Account_Cycle_Illustrative_Problem.pdf - Chapter 1- Chapter...

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Chapter 1- Chapter 4Accounting Cycle1Account Cycle Illustrative ProblemFor the past several years, Kareem Ismail has operated a part-time consultingbusiness from his home. As of October 1, 2010, Kareem decided to move to rentedquarters and to operate the business, which was to be known as Iron MountainConsulting, on a full-time basis. Iron Mountain Consulting entered into the followingtransactions during October:Oct.1. The following assets were received from Kareem Ismail: Cash, $18,000;Account Receivable, $ 5,000; Supplies, $1,500; and Office Equipment,$10,750.1. Paid three months’ rent on a lease rental contract, $4,800.2. Paid the premiums on property and casualty insurance policies, $2,700.4. Received cash from clients as an advance payment for services to be providedand recorded it as unearned fees, $3,150.5. Purchased additional office equipment on account from Office Station Co.,$1,2506. Received cash from clients on account, $2,000.10. Paid cash for a newspaper advertisement, $325.12. Paid Office Station Co. for part of the debt incurred on Oct 5, $750.12. Recorded services provided on account for the period Oct 1-12, $5,750.14. Paid part-time receptionist for two weeks’ salary, $900.17. Recorded cash from cash clients for fees earned during the period Oct 1-17,$9,250.18. Paid cash for supplies, $600.20. Recorded services provided on account for the period Oct 13-20, $4,100.24. Recorded cash from cash clients for fees earned for the period Oct 17-24,$4,850.26. Received cash from cash client on account, $3,450.
Chapter 1- Chapter 4Accounting Cycle227. Paid part-time receptionist for two weeks’ salary, $900.29. Paid telephone bill for Oct, $250.31. Paid electricity bill for Oct, $300.31. Recorded cash from cash clients for fees earned for the period Oct 25-31,$3,975.31. Recorded services provided on account for the remainder of Oct, $2,500.31. Kareem withdraw $7,500 for personal use.At the end of October, the following adjustment data were assembled.a. Insurance expired during Oct is $225.b. Supplies on hand on Oct 31 are $875.c. Depreciation of office equipment for Oct is $400.d. Accrued receptionist salary on Oct is $200.e. Rent expired during Oct is $1,600.f. Unearned fees on Oct 31 are $1,150.Based on previous data, completing the accounting cycle.Form 1. Chart of AccountsAssetsOwner’s Equity11.Cash12.Accounts Receivable14.Supplies15.Prepaid Rent16.Prepaid Insurance18.Office Equipment19.AccumulatedDepreciation31. Kareem Ismail, Capital32. Kareem Ismail, Drawing33. Income SummaryRevenues41. Fees EarnedExpenses51. Salary Expense52. Rent Expense53. Supplies ExpenseLiabilities

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Term
Winter
Professor
Dunning
Tags
Balance Sheet, Generally Accepted Accounting Principles, Accounting software, Kareem Ismail

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