Comprehensive Accounting Cycle Review Problem Student Name: James Fair Complete the Comprehensive Problem, beginning on page 2, on the included work papers. A solution to this problem is not available for your reference, by design. It is time for you to complete a problem on your own. The following check figures are provided: Unadjusted Trial Balance Adjusted Trial Balance Net Income Total Assets Post-Closing Trial Balance $101,920 $102,175 $13,465 $92,260 $92,440 Comprehensive Accounting Cycle Review Problem On December 1st Curt Williamson began an auto repair shop, Williamsons Quality Automotive. The following information about December’s transactions, accounts, and adjustment data is available. Transactions Dec. 1 1 9 10 19 22 26 28 31 31 31 31 1 Williamson contributed $50,000 cash to the business in exchange for capital. Purchased $10,800 of equipment paying cash. Paid $4,500 for a 9-month insurance policy starting on December 1. Paid $18,000 cash to purchase land to be used in operations. Purchased office supplies on account, $3,000. Borrowed $28,000 from the bank for business use. Williamson signed a note payable to the bank in the name of the business. Paid $800 for advertising expenses. Paid $1,000 on account. The business received a bill for utilities to be paid in January, $280. Revenues earned during the month included $17,500 cash and $2,700 on account. Paid employees' salaries $3,600 and building rent $700. Record as a compound entry. The business received $1,440 for auto screening services to be performed next month. Williamson withdrew cash of $3,000. Accounts Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Equipment; Accumulated Depreciation-Equipment; Land; Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Notes Payable; Williamson, Capital; Williamson, Withdrawals; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation ExpenseEquipment. Adjustment Data a. Office Supplies used during the month, $600. b. Depreciation for the month, $180. c. One month insurance has expired. d. Accrued Interest Expense, $75. Requirements: Complete the following on the attached work papers 1. 2. 3. 4. 5. Prepare the journal entries and post to the T-accounts. Prepare an unadjusted trial balance. Prepare the adjusting entries and post to the T-accounts. Prepare an adjusted trial balance. Prepare the income statement, the statement of owner's equity, and a classified balance sheet. Use proper formatting techniques including headings, dollar signs, and underlining. 1 6. 7. Prepare the closing entries and post to the T-accounts. Prepare a post-closing trial balance. GENERAL JOURNAL DATE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT Record Transactions, Adjusting Entries, Closing Entries in this journal Dec. 1 Dec. 1 Dec. 1 Dec. 9 Cash Williamson Capital Owner Contribution $50,000 Equipment Cash Purchased Equipment 10,800 Pre-paid Insurance Cash Paid rent in advance 4,500 Land Cash Paid cash for land 18,000 $50,000 10,800 4,500 18,000 Dec. 10 Office Supplies Accounts Payable Purchased office supplies on account 3,000 Dec. 19 Cash Notes Payable Collected cash on note 28,000 Advertising Expense Cash Paid cash expense 800 Accounts Payable Cash Paid cash on account 1,000 Utilities Expense Cash Paid Cash Expense 280 Dec. 22 Dec. 26 Dec. 28 3,000 28,000 800 1,000 280 2 GENERAL JOURNAL DATE Dec. 31 Dec. 31 Dec. 31 Dec. 31 ACCOUNT TITLES AND EXPLANATION DEBIT Cash Accounts Payable Service Revenue Performed services collected cash and account credit. 17,500 2,700 Salaries expense Rent Expense Cash Paid cash expenses 3,600 700 Cash Unearned revenue Collected cash for future services. 1,440 Williamson, withdrawals Cash Owner Withdrawal 3,000 CREDIT 20,200 4,300 1,440 3,000 3 GENERAL LEDGER Cash 50,000 10,800 28,000 4,500 17,500 1,440 Accounts Receivable Office Supplies Prepaid Insurance 2,700 4,500 3,000 18,000 800 1,000 & 280 4,300 & 3,000 Equipment 10,800 1,000 Accumulated Depreciation – Equip. Accounts Payable 18,000 3,000 Utilities Payable Land Interest Payable Unearned Revenue Notes Payable-Williamson 1,440 28,000 Capital-Williamson 50,000 Withdrawals Service Revenue 3,000 20,200 4 Salaries Expense 3,600 Rent Expense 700 Insurance Expense Utilities Expense Advertising Expense 280 Supplies Expense 800 Interest Expense Depreciation Exp. Equip. 5 Income Summary Unadjusted Trial Balance Williamson Quality Automotive Unadjusted Trial Balance Month End December 31st Debits Cash Office Supplies Prepaid Insurance Equipment Land Accounts Payable Rent Expense Unearned revenue Credits $54,260 3,000 4,500 10,800 18,000 2000 800 1,440 28,000 50,000 Notes Payable-Williamson Capital - Capital-Williamson Williamson (Withdrawals) Service Revenue Salaries expense Advertising Expense Utilities expense Accounts Receivable Total 3,000 20,200 3,600 800 280 2700 $101,920 $101,920 6 Adjusted Trial Balance Williamson Quality Automotive Adjusted Trial Balance Month End December 31st Debits Cash Office Supplies Prepaid Insurance Accumulated Depreciation - Insurance Equipment Accumulated Depreciation – Equipment Land Accounts Payable Unearned revenue Credits $54,260 2,400 4,500 500 10,800 180 18,000 2,000 1,440 28,000 50,000 Notes Payable-Williamson Capital - Capital-Williamson Williamson (Withdrawals) Service Revenue Rent Expense Salaries expense Advertising Expense Utilities expense Accounts Receivable Depreciation Expense - Insurance Depreciation Expense – Equipment -Supplies Expense Interest Expense Total 3,000 20,200 800 3,600 800 280 2700 500 180 600 75 $102,175 $102,175 7 Income Statement Williamson Quality Automotive Income Statement Month End December 31st Revenues: Service Revenue 20,200 Expenses: Salaries expense Advertising Expense Utilities expense Accounts Receivable Depreciation Expense - Insurance Depreciation Expense – Equipment Supplies Expense Interest Expense Rent Expense Total Expenses Net Income 3,600 800 280 2700 500 180 600 75 800 $9,535 $10,665 Statement of Changes in Owner’s Equity Williamson Quality Automotive Owners Equity Month End December 31st Williamson Capital December 1 Owner Contribution Net Income for the month 0 50,000 10,665 60,665 (3,000) $57,665 Owner Withdrawal Williamson Capital December 31 8 Balance Sheet Williamson Quality Automotive Balance Sheet Month End December 31st Assets Cash Office Supplies Prepaid Insurance Accum. Dep. – Insurance Land Equipment Accum. Dep. – Equipment Total Assets $54,260 2,400 4,500 (500) 18,000 10,800 (180) $89,280 Liabilities Accounts Payable 2,000 Unearned revenue Notes Payable-Williamson 1,440 28,000 5 0 Total Liabilities $31,440 Owner’s Equity Williamson Capital Total Liabilities & Owners Equity 9 $57,665 $89,280 Post-Closing Trial Balance Williamson Quality Automotive Post-Closing Trial Balance Month End December 31st Debits Cash Office Supplies Prepaid Insurance Accumulated Depreciation - Insurance Equipment Accumulated Depreciation – Equipment Land Accounts Payable Unearned revenue Credits $54,260 2,400 4,500 500 10,800 180 18,000 Notes Payable-Williamson Capital - Capital-Williamson Total: $92,440 10 2,000 1,440 28,000 50,000 $92,440