Financial Accounting

Assignment: Financial and Managerial Accounting

1. Derrick Epstein has operated a part-time consulting business from his home. As of June 1, 2008, Derrick decided to move to rented quarters and to operate the business, which was to be known as Luminary Consulting, on a full-time basis.

June 1. The following assets were received from Derrick Epstein: cash, $26,200; accounts receivable, $6,000; supplies, $2,800; and office equipment, $25,000. There were no liabilities received.

1. Paid three months’ rent on a lease rental contract, $5,250.

2. Paid the premiums on property and casualty insurance policies, $2,100.

4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $2,700.

5. Purchased additional office equipment on account from Office Station Co., $5,000.

6. Received cash from clients on account, $3,000.

10. Paid cash for a newspaper advertisement, $200.

12. Paid Office Station Co. for part of the debt incurred on June 5, $1,000.

12. Recorded services provided on account for the period June 1–12, $5,100.

14. Paid part-time receptionist for two weeks’ salary, $800.

17. Recorded cash from cash clients for fees earned during the period June 1–16, $3,500.

18. Paid cash for supplies, $750.

20. Recorded services provided on account for the period June 13–20, $1,100.

24. Recorded cash from cash clients for fees earned for the period June 17–24, $4,150.

26. Received cash from clients on account, $4,900.

27. Paid part-time receptionist for two weeks’ salary, $800.

29. Paid telephone bill for June, $150.

30. Paid electricity bill for June, $400.

30. Recorded cash from cash clients for fees earned for the period June 25–30, $1,500.

30. Recorded services provided on account for the remainder of June, $1,000.

30. Derrick withdrew $8,000 for personal use.

Instructions

1. Journalize each transaction in a two-column journal, referring to the following chart of accounts 11 Cash 31 Derrick Epstein, Capital

12 Accounts Receivable 32 Derrick Epstein, Drawing

14 Supplies 41 Fees Earned

15 Prepaid Rent 51 Salary Expense

16 Prepaid Insurance 52 Rent Expense

18 Office Equipment 53 Supplies Expense

19 Accumulated Depreciation 54 Depreciation Expense

21 Accounts Payable 55 Insurance Expense

22 Salaries Payable 59 Miscellaneous Expense

23 Unearned Fees

Answer

2. at the end of June, the following adjustment

a. Insurance expired during June is $175.

b. Supplies on hand on June 30 are $2,000.

c. Depreciation of office equipment for June is $500.

d. Accrued receptionist salary on June 30 is $120.

e. Rent expired during June is $1,500.

f. Unearned fees on June 30 are $1,875.

Prepare: – Complete Accounting Cycle?

Solution: