Question - On July 1, 2016, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during the company's first month.
July 1 Plume invested $30,000 cash and buildings worth $150,000 in the company
July 2 The company rented equipment by paying $2,000 cash for the first month's (July) rent.
July 5 The Company purchased $2,400 of office supplies for cash.
July 10 The Company paid $7,200 cash for the premium on a 12-month insurance policy. Coverage begins on July 11.
July 14 The Company paid an employee $1,000 cash for two weeks salary earned.
July 24 The Company collected $9800 cash for storage fees from customers.
July 26 The company again paid $1000 cash for two weeks salary earned by an another employee.
July 27 The Company paid $950 cash for minor repairs to a leaking roof.
July 27 the company paid $400 cash for this month's telephone bill.
July 28 Plume withdrew $2,000 cash for his personal use.
The company's chart of accounts follows:
101 Cash
106 Accounts Receivable
124 Office Supplies
128 Prepaid Insurance
173 Buildings
174 Accumulated Depreciation- Buildings
209 Salaries Payable
301 L. Plume , Capital
302 L.Plume , Withdrawals
401 Storage Fees Earned
606 Depreciation Expense- Buildings
622 Salaries Expense
637 Insurance Expense
640 Rent Expense
650 Office Supplies Expense
684 Repairs Expense
688 Telephone Expense
901 Income Summary
Required:
1. Use the balance column format to set up each ledger account listed in its chard of accounts.
2. Prepare journal entries to record the transactions for July and post them to the ledger accounts. Record prepaid and unearned items in balance sheet accounts.
3. Prepare an unadjusted trial balance as of July 31 using worksheet.
4. Use the following information to journalize and post adjusting entries for the month:
a. Two-thirds of one month's insurance coverage has expired.( Round to nearest dollar )
b. At the end of the month, $1525 of office supplies are still available.
c. This month's depreciation on the buildings is $1500.
d. An employee earned $100 of unpaid and unrecorded salary as of month-end.
5. Journalize and Post adjusting Entries for the Month
6. Prepare the adjusted trial balance as of July 31. Prepare the income statement and balance sheet columns of the worksheet.
7. Prepare the Formal : Income Statement , Statement of Owner's Equity and Balance Sheet as of July 31,2016
8. Execute the closing entries process using 4 steps to close all temporary Accounts via the Journalizing and Posting of these entries.
9. Prepare a Post Closing Trial Balance.