Question

Super Accounting Inc. opened on November 1, 2020. During November and December, the following transactions occurred. 1-Nov Issued 7,000 shares of common stock for $14,000 cash. 1.Nov Purchased accounting supplies for $700 "on account." 1 Nov Borrowed $10,000 cash, signing a 12%, 2 year note. 1-Nov Paid $3,000 cash for 12 months rent on a temporary office 1-Nav Purchased a used car for $11,000, paying $2,000 cash and the balance an account: 1-Nov Paid $1,200 cash on 1 year insurance policy effective November 1. 23-Novilled" customers $4,100 for accounting services 3-Dec Paid 5800 cash an amount owed on car 14-Dec Paid $2,250 cash for employee salaries. 22-Dec Paid $300 cash on amount owed on accounting supplies. 23-Dec Collected $1,500 cash from customers "billed" on Nov 23. 26-Dec "illed" customers $2,700 for accounting services. 29-Dec Purchased land for future office site, paid cash $3,500. 30-Dec Declared and paid a $500 cash dividend, At Year End (December 31st), assume the following: There were $500 of supplies left on hand. The car is depreciated on a straight-line basis at $1,000/year The interest rate on the note is market rate

Step 1, "Journalize" Accounting Period Transactions

Step 2, "Post" all journal entries from step 1 to general ledger accounts (T accounts)

Step 3, Prepare an unadjusted trial balance at period ending (date).

Step 4, "Journalize" Adjusting Year-end Entries

Step 5, Carry over existing T-Accounts from Tab "Steps 1-3" and Post all journal entries from step 1 to general ledger accounts (T accounts)

Step 6, Prepare an Adjusted trial balance at period ending (date).

Step 7, Prepare Year-End Financial Statements

Answer 1

Step-1, 2 & 4: Journal Enties: CREDIT CREDIT Date Nov. 1 DEBIT $14,000 DEBIT $300 $14,000 $300 Nov. 1 $700 $1,500 $700 $1,500 Nov. 1 $10,000 $2,700 $10,000 $2,700 Nov. 1 $3,000 $3,500 $3,000 $3,500 Nov. 1 $11,000 $500 ACCOUNT TITLES Cash Common Stock Accounting Supplies Accounts Payable Cash Note Payable Prepaid Rent Cash Vehicle Accounts Payable Cash Prepaid Insurance Cash Accounts Receivable Service Revenue Accounts Payable Cash Salaries Expense Cash ($11000 - $2000] EVENT ACCOUNT TITLES Dec. 22 Accounts Payable Cash Dec. 23 Cash Accounts Receivable Dec. 26 Accounts Receivable Service Revenue Dec. 29 Land Cash Dec. 30 Dividends Cash Adjust-1 Accounting Supplies Expense Accounting Supplies Adjust-2 Depreciation Expense Accum. Depreciation Adjust-3 Interest Expense Interest Payable Adjust-4 Rent Expense Prepaid Rent Adjust-4 Insurance Expense Prepaid Insurance $9,000 $2,000 $500 $200 [$700 - $500] Nov. 1 $1,200 $200 $1,200 $167 Nov. 23 $4,100 $167 $4,100 $200 Dec. 8 $800 $200 ($1,000 x 2/12] [2 months' dep. exp.) [$10,000 x 12% x 2/12] [2 months' int exp.) [$3,000 x 2/12] [2 months' rent exp.] [$1,200 x 2/12] [2 months' ins. exp.] $800 $500 Dec. 14 $2,250 $500 $2,250 $200 $200

