Hillary Curran set up her psychology practice on March 1. The following transactions occurred during March:

1 Deposited $ 25,000 in an account in the name of the business.

2 Paid $ 5,400 for three months’ rent of an office.

5 Purchased office supplies for cash, $ 900.

8 Purchased $ 4,800 of office furniture on account.

10 Paid $ 250 for advertising in the local newspaper.

12 Completed counseling with a client and sent a bill for $ 850 for services rendered.

15 Performed counseling services for a local DJ and immediately collected $ 350.

18 Paid the March insurance premium of $ 300.

20 Received a $ 5,000 deposit for counseling services to be performed for the employees of Reny Company beginning next week.

21 Received a partial payment of $ 200 from the client billed on March 12.

25 Paid $ 1,000 of the amount owed from the purchase of office furniture on March 8.

27 Withdrew $ 2,000 for personal living expenses.

31 Paid the receptionist’s salary of $ 1,200.

Required:

1. Prepare journal entries for each of the previous transactions.

2. Post the entries to the general ledger. Use T-accounts to represent general ledger accounts and determine the ending balance of each account.

3. Using this information, prepare the necessary adjusting entries and post them to the T- accounts:

A. One month’s rent has expired.

B. An inventory of supplies showed $ 250 still on hand.

C. The office furniture is estimated to have a 10- year useful life.

D. Of the Unearned Revenue, $ 400 had been earned by March 31.

E. The telephone bill for March, for $ 130, was received on April 3.

F. A client counseled on March 31 was sent an invoice for $ 350 on April 2.

4. Prepare an income statement, statement of owners’ equity, balance sheet, and statement of cash flows.

5. Prepare the closing entries and post them to the T- accounts.