Question

For the past several years, Stefly Lopez has operated a part-time consulting business from his home. As of July 1, 2018, Stetty decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond Consulting entered into the following transactions during July Jul 1 2 4 The following assets were received from Steffy Lopez in exchange for common stock cash, $13,500, accounts receivable, $20,800, supplies, $3,200, and office equipment, $7,500. There were no liabilities received Paid two months' rent on a lease rental contract, $4,800. Paid the annual premiums on property and casualty insurance policies, $4,500 Received cash from clients as an advance payment for services to be provided, and recorded it as unearned fees, $5,500 Purchased additional office equipment on account from Office Station Co. 56,500 Received cash from clients on account, $15.300 Paid cash for a newspaper advertisement. $400 Paid Office Station Co. for part of the debt incurred on July 5, $5.200. Recorded services provided on account for the period July 1-12. 513.300 Paid receptionist for two weeks' salary, 51.750 6 10 12 12 14

Answer 1

Post Ref Debit Credit Calculation Diamond Consulting Journal entries Date Account Page 1 1-Jul Cash Accounts Receivable Supplies Office Equipment Common Stock GL1 GL1 GLI GL1 $ 13,500 $ 20,800 $ 3,200 $ 7,500 GL1 $ 45,000 1-Jul $ 4,800 Prepaid Rent Cash GL1 GL1 $ 4,800 2-Jul $ 4,500 Prepaid Insurance Cash GL1 GL1 $ 4,500 4-Jul $ 5,500 Cash Unearned Fees GL1 GL1 $ 5,500 $ 6,500 5-Jul Office Equipment Accounts Payable GL1 GL1 $ 6,500 6-Jul $ 15,300 Cash Accounts Receivable GL1 GL1 $ 15,300 $ 400 10-Jul Advertising Expense Cash GL1 GL1 $ 400 $ 5,200 12-Jul Accounts Payable Cash GL1 GL1 $ 5,200 $ 13,300 12-Jul Accounts Receivable Fees Earned GL1 GL1 $ 13,300 $ 1,750 GL1 GL1 $ 1,750 14-Jul Salaries Expense Cash Page 2 17-Jul Cash Fees Earned $ 9,450 GL2 GL2 $ 9,450 18-Jul $ 600 Supplies Cash GL2 GL2 $ 600 $ 6,650 20-Jul Accounts Receivable Fees Earned GL2 GL2 $ 6,650 $ 4,000 24-Jul Cash Fees Earned GL2 GL2 $ 4,000 $ 12,000 26-Jul Cash Accounts Receivable GL2 GL2 $ 12,000 27-Jul $ 1,750 Salaries Expense Cash GL2 GL2 $ 1,750 29-Jul Telephone expense $ 325 GL2 GL2 Cash $ 325 31-Jul $ 675 Electricity expense Cash GL2 GL2 $ 675 $ 5,200 31-Jul Cash Fees Earned GL2 GL2 $ 5,200 $ 3,000 31-Jul Accounts Receivable Fees Earned GL2 GL2 $ 3,000 $ 12,500 GL2 GL2 $ 12,500 31-Jul Dividends Cash Page 3 31-Jul Insurance Expense Prepaid Insurance $ 375 GL3 GL3 $ 375 $ 2,275 =3,200+600-1,525 31-Jul Supplies Expense Supplies GL3 GL3 $ 2,275 $ 750 31-Jul Depreciation Expense Accumulated Depreciation GL3 GL3 $ 750 $ 2,400 31-Jul Rent Expense Prepaid Rent GL3 GL3 $ 2,400 $ 175 31-Jul Salaries Expense Salaries Payable GL3 GL3 $ 175 $ 2,750 =5,500-2,750 GL3 GL3 $ 2,750 31-Jul Unearned Fees Fees Earned Page 4 31-Jul Fees Earned Income Summary GL4 $ 44,350 GL4 $ 44,350 $ 10,875 GL4 GL4 GL4 $ $ $ GL4 31-Jul Income Summary Salaries Expense Advertising Expense Telephone expense Electricity expense Insurance Expense Supplies Expense Depreciation Expense Rent Expense GL4 GL4 3,675 400 325 675 375 2,275 750 2,400 GL4 $ $ $ $ GL4 GL4 $ 33,475 31-Jul Income Summary Retained Earnings GL4 GL4 $ 33,475 $ 12,500 31-Jul Retained Earnings Dividends GL4 GL4 $ 12,500

