Lee Chang opened Lee’s Window Washing on July 1, 2024. In July, the following transactions were completed:
July 1 Lee 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 repairs on the truck. 31 Withdrew $2,600 cash for personal use.

Instructions
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. Services of $1,500 were provided but remained unbilled and uncollected at July 31.
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 payable 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, 2024. Of the note payable, $5,000 must be paid by June 30, 2025.
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?