Refer to Exercise of Chapter 2. Start from the trial balance and the posted T-accounts that Jerome Smith, Certified Public Accountant, Professional Corporation (P.C.), prepared for his accounting practice at March 18. A professional corporation is not subject to income tax. Later in March, the business completed these transactions:

Mar 21 Received $1,800 in advance for tax work to be performed over the next 30 days.

21 Hired a secretary to be paid on the 15th day of each month.

26 Paid $500 for the supplies purchased on March 5.

28 Collected $2,100 from the client on March 18.

31 Declared and paid dividends of $1,400.

Requirements

1. Journalize the transactions of March 21 through 31.

2. Post the March 21 to 31 transactions to the T-accounts, keying all items by date.

3. Prepare a trial balance at March 31.

4. At March 31, gathers the following information for the adjusting entries:

a. Accrued service revenue, $1,600

b. Earned $600 of the service revenue collected in advance on March 21

c. Supplies on hand, $100

d. Depreciation expense equipment, $40; furniture, $125

e. Accrued expense for secretary’s salary, $600

Make these adjustments in the adjustments columns and complete the adjusted trial balance at January 31.

5. Journalize and post the adjusting entries. Denote each adjusting amount as Adj and an account balance as Bal.

6. Prepare the income statement and statement of retained earnings of Jerome Smith

Certified Public Accountant, P.C., for the month ended March 31 and the classified balance sheet at that date.

7. Journalize and post the closing entries at March 31. Denote each closing amount as Clo and an account balance as Bal.

8. Compute the current ratio and the debt ratio of Jerome Smith Certified Public

Accountant, P.C., and evaluate these ratio values as indicative of a strong or weak financial position.