Diamond Consulting T Accounts Date Item Credit Debit Balance Credit Balance Credit Date Item Credit Debit Post Ref Debit Cash Post Ref Debit Accounts Receivable $ 13,500 $ 20,800 $ 15,300 1-Jul Balance 1-Jul Common Stock 6-Jul Cash 12-Jul Fees Earned 20-Jul Fees Earned 26-Jul Cash 31-Jul Fees Earned GL1 GL1 GL1 GL1 GL1 GL1 GL1 GL1 GL1 GL1 GL1 GL2 GL2 GL2 $ 13,300 $ 6,650 $ 20,800 $ 5,500 $ 18,800 $ 25,450 $ 13,450 $ 16,450 $ 5,500 $ 15,300 $ 12,000 $ 3,000 1-Jul Balance 1-Jul Common Stock 1-Jul Prepaid Rent 2-Jul Prepaid Insurance 4-Jul Unearned Fees 6-Jul Accounts Receivable 10-Jul Advertising Expense 12-Jul Accounts Payable 14-Jul Salaries Expense 17-Jul Fees Earned 18-Jul Supplies 24-Jul Fees Earned 26-Jul Accounts Receivable 27-Jul Salaries Expense 29-Jul Telephone expense 31-Jul Electricity expense 31-Jul Fees Earned 31-Jul Dividends GL2 $ 9,450 $ 13,500 $ 4,800 $ 8,700 $ 4,500 $ 4,200 $ 9,700 $ 25,000 $ 400 $ 24,600 $ 5,200 $ 19,400 $ 1,750 $ 17,650 $ 27,100 $ 600 $ 26,500 $ 30,500 $ 42,500 $ 1,750 $ 40,750 $ 325 $ 40,425 $ 675 $ 39,750 $ 44,950 $ 12,500 $ 32,450 $ 4,000 $ 12,000 GL2 GL2 GL2 GL2 GL2 GL2 GL2 GL2 Prepaid Rent $ 5,200 Prepaid Insurance 1-Jul Balance 1-Jul Cash 31-Jul Adjusting $ 4,800 GL1 GL3 Supplies $ $ 4,800 2,400 1-Jul Balance 2-Jul Cash 31-Jul Adjusting $ - $ 4,500 $ 4,125 GL1 $ 4,500 GL3 Office Equipment $ 2,400 $ 375 1-Jul Balance 1-Jul Common Stock 18-Jul Cash 31-Jul Adjusting $ $ $ $ - 3,200 3,800 1,525 1-Jul Balance 1-Jul Common Stock 5-Jul Accounts Payable GL1 $ 3,200 GL2 $ 600 GL3 Accumulated Depreciation GL1 GLI $ 7,500 $ 6,500 $ - $ 7,500 $ 14,000 $ 14,000 $ 2,275 Accounts Payable $ 1-Jul Balance 31-Jul Adjusting GL3 $ 750 - 750 750 1-Jul Balance 5-Jul Office Equipment 12-Jul Cash $ 6,500 $ $ $ - 6,500 1,300 $ GLI GL1 $ 5,200 Salaries Payable ✓ GL3 1-Jul Balance 31-Jul Adjusting $ 5,500 $ - $ 5,500 $ 2,750 $ Unearned Fees 1-Jul Balance 4-Jul Cash GL1 31-Jul Adjusting GL3 $ Common Stock 1-Jul Balance 1-Jul Cash, Accts Rec, Supplies & Office Equip GLI 175 $ $ $ - 175 175 2,750 Retained Earnings $45,000 1-Jul Balance 31-Jul Closing 31-Jul Closing $ 45,000 $ 45,000 $ 33,475 GL4 GL4 $ . $ 33,475 $ 20,975 $ 12,500

