You will be recording the July 2021 transactions for Lenny's Lawn Service, Inc. After recording the July transactions you will be preparing a Pre-Closing Trial Balance, Income Statement, Statement of Stockholders' Equity, Balance Sheet, and Post-Closing Trial Balance.

You are given the following:

-July 2021 Transactions and Additional Information - Trans Tab

-Charts of Accounts with Account Numbers and Account Names - Chart Accts Tab

-General Ledger - GL Assets, GL Liam-Equity, GL Rev-Exp tabs

-Forms for the July 31.2021: Pre-Closing Trial Balance (Trial Bal tab), Income Statement and Calculation of Retained Earnings (IS & RE tab), Balance Sheet (BalSht tab), and Post-Closing Trial Balance (Post Close TB tab)

Lenny's Lawn Service, Inc. - Transactions - Additional Information

July 1 - Borrow $35,000.00 from 1st Bank by signing a 24 month note. (As an example of how to journalize and post a transaction -- this transaction has already been eneted into the Generalb Journal and posted to the General Ledger)

July 1 - Receive $80,300.00 Cash from new investors, and issue $80,300.00 of Common Stock to them.

July 1 - Purchase $61,800.00 of new mowing equipment, paying cash to the mower dealer.

July 1 - Pay $500.00 cash for the July truck rental.

July 3 - Invoice a new customer $7,265.00 for the completed mowing job -- customer will pay in 10 days.

July 5 - The Board of Directors declares a cash dividend. The total amount of the dividend is $30,000.00 The Date of Record is set as July 15. The Date of Payment is set as July 31.

July 7 - Pay the employees $5,900.00 for work performed during the 1st week of July.

July 10 - Complete a mowing job for a new customer -- customer pays $4,250.00 cash for the job.

July 12 - Collect $3,500.00 cash from the gold course for special rush mowing job completed on May 31.

July 14 - Pay the employees $7,100.00 for work performed during the 2nd week of July.

July 15 - Purchase $1,825.00 of supplies from the mower dealer. The supplies are consumed immediately. Lenny's will pay the mower dealer for the supplies in about 2 weeks.

July 15 - Collect $7,265.00 on account. The cash that is received is from the new customer for the job that was completed on July 3.

July 17 - One of the original mowers purchased in January of 2020 broke down and is repaired by the mower dealer. The cost of the Mower Repair job is $955.00 Lenny's will pay the mower dealer in 30 days.

July 19 - Purchase for cash $26,950.00 of supplies. These supplies will be consumed over the next 12 months.

July 20 - Collect $30,000.00 from the property management company for work performed in June.

July 21 - Pay the employees $7,500.00 for work performed during the 3rd week of July.

July 23 - Receive a $29,775.00 advance payment from the university. The advance payment is for 6 months of work which will be performed from August 1, 2021 to January 31, 2022.

July 25 - Complete a special mowing job for the gold course. The total price for the mowing job is $6,900.00. The gold course pays $1,000.00 cash on this date and will pay the remainder on August 25.

July 27 - Complete a mowing job for a new customer -- customer pays $3,725.00 cash for the job.

July 27 - Pay $1,825.00 cash to the mower dealer for the supplies purchased on account on July 15.

July 28 - Pay the employees $6,890.00 for work performed during the 4th week of July.

July 31 - Invoice the property management company $23,700.00 for July mowing work. The property management company will pay the invoice on the 20th of next month.

July 31 - Pay the cash dividend which was declared on July 5.

Additional Information:

Equipment: The $48,000.00 beginning balance in the Equipment account relates to the mowing equipment which was purchased on January 2, 2020. For information related to this mowing equipment see Page 70 in the Solid Footing text (PDF 07 - Intro to Adjusting Entries). The equipment continues to be used and should be depreciated for the month of July.

The following information relates to the new equipment which was purchased on July 1, 2021:

-The new equipment was placed into service on July 1, 2021 and should be depreciated for the month of July.

-The estimated useful life of the new equipment is 5 years.

-At the end of 5 years, the new equipment will have no future value and will be scrapped.

-The new equipment will be depreciated using the straight-line method.

Supplies: At the end of July there are $27,880.00 supplies on-hand.

Mowing Service at the University: The monthly mowing service was provided to the university per the contract signed on April 1, 2021. For information on the contract with the university and the related advance payment, see Pages 95 and 98 in the Solid Footing text (PDF 08 - Adjusting Entries Continued).

