- Question 4 Clane Opened A Cleaning Service On July 1 2019 During July The Following Transactions Were Completed July 1 (117.93 KiB) Viewed 36 times
Clane opened a cleaning service on July 1, 2019. During July, the following transactions were completed.
July 1 Clane invested $20,000 cash in the business.
1 Purchased used truck for $12,000, paying $4,000 cash and the balance on account.
3 Purchased cleaning supplies for $2,100 on account.
5 Paid $1,800 cash on a 1-year insurance policy effective July 1.
12 Billed customers $4,500 for cleaning services.
18 Paid $1,500 cash on amount owed on truck and $1,400 on amount owed on cleaning supplies.
20 Paid $2,800 cash for employee salaries.
21 Collected $3,400 cash from customers billed on July 12.
25 Billed customers $6,000 for cleaning services.
31 Paid $350 for the monthly gasoline bill for the truck.
31 Withdraw $5,600 cash for personal use.
Required:
(a) Prepare the accounting equation and trial balance on 31 July 2019. (15 marks)
(b) Prepare the journal entries for the additional adjustment below after the part (a). (15 marks)
(i) Unbilled and uncollected revenue for services performed at July 31 were $2,700.
(ii) Depreciation on equipment for the month was $500.
(iii) One-twelfth of the insurance expired.
(iv) An inventory count shows $600 of cleaning supplies on hand at July 31.
(v) Accrued but unpaid employee salaries were $1,000.
(c) Complete the income statement and balance sheet (10 marks)
(d) Justify THREE (3) accounting concepts use from the above transactions. (10 marks)
Question 4 Clane opened a cleaning service on July 1, 2019. During July, the following transactions were completed. July 1 Clane invested $20,000 cash in the business. 1 Purchased used truck for $12,000, paying $4,000 cash and the balance on account. 3 Purchased cleaning supplies for $2,100 on account. 5 Paid $1,800 cash on a 1-year insurance policy effective July 1. 12 Billed customers $4,500 for cleaning services. 18 Paid $1,500 cash on amount owed on truck and $1,400 on amount owed on cleaning supplies. 20 Paid $2,800 cash for employee salaries. 21 Collected $3,400 cash from customers billed on July 12. 25 Billed customers $6,000 for cleaning services. 31 Paid $350 for the monthly gasoline bill for the truck. 31 Withdraw $5,600 cash for personal use. Required: (a) Prepare the accounting equation and trial balance on 31 July 2019. (15 marks) (b) Prepare the journal entries for the additional adjustment below after the part (a). (15 marks) (i) Unbilled and uncollected revenue for services performed at July 31 were $2,700. (ii) Depreciation on equipment for the month was $500. (iii) One-twelfth of the insurance expired. (iv) An inventory count shows $600 of cleaning supplies on hand at July 31. (v) Accrued but unpaid employee salaries were $1,000. (c) Complete the income statement and balance sheet. (10 marks) (d) Justify THREE (3) accounting concepts use from the above transactions. (10 marks)