Laura Eddy opened Eddy's Carpet Cleaners on March 1, 2014. In March, the following transactions were completed:

Mar. 1 Laura invested $10,000 cash in the business.

1 Purchased a used truck for $6,500, paying $1,500 cash and signing a note payable for the balance.

3 Purchased supplies for $1,200 on account.

5 Paid $1,200 on a one-year insurance policy, effective March 1.

12 Billed customers $4,800 for cleaning services.

18 Paid $500 of amount owed on supplies.

20 Paid $1,800 for employee salaries.

21 Collected $1,400 from customers billed on March 12.

25 Billed customers $2,500 for cleaning services.

31 Paid $375 for fuel for the month on the truck.

31 Withdrew $900 cash for personal use.

Instructions

(a) Journalize and post the March transactions.

(b) Prepare a trial balance at March 31.

(c) Journalize and post the following adjustments:

1. The truck has an estimated useful life of five years.

2. One-twelft h of the insurance expired.

3. An inventory count shows $400 of supplies on hand at March 31.

4. Accrued but unpaid employee salaries were $500.

5. The note payable has a 4.5% annual interest rate.

6. Earned but unbilled fees at March 31 were $500.

(d) Prepare an adjusted trial balance.

(e) Prepare the income statement and statement of owner's equity for March, and a classified balance sheet at

March 31, 2014. Of the note payable, $2,000 must be paid by March 1, 2015.

(f) Journalize and post the closing entries.

(g) Prepare a post-closing trial balance at March 31.

Taking It Further

Do companies need to make adjusting and closing entries at the end of every month?