Part 1
Begging Trial Balance
1. Each account balance should be entered in the General Ledger.
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Pure Water, Inc.
Trial Balance
June 30.XXXXX30,635
Account Receivable dr 2,300
Supplies Dr 1,370
Land Dr 17,000
Furniture 3,600
Equipment Dr 2,400
Vehicles Dr 35,800
Account Payable Cr 4,380
Notes Payable Cr 35,800
Common Stock Cr 52,500
Dividends Dr 5,300
Service Revenue Cr 11,600
Salaries Expense Dr 2,200
Rent Expense Dr 1,800
Utilities Expense Dr 1,300
Advertising Expense Dr 325
Miscellaneous Expense DrXXXXX104,280 Cr 104,280
Pure Water, Inc.
CHART OF ACCOUNTS – PERPETUAL INVENTORY SYSTEM
NORMAL ACCOUNT
BALANCE NUMBER ACCOUNT DESCRIPTION
DEBIT 110 Cash in Bank
DEBIT 120 Accounts Receivable
DEBIT 130 Office Supplies inventory
DEBIT 150 Prepaid Rent
DEBIT 160 Office Furniture
DEBIT 210 Store Equipment
DEBIT 215 Land
DEBIT 220 Vehicles
CREDIT 279 Accumulated Depreciation – Store Equipment
CREDIT 289 Accumulated Depreciation – Vehicles
CREDIT 299 Accumulated Depreciation – Office Furniture
CREDIT 310 Accounts Payable
CREDIT 315 Salaries Payable
CREDIT 320 Unearned Revenue
CREDIT 330 Income Taxes Payable
CREDIT 340 Notes Payable
CREDIT 410 Common Stock
CREDIT 420 Additional Paid-in Capital
DEBIT 430 Dividends
CREDIT 440 Retained Earnings
ZERO 499 INCOME SUMMARY (special year-end clearing account)
CREDIT 510 Service Revenue
DEBIT 710 Payroll Tax Expense
DEBIT 720 Salaries Expense
DEBIT 730 Rent Expense
DEBIT 740 Utility Expense
DEBIT 760 Freight-Out (Delivery Expense)
DEBIT 765 Advertising Expense
DEBIT 770 Insurance Expense
DEBIT 780 Depreciation Expense – Store Equipment
DEBIT 785 Depreciation Expense – Vehicles
DEBIT 790 Supplies Expense
DEBIT 800 Miscellaneous Expense
DEBIT 810 Income Tax Expense
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General Journal
2. The General Journal should be used to enter each transaction by date. The transactions are for the month of July 2012. Please use the accounts that are listed on the Chart of Accounts only. Include explanations for each entry. The journal sheet may be duplicated for all journal related steps in the accounting cycle. For example, you will need separate sheets for adjusting and closing entries.
July
July
1 Paid three months’ rent, $7,200
4 Performed service for a customer and received cash, $2,100.
9 Received $2,700 from customers for services to be performed later.
12 Purchased $950 of supplies on account.
15 Billed customers for services performed, $2,600.
16 Paid receptionist’s salary, $550
22 Received $3,100 on account.
25 Paid $2,000 on account.
28 Received $1,600 cash for services performed.
30 Paid $900 of dividends.
Part 2
Requirements
1. Journalize the transactions that occurred in July. Omit Explanations.
2. Using four-Column account, post the transactions to the ledger creating new ledger accounts as necessary. Omit posting references. Calculate the new account balance at July 31.
3. Prepare the unadjusted trial balance for Pure Water, Inc., at the end of July.
4. Journalize and post the adjusting entries for July based on the following adjustment information:
a. Record the expired rent.
b. Supplies on hand, $200.
c. Depreciation: $100 equipment, $75 furniture, $330vehicles.
d. Services performed but unbilled, $1,900.
e. Accrued salaries, $550.
f. Unearned service revenue earned as of July 31, $1,000.
5. Prepare an adjusted trial balance for Pure Water, Inc., at the end of July.
6. Prepare the income statement and statement of retained earnings for the Three-month period May 1 through July 31. 2012. Also prepare a balance sheet at July 31. 2012
7. Prepare and post-closing entries
8. Prepare a post-closing trial balance at July 31. 2012.
Worksheet
Following Step 3, a ten column worksheet should be compiled. The first two columns will consist of the detail from Step 3. The worksheet will be completed simultaneously with Steps 3-5 above in Part III. The worksheet will assist in the preparation of the financial statements in Step 6.
Income Taxes
Income taxes should be computed using a 35% tax rate. This information should be placed on the worksheet and on the applicable financial statement(s).
Financial Statements
Templates have been created and should be updated accordingly.