Dividends Fees Earned 1-Jul Balance 31-Jul Cash 31-Jul Closing $ 12,500 GL1 GL2 GL4 $ 12,500 $ $12,500 GL2 GL2 1-Jul Balance 12-Jul Accounts Receivable 17-Jul Cash 20-Jul Accounts Receivable 24-Jul Cash 31-Jul Cash 31-Jul Accounts Receivable 31-Jul Adjusting 31-Jul Closing GL2 GL2 GL2 GL3 GL4 $44,350 Advertising Expense $ 13,300 $ 9,450 $ 6,650 $ 4,000 $ 5,200 $ 3,000 $ 2,750 $ 13,300 $ 22,750 $ 29,400 $ 33,400 $ 38,600 $ 41,600 $ 44,350 $ Salaries Expense $ 1-Jul Balance 14-Jul Cash 27-Jul Cash 31-Jul Adjusting 31-Jul Closing 400 1-Jul Balance 10-Jul Cash 31-Jul Closing 1,750 1,750 175 $ - $ 1,750 $ 3,500 $ 3,675 $ - GL1 GL4 GL1 $ GL2 $ GL3 $ GL4 Telephone expense $ 400 $ $ $ $ $ - 400 . . . $ 3,675 Electricity expense 1-Jul Balance 29-Jul Cash 31-Jul Closing 325 GL2 $ GL4 Insurance Expense $ $ $ . 325 - 1-Jul Balance 31-Jul Cash 31-Jul Closing $ 675 $ GL2 $ 675 GL4 Supplies Expense 675 . $ 325 $ 1-Jul Balance 31-Jul Adjusting 31-Jul Closing 375 GL3 $ GL4 Depreciation Expense $ $ 375 $ - 375 - 1-Jul Balance 31-Jul Adjusting 31-Jul Closing $ $ $ GL3 $ 2,275 GL4 Rent Expense . 2,275 - $ $ 2,275 S - 1-Jul Balance 31-Jul Adjusting 31-Jul Closing 750 1-Jul Balance 31-Jul Adjusting 31-Jul Closing $ $ $ 2,400 GL3 GL4 $ $ 2,400 - $ 750 $ 2,400 GL3 $ 750 GL4 Income Summary GL3 GL3 $ 10,875 GL3 $ 33,475 $44,350 31-Jul Closing 31-Jul Closing 31-Jul Closing $ 44,350 $ 33,475 $ -

Unadjusted TB Debit Credit 32,450 16,450 4,800 4,500 3,800 14,000 Diamond Consulting Account Names Cash Accounts Receivable Prepaid Rent Prepaid Insurance Supplies Office Equipment Accumulated Depreciation Accounts Payable Unearned Fees Salaries Payable Common Stock Retained Earnings Dividends Fees Earned Salaries Expense Advertising Expense Telephone expense Electricity expense Insurance Expense Supplies Expense Depreciation Expense Rent Expense Totals Adjusted TB Debit Credit 32,450 16,450 2,400 4,125 1,525 14,000 750 1,300 2,750 175 45,000 Post Closing TB Debit Credit 32,450 16,450 2,400 4,125 1,525 14,000 750 1,300 2,750 175 45,000 20,975 1,300 5,500 45,000 12,500 12,500 41,600 44,350 3,675 400 3,500 400 325 675 325 675 375 2,275 750 2,400 94,325 93,400 93,400 94,325 70,950 70,950

44,350 Diamond Consulting Income Statement For Month ended July 31, 20Y2 Fees Earned Expenses Salaries Expense Advertising Expense Telephone expense Electricity expense Insurance Expense Supplies Expense Depreciation Expense Rent Expense Total Expenses Net Income 3,675 400 325 675 375 2,275 750 2,400 10,875 33,475

Diamond Consulting Statement of Stockholders Equity For Month ended July 31, 20Y2 Common Stock Retained Earnings Total Equity 45,000 Balance, July 1, 20Y2 Issue of common stock Net Income Dividends Balance, July 31, 20Y2 33,475 (12,500) 20,975 45,000 33,475 (12,500) 65,975 45,000

Balance Sheet As of July 31, 20Y2 Assets Current Assets Cash Accounts Receivable Prepaid Rent Prepaid Insurance Supplies Total Current Assets Liabilities & Stockholders Equity Current Liabilities 32,450 Accounts Payable 16,450 Unearned Fees 2,400 Salaries Payable 4,125 1,525 56,950 Total Current Liabilities 1,300 2,750 175 4,225 Fixed Assets Office Equipment Accumulated Depreciation Total Fixed Assets Stockholders Equity 14,000 Common Stock (750) Retained Earnings 13,250 Total Stockholders Equity 45,000 20,975 65,975 Total Assets 70,200 Total Liabilities & Stockholders Equity 70,200