Wages Due the Employees: The last wage payment was made to the employees on July 28, 2021. The employees worked on July 29, 20, and 31. For these three days of work the employees earned $2,495.00 of wages. These three days of wages will be paid to the workers during the first week of august.

Bank Loan: The interest on the loan from 1st Bank will be paid every three months. The first interest payment to the bank will be made on September 30, 2021. Lenny's calls the bank on July 31 and the bank indicates that the interest on the loan for July is $870.00.

Lenny's Lawn Service, Inc. - Chart of Accounts

Account # - Account Name

Assets:

100 - Cash

105 - Accounts Receivable

110 - Supplies

150 - Equipment

155 - Accumulated Depreciation

Liabilities:

200 - Accounts Payable

205 - Wages Payable

210 - Interest Payable

215 - Unearned Revenue

220 - Dividends Payable

250 - Note Payable

Equity:

300 - Common Stock

305 - Retained Earnings

Revenues:

400 - Service Revenue

Expenses:

500 - Supplies Expense

505 - Mower Repair Expense

510 - Wages Expense

515 - Truck Rental Expense

520 - Depreciation Expense

550 - Interest Expense

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ACC 321: Accounting as a Management Tool

ACP Project

Additional Information Notes on Project

1. There are two pieces of equipment that need to be depreciated (record depreciation expense and accumulated depreciation) for July.
   1. $48,000 was spent on mowing equipment on January 2. Page 70 of the textbook includes information needed to calculate monthly depreciation for this asset. Record the entry. (Page 70 literally shows you how to calculate the answer and gives you the answer.)
      1. Useful life = 4 years (48 months)
      2. No salvage value
      3. Straight-line depreciation
   2. In the project, you will see that a piece of equipment was purchased on July 1^st. Calculate monthly depreciation and record the entry.
      1. Useful life = 5 years (60 months)
      2. No salvage value
      3. Look at the transactions you recorded to find the cost of the asset.
      4. Straight-line depreciation

2. After you have recorded all of your transactions for the month, take a look at your supplies ending balance (the asset account not the expense account). What is the ending balance? Compare this to the ending balance that the company counted as “on-hand” as of July 31^st. Our goal is to have supplies recorded as the amount “on-hand” at July 31^st. So, what is the adjusting entry needed? For example, if the ending balance of supplies was $29,000, but the “on-hand” balance was only $28,000, your entry would look like this:

Dr. Supplies Expense $1,000

Cr. Supplies $1,000

Double-check that you recorded the entry correctly by looking at the balance in your T-account after you post the entry. Does it match the “on-hand” amount?

3. Pages 95 and 98 of the textbook contain information related to a contract signed on April 1.
   1. Advance payment of $32,000 received in cash on April 1^st for work to be performed over four months. This was recorded originally as a debit to cash and a credit to unearned revenue for the entire amount.
   2. The monthly earned revenue is $8,000.
   3. Record the entry to recognize earned revenue for July only.

4. Wages were last paid to employees on July 28^th. However, the employees worked July 29, 30, and 31. They will not be paid for these three days until August. These three days of work earned the employees $XX of wages (see additional information section). Record the expense and wages payable for these three days.

5. Because interest on the bank loan is only paid every three months, and the first payment will be made on September 30^th, we need to accrue (record a payable) for one month’s worth of interest expense related to the bank loan. See the additional information section for the amount of interest you need to record.

Very important! We are dealing with a Corporation in this project. A corporation uses slightly different equity accounts, but the basic rules remain the same.

• Common Stock (when the owners invest in the company, they are given common stock in exchange for the cash put into the business)
• Retained earnings = Owner’s Equity
• Dividends = Owner’s Withdrawals (in this project, any dividends are recorded against retained earnings)

Closing Entries

• The Solid Footing textbook does not use the Income Summary account. Instead, when you record your TWO (not four) closing entries, please follow these notes:

• Close revenues into retained earnings (instead of income summary)
• Close expenses into retained earnings (instead of income summary)

Dividend Entries

• The Solid Footing textbook does not use the Cash Dividends account. Instead, when dividends are declared, you must debit Retained Earnings and credit Dividends Payable. On the date of record, you will record no entry. On the payment date, you will record a debit to Dividends Payable and a credit to Cash.

Answer rating: 100% (QA)

STEP 1 First you will want to set up your chart of accounts and make sure you have the proper accoun... View the full answer