in the order given.
    1. Journalize and post the transactions noted below for Victoria Consulting, Inc. during the
    firm's first month of business. Note: Use the account titles and numbers in the chart of
    accounts provided and round all calculations to the nearest whole dollar.
    2. Prepare a 10-column worksheet using your knowledge of what has taken place during
    January and the supplemental adjusting entry information provided.
    3. Journalize and post all indicated adjusting entries.
    4. Journalize and post all closing entries.
    5. Prepare an income statement, a classified balance sheet, and a statement of retained
    earnings in good form. Note: Blank statements are not provided; use a spreadsheet
    program to prepare the required statements.
    6. Prepare a post-closing trial balance.
    TRANSACTIONS:
    Date Transaction
    January 1 Issued 25,000 shares of $14 par value common stock in exchange for an
    initial investment of $350,000 by the firm's owners, Siam Gato and Scotty
    Phideaux.
    January 1 Purchased a one-year insurance policy for $3,600
    January 2 Issued 2,000 shares of $14 par value common stock for office equipment
    with a fair market value of $28,000.
    January 2 Purchased land and an office building for $150,000, of which $120,000 was
    attributable to the fair market value of the building. A $50,000 cash downpayment
    was made and a 6% five-year note was signed for the balance.
    Interest and 20% of the principal will be paid annually on this date.
    (Assume a 360-day year for interest computation purposes.)
    January 5 Purchased office supplies of $10,000 on account from Kilcoyne Office
    Supplies.
    January 6 Established a petty cash fund of $400.
    January 7 Placed an order in the local newspaper for advertising, which will run during
    January, February, and March beginning January 15. The advertising, which
    cost $1,800, was paid for on this date in order to obtain a lower price.
    .
    January 10 Completed several consulting jobs, which totaled $75,000. Cash of $35,000
    was collected with the balance due in 30 days.
    January 15 Paid the semi-monthly payroll, which totaled $20,000, to the firm's
    consultants, all of which are classified as independent contractors.
    January 15 A client indicated that a $2,000 receivable due to Victoria would not be paid
    for 6 months. Victoria accepted a 12% 6-month note receivable on this date.
    January 16 Declared a cash dividend of $0.50 per share on this date payable on February
    18.
    January 19 Paid Kilcoyne Office Supply $1,000 on the account balance.
    January 30 Received the January telephone bill for $205.
    January 31 Collected $10,000 of the receivable recorded on January 10.
    January 31 Accrued the payroll for the second half of January.
    January 31 Received various utility bills for January, which totaled $864.
    January 31 Recorded consulting jobs completed during the last half of January that
    totaled $105,000. $80,000 was collected in cash with the balance due in 30
    days.
    January 31 An audit of the petty cash fund determined the following:
    Receipts:
    Postage $ 85
    Freight-out 160
    Misc. Exp. 45
    Currency and Coin 115
    The appropriate entry was recorded from the information above.
    SUPPLEMENTAL ADJUSTING ENTRY INFORMATION:
    a. An inventory of office supplies found that $ XXXX of supplies remained
    at January 31. (Use the last four digits of your student ID Number.) Do
    Not Use the Single Digit to the right of the rest of the Numbers.
    b. The building will be depreciated on a straight-line basis over 20 years
    with $24,000 salvage value.
    c. The equipment will be depreciated on a straight-line basis over 8 years
    with $4000 salvage value.
    d. An aging of accounts receivable indicated that, as of the balance sheet
    date, $1,000 of accounts receivable would ultimately be uncollectible.
    e. Income tax expense of 38% will be recorded on pre-tax accounting
    income.
    f. Be aware that there might be other adjustments necessary in addition
    to those indicated in items a through e above.
    CHART OF ACCOUNTS
    ACCOUNT NUMBER ACCOUNT NAME
    10 Cash
    11 Petty Cash
    15 Accounts Receivable
    16 Allowance for Doubtful Accounts
    18 Notes Receivable
    19 Interest Receivable
    20 Office Supplies
    21 Prepaid Insurance
    22 Prepaid Advertising
    30 Office Equipment
    31 Accumulated Depreciation, Office Equipment
    50 Building
    51 Accumulated Depreciation, Building
    70 Land
    200 Accounts Payable
    210 Dividends Payable
    220 Salaries Payable
    230 Income Tax Payable
    260 Notes Payable
    265 Interest Payable
    300 Common Stock
    350 Retained Earnings
    355 Dividends
    400 Consulting Revenue
    410 Interest Revenue
    500 Salary Expense
    502 Advertising Expense
    505 Insurance Expense
    509 Interest Expense
    520 Telephone Expense
    530 Utilities Expense
    540 Repairs Expense
    543 Postage Expense
    544 Freight-out
    550 Supplies Expense
    561 Depreciation Expense, Office Equipment
    562 Depreciation Expense, Building
    563 Bad Debts Expense
    580 Miscellaneous Expense
    585 Income Tax Expense
    590 Cash Over and Short
    600 Income Summary

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    The solution journalizes transactions and creates an income statement.

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