For the past several years, Abby Brown has operated a part-time consulting business from her home. As of June 1, 2012, Abby decided to move to rented quarters and to operate the business, which was to be known as Square One Consulting, on a full-time basis. Square One Consulting entered into the following transactions during June: June 1. The following assets were received from Abby Brown: cash, $30,000; accounts receivable, $7,500; supplies, $2,000; and office equipment, $15,000. There were no liabilities received.

1. Paid three months’ rent on a lease rental contract, $6,000.

2. Paid the premiums on property and casualty insurance policies, $3,600.

4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $5,000.

5. Purchased additional office equipment on account from Office Depot Co., $6,000.

6. Received cash from clients on account, $4,000.

10. Paid cash for a newspaper advertisement, $200.

12. Paid Office Depot Co. for part of the debt incurred on June 5, $1,200.

12. Recorded services provided on account for the period June 1–12, $13,000.

14. Paid part-time receptionist for two weeks’ salary, $1,500.

Record the following transactions on Page 2 of the journal.

17. Recorded cash from cash clients for fees earned during the period June 1–16, $9,000.

18. Paid cash for supplies, $1,400.

20. Recorded services provided on account for the period June 13–20, $8,500.

24. Recorded cash from cash clients for fees earned for the period June 17–24, $6,300.

26. Received cash from clients on account, $12,100.

27. Paid part-time receptionist for two weeks’ salary, $1,500.

29. Paid telephone bill for June, $150.

30. Paid electricity bill for June, $400.

30. Recorded cash from cash clients for fees earned for the period June 25–30, $3,900.

30. Recorded services provided on account for the remainder of June, $2,500.

30. Abby withdrew $10,000 for personal use.

Instructions

1. Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.)

11 Cash

12 Accounts Receivable

14 Supplies

15 Prepaid Rent

16 Prepaid Insurance

18 Office Equipment

19 Accumulated Depreciation

21 Accounts Payable

22 Salaries Payable

23 Unearned Fees

31 Abby Brown, Capital

32 Abby Brown, Drawing

41 Fees Earned

51 Salary Expense

52 Supplies Expense

53 Rent Expense

54 Depreciation Expense

55 Insurance Expense

59 Miscellaneous Expense

2. Post the journal to a ledger of four-column accounts.

3. Prepare an unadjusted trial balance.

4. At the end of June, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6).

a. Insurance expired during June is $200.

b. Supplies on hand on June 30 are $600.

c. Depreciation of office equipment for June is $250.

d. Accrued receptionist salary on June 30 is $350.

e. Rent expired during June is $2,500.

f. Unearned fees on June 30 are $3,200.

5. Optional: Enter the unadjusted trial balance on an end-of-period spreadsheet (work sheet) and complete the spreadsheet.

6. Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal.

7. Prepare an adjusted trial balance.

8. Prepare an income statement, a statement of owner’s equity, and a balance sheet.

9. Prepare and post the closing entries. Record the closing entries on Page 4 of the journal. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.

10. Prepare a post-closing trial balance.