Tom Smith Opened XYZ Cleaning Services
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Tom Smith opened XYZ Cleaning Services, Inc. on July 1, 2012.
During July the following transactions were completed.
July 1 Issued 15,000 shares of common stock for $15,000 cash.
1 Purchased a truck for $12,000 , paying $2,500 cash
and the balance on account.
3 Purchased cleaning supplies for $1,400 on account.
5 Paid $2,400 cash on 1-year insurance policy effective July 1.
12 Billed customers $5,600 for cleaning services.
18 Paid $2,600 cash on amount owed on truck and
$800 on account owed on cleaning supplies.
20 Paid $2,350 cash for employee salaries.
21 Collected $4,600 cash from customers billed on July 12.
25 Billed customers $3,800 for cleaning services.
31 Paid $455 for maintenance of the truck during the month.
31 Declared and paid $800 cash dividend.
The chart of accounts for XYZ Cleaning Services contains the
following accounts: Cash, Accounts Receivable, Supplies,
Prepaid Insurance, Equipment, Accumulated Depreciation - Equipment,
Accounts Payable, Salaries and Wages Payable, Common Stock,
Retained Earnings, Dividends, Income Summary, Service Revenue,
Maintenance and Repairs Expense, Supplies Expense, Depreciation
Expense, Insurance Expense, Salaries and Wages Expense.
Instructions:
(a) Journalize the July transactions.
(b) Post to the ledger accounts. (Use T accounts).
(c) Prepare a trial balance at July 31.
(d) Journalize the following adjustments.
(1) Services provided but unbilled and uncollected at July 31 $1,900
(2) Depreciation on equipment for the month was $250
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $275 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $650
(e) Post adjusting entries to the T accounts.
(f) Prepare an adjusted trial balance.
(g) Prepare the income statement and a retained earnings statement for
July and a classified balance sheet at July 31.
(h) Journalize and post closing entries and complete the closing process
(i) Prepare a post-closing trial balance at July 31.
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Solution Summary
The solution discusses how Tom Smith opened XYZ cleaning services, including journalizing transactions, posting ledgers, preparing trial balances, and adjusting entries.
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