Lee Chang opened Lee's Window Washing on July 1, 2017. In July, the following transactions were completed:

July 1 Invested $20,000 cash in the business.

1 Purchased a used truck for $25,000, paying $5,000 cash and signing a note payable for the balance.

1 Paid $2,800 on a one-year insurance policy, effective July 1.

5 Billed customers $3,300 for cleaning services.

12 Purchased supplies for $2,100 on account.

18 Paid $3,000 for employee salaries.

25 Billed customers $8,900 for cleaning services.

28 Collected $3,300 from customers billed on July 5.

31 Paid $550 for fuel for the month on the truck.

31 Withdrew $2,600 cash for personal use.

Instruction

(a) Journalize and post the July transactions to the general ledger.

(b) Prepare a trial balance at July 31.

(c) Journalize and post the following July 31 adjustments:

1. Earned but unbilled fees at July 31 were $1,500.

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

3. One twelfth of the insurance expired.

4. An inventory count shows $700 of supplies on hand at July 31.

5. Accrued but unpaid employee salaries were $800.

6. The note pay able has a 5.5% annual interest rate.

(d) Prepare an adjusted trial balance.

(e) Prepare the income statement and statement of owner's equity for July, and a classified balance sheet at July 31, 2017. Of the note payable, $5,000 must be paid by June 30, 2018.

(f) Journalize and post the closing entries.

(g) Prepare a post-closing trial balance at July 31?

Taking It Further

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