Step-3 & 5: T-Accounts: Adjust-4 Prepaid Rent $3,000 $500 $2,500 Nov. 1 Nov. 1 Dec. 8 Nov. 1 End. Bal. Accounts Payable $800 $700 $300 $9,000 $8,600 Nov. 1 Nov. 1 Dec. 22 End. Bal. Dec. 23 Cash $14,000 $3,000 $10,000 $2,000 $1,500 $1,200 $800 $2,250 $300 $3,500 $500 $11,950 Nov. 1 Nov. 1 Nov. 1 Dec. 8 Dec. 14 Dec. 22 Prepaid Insurance $1,200 $200 $1,000 Nov. 1 End. Bal. Adjust-4 Interest Payable $200 $200 Adjust-3 Dec. 29 End. Bal. Dec. 30 End. Bal. Dec. 29 End. Bal. Land $3,500 $3,500 Note Payable $10,000 $10,000 Nov. 1 End. Bal. Dec. 23 Nov. 23 Dec. 26 End. Bal. Accounts Receivable $4,100 $1,500 $2,700 $5,300 Nov. 1 End. Bal. Vehicles $11,000 $11,000 Common Stock $14,000 $14,000 Nov. 1 End. Bal. Accounting Supplies $700 $200 $500 Nov. 1 End. Bal. Adjust-1 Accumulated Depreciation $167 Adjust-2 $167 End. Bal. Dec. 30 End. Bal. Dividends $500 $500

Service Revenue $4,100 $2,700 $6,800 Nov. 23 Dec. 26 Adjust-2 End. Bal. Depreciation Expense $167 $167 End. Bal. Dec. 14 Salaries Expense $2,250 $2,250 Adjust-3 End. Bal. Interest Expense $200 $200 End. Bal. Adjust-1 End. Bal. Accounting Supplies Expense $200 $200 Adjust-4 End. Bal. Rent Expense $500 $500 Adjust-4 End. Bal. Insurance Expense $200 $200

CREDIT Super Accounting Inc. Step-3) Unadjusted Trial Balance December 31, 2020 ACCOUNT TITLES DEBIT Cash $11,950 Accounts Receivable $5,300 Accounting Supplies $700 Prepaid Rent $3,000 Prepaid Insurance $1,200 Land $3,500 Vehicles $11,000 Accounts Payable Note Payable $8,600 $10,000 Super Accounting Inc. Step-6) Adjusted Trial Balance December 31, 2020 ACCOUNT TITLES DEBIT CREDIT Cash $11,950 Accounts Receivable $5,300 Accounting Supplies $500 Prepaid Rent $2,500 Prepaid Insurance $1,000 Land $3,500 Vehicles $11,000 Accumulated Depreciation $167 Accounts Payable $8,600 Interest Payable $200 Note Payable $10,000 Common Stock $14,000 Dividends $500 Service Revenue $6,800 Salaries Expense $2,250 Accounting Supplies Expense $200 Rent Expense $500 Insurance Expense $200 Depreciation Expense $167 Interest Expense $200 TOTALS $39,767 $39,767 $14,000 $500 Common Stock Dividends Service Revenue Salaries Expense TOTALS $6,800 $2,250 $39,400 $39,400

$6,800 Super Accounting Inc. Step-7a) Income Statement For the Year Ended December 31, 2020 Revenues: Service Revenue Expenses: Salaries Expense $2,250 Accounting Supplies Expense $200 Rent Expense $500 Insurance Expense $200 Depreciation Expense $167 Interest Expense $200 Total Expenses Net Income Super Accounting Inc. Step-7b) Statement of Retained Earnings For the Year Ended December 31, 2020 Retained Earnings - Beginning Balance $0 Add: Net Income $3,283 [Ref: Income Statement] Less: Dividends -$500 Net increase in retained earnings $2,783 Retained Earnings - Ending Balance $2,783 $3,517 $3,283

$8,800 Assets Current Assets: Cash Accounts Receivable Accounting Supplies Prepaid Rent Prepaid Insurance Total Current Assets Property, Plant and Equipment: Land Vehicles Less: Accumulated Depreciation Property, Plant and Equipment, Net Total Assets Super Accounting Inc. Ste[-7c) Balance Sheet December 31, 2020 Liabilities & Shareholders' Equity Current Liabilities: $11,950 Accounts Payable $8,600 $5,300 Interest Payable $200 $500 Total Current Liabilities $2,500 Long-Term Liabilities $1,000 Note Payable $21,250 Total Liabilities Shareholders' Equity: $3,500 Common Stock $14,000 $11,000 Retained Earnings $2,783 $167 Shareholders' Equity $14,333 $35,583 Total Liabilities & Shareholders' equity $10,000 $18,800 $16,783 $35,583