COMPREHENSIVE ACCOUNTING CASE

Basic Accounting
BUS 1102
Comprehensive Problem
Term __
Instructor:

Student Name:_____________________________________
 New Era Cleaning Service, Inc. opened for business on
July 1, 2010. During the month of July, the following transactions occurred:

July 1 Issued $18,000 of common stock for $18,000 cash.

July 1 Purchased a truck for $11,000. Paid $4,000 in cash and borrowed the rest (long term) from the bank.

July 3 Purchased cleaning supplies for $900 on account.

July 5 Paid $1,800 on a one-year insurance policy, effective July 1.

July 12 Billed customers $4,800 for cleaning services.

July 18 Paid $1,500 of the amount owed on the truck.

July 18 Paid $500 of the amount owed on cleaning supplies.

July 20 Paid $1,700 for employee salaries.

July 21 Collected $1,200 from customers billed on July 12.

July 25 Billed customers $1,900 for cleaning services.

July 31 Paid gas and oil for the month on the truck, $500.

July 31 Paid a $800 dividend.

Instructions:

Unit 2 Post July transactions to the general journal and general ledger 'T' accounts

Unit 3 Prepare an unadjusted trial balance

Unit 3 Post the following adjustments

(a) Earned but unbilled fees at July 31 were $1,400
(b) Depreciation for the month was $200
(c) One-twelfth of the insurance expired
(d) An inventory count showed $300 of cleaning supplies remaining on July 31.
(e) Accrued but unpaid employee salaries were $500.

Unit 3 Prepare an adjusted trial balance

Unit 4 Post closing entries

Unit 4 Prepare a classified balance sheet and an income statement as of July 31.
 Journal # Date Accounts and Description Debit Credit
Debit Credit

#1 7/1/2010 Cash $18,000

Common Stock $18,000
Initial investment: Cash received for stock ownership

#2 7/1/2010 Truck - Equipment 11000

Cash 4000
Bank Loan 7000
Purchase truck with cash and bank loan

#3 7/3/2010 Cleaning Supplies 900

Accounts Payable 900
Purchased supplies on account

#4 7/5/2010 Pre-paid Insurance 1800

Cash 1800
Paid annual premium for insurance policy - eff 7/1

#5 7/12/2010 Accounts Receivable 4800

Service Revenue 4800
Billing for cleaning services rendered

#6 7/18/2010 Bank Loan 1500

Cash 1500
Loan payment on truck loan

#7 7/18/2010 Accounts Payable 500

Cash 500
Payment to cleaning supplies vendor

#8 7/20/2010 Salaries Expense 1700

Cash 1700
Payment of salaries

#9 7/21/2010 Cash 1200

Accounts Receivable 1200
Collections of Accounts Receivable

#10 7/25/2010 Accounts Receivable 1900

Service Revenue 1900
Billing for cleaning services rendered

#11 7/31/2010 Gas & Oil Expense 500

Cash 500
Gas and Oil (expense)

#12 7/31/2010 Dividend 800

Cash 800
Payment of dividend to shareholders
Adjusting entries:

(a) 7/31/2010 Accounts Receivable 1400

Service Revenue 1400
Adjust for unbilled fees earned in July 2010

(b) 7/31/2010 Depreciation Expense 200

Accumulated Depreciation 200
Record depreciation

(c ) 7/31/2010 Insurance Expense 150

Pre-paid Insurance 150
Adjust for the use (expense) of one month's pre-paid insurance

(d) 7/31/2010 Cleaning Supplies Expense 600

Cleaning Supplies 600
Adjust for the use (expense) of $600 of supplies

(e) 7/31/2010 Salaries Expense 500

Salaries Payable 500
To accrue for employee salaries

revenues 8100
income summary 8100
to close revenues to income summary account

income summary 4450

expenses 4450
to close expenses to income summary account

income summary 3650

retained earnings 3650
to close income summary account to reatained earnings account

dividend 800
retained earnings 800
to close divident account to retained earnings
 Cash Accounts Receivable Pre-Paid Insurance Supplies
Debit Credit Debit Credit Debit Credit Debit Credit
(1) 18000 (5) 4800 (4) 1800 (3) 900
4000 (2) 1200(9)
1800 (4) (10) 1900 150 (c ) 600 (d)
1500 (6) 5500
500 (7)
1700 (8) (a) 1400
(9) 1200
500 (11)
800 (12)
8400

Equipment: Truck Accum. Depreciation Accounts Payable Bank Loan

Debit Credit Debit Credit Debit Credit Debit Credit
(2) 11000 200 (b) 900 (3) 7000 (2)
(7) 500 (6) 1500
400 5500

Revenue Gas & Oil Expense Salaries Expense

Salaries Payable Debit Credit Debit Credit Debit Credit
Debit Credit 4800 (5) (11) 500 (8) 1700
500 (e) 1900 (10)
6700 (e) 500

1400 (a)

Insurance Expense Supplies Expense Depreciation Expense Income Summary

Debit Credit Debit Credit Debit Credit Debit Credit
(c ) 150 (d) 600 (b) 200 2200 8100
600
500
200
150
4450
Common Stock Dividend Retained Earnings
Debit Credit Debit Credit Debit Credit
18000 (1) (12) 800 4450 800

3650
 Happy Workers Cleaning Service

Unadjusted Adjusted
Account Beginnng Balance Trial Balance Adjusting Entries Trial Balance
Debit Credit Debit Credit Debit Credit Debit Credit

Cash 0 8,400 8,400

Accounts Receivable 0 5,500 1,400 a 6,900
Cleaning Supplies 0 900 d 600 300
Prepaid Insurance 0 1,800 c 150 1,650
Equipment 0 11,000 11,000
Accumulated Deprec. 0 b 200 200

Accounts Payable 0 400 400

Salaries Payable 0 e 500 500
Bank Loan 0 5,500 5,500

Common Stock 0 18,000 18,000

Retained Earnings 0
Dividends 0 800 800

Service Revenue 0 6,700 a 1,400 8,100

Gas & Oil Expense 0 500 500
Cleaning Supplies Exp 0 600 d 600
Depreciation Expense 0 200 b 200
Insurance Expense 0 150 c 150
Salaries Expense 0 1,700 500 e 2,200
30,600 30,600 2,850 2,850 32,700 32,700
New Era Cleaning Service
Income Statement for period of July 1 through July 31, 2010

Revenue $8,100

Less: Expenses
Salaries $2,200
Cleaning Supplies $600
Gas & Oil $500
Depreciation $200
Insurance $150
Total Expenses $3,650

Net Income $4,450

 New Era Cleaning Service
Balance Sheet as of July 31, 2010

Assets
Current Assets
Cash 8400
Accounts Receivable 6900
Cleaning Supplies 300
Pre-paid Insurance 1650
Total Current Assets $17,250

Long Term Assets

Truck-Equipment 11000
less: Accumulated Depreciation 200
Total Long Term Assets $11,200

Total Assets $28,450

Liabilities
Current Liabilities
Accounts Payable $400
Salaries Payable $500
Total Current Liabilities $900

Long Term Liabilities

Bank Loan $5,500
Total Long Term Liabilities $5,500

Total Liabilities $6,400

Owners' Equity
Common Stock 18000
Retained Earnings $3,650
Beginning Retained Earnings $8,400
Net Income $4,450
less: Dividends ($800)
Ending Retained Earnings

Total Owners' Equity $33,700

Total Liabilities and Owners' Equity $40,100