This comprehensive problem involving Miller Design Studio covers all the learning objectives in this chapter and in
Question:
This comprehensive problem involving Miller Design Studio covers all the learning objectives in this chapter and in the chapters on measuring business transactions and measuring business income. To complete the problem, you may sometimes have to refer to this material.
The July 31, 2011 7 post-closing trial balance for the Miller Design Studio is on the next page.
During August, the studio engaged in these transactions.
Required
1. Record entries in journal form and post to the ledger accounts the optional reversing entries on August 1 for Wages Payable and Accounts Receivable (see adjustment for unrecorded wages on page 116 and adjustment for design revenue on page 119). (Begin the general journal on page 5.)
2. Record the transactions for August in journal form.
3. Post the August transactions to the ledger accounts.
4. Prepare the Trial Balance columns of a work sheet.
5. Prepare adjusting entries and complete the work sheet using the information below.
a. One month’s prepaid rent has expired, $1,600.
b. An inventory of supplies reveals $2,020 still on hand on August 31.
c. Depreciation on equipment for August is calculated to be $300.
d. Services performed for which payment had been received in advance totaled $1,300
e. Services performed that will not be billed until September totaled $580.
f. Wages accrued by the end of August, $720.
6. From the work sheet, prepare an income statement, a statement of owner’s equity, and a balance sheet for August 31, 2011.
7. Record the adjusting entries on August 31, 2011, in journal form, and post them to the ledger accounts.
8. Record the closing entries on August 31, 2011, in journal form, and post them to the ledger accounts.
9. Prepare a post-closing trial balance at August 31, 2011.