This comprehensive problem involving Miller Design Studio covers
This comprehensive problem involving Miller Design Studio covers all the learning objectives in this chapter and in the chapters on measuring business transaction and measuring business income. To complete the problem, you may some-times have to refer to this material. The July 31, 2011, post-closing trial balance for the Miller Design Studio is on the next page.
During August, the studio engaged in these transactions:
Aug. 1 Received an additional investment of cash from J. Miller, $20,000.
2 Purchased additional office equipment with cash, $4,700.
7 Purchased addition al office supplies for cash, $540.
8 Completed the series of designs that began on July 31 and billed for the total design services performed, including the accrued revenues of $800 that had been recognized in an adjusting entry in July, $1,400.
12 Paid the amount due for the office equipment purchased last month, $3,000.
13 Accepted an advance in cash for design work to be done, $2,400.
15 Performed design services and received a cash fee, $2,900.
16 Received payment on account for design services performed last month, $2,800.
19 Made a partial payment on the utilities bill that was received and recorded at the end of July, $140.
20 Performed design services for Rave Department Stores and agreed to accept payment next month, $3,200.
21 Performed design services for cash, $1,160.
22 Received and paid the utilities bill for August, $900.
23 Paid the assistant for four weeksâ wages, $4,800.
26 Paid the rent for September in advance, $1,600.
30 Paid cash to J. Miller as a withdrawal for personal expenses, $2,800.
1. Record entries in journal form and post to the ledger accounts the optional reversing entries on August 1 for Wages Payable and Accounts Receivable (see adjustment for unrecorded wages on page 116 and adjustment for design revenue on page 119). (Begin the general journal on page 5.)
2. Record the transactions of August in journal form.
3. Post the August transactions to the ledger accounts.
4. Prepare the Trial Balance columns of a work sheet.
5. Prepare adjusting entries and complete the work sheet using the information below.
a. One monthâs prepaid rent has expired, $1,600.
b. An inventory of supplies reveals $2,020 still on hand on August 31.
c. Depreciation on equipment for August is calculated to be $300.
d. Services performed for which payment had been received in advance totaled $1,300.
e. Services performed that will not be billed until September totaled $380.
f. Wages accrued by the end of August, $720.
6. From the work sheet, prepare an income statement, a statement of ownerâs equity, and a balance sheet for August 31, 2011.
7. Record the adjusting entries on August 31, 2011, in journal form, and post them to the ledger accounts.
8. Record the closing entries on August 31, 2011, in journal form, and post them to the ledger accounts.
9. Prepare a post-closing trial balance at August 31,2011.
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