Account Cycle Illustrative Problem

Account Cycle Illustrative Problem - Chapter 1- Chapter 4 1...

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Chapter 1- Chapter 4 Accounting Cycle 1 Account Cycle Illustrative Problem For the past several years, Kareem Ismail has operated a part-time consulting business from his home. As of October 1, 2010, Kareem decided to move to rented quarters and to operate the business, which was to be known as Iron Mountain Consulting, on a full-time basis. Iron Mountain Consulting entered into the following transactions 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 provided and recorded it as unearned fees, $3,150. 5. Purchased additional office equipment on account from Office Station Co., $1,250 6. 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.
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Chapter 1- Chapter 4 Accounting Cycle 2 27. 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 Accounts Assets Owner’s Equity 11. Cash 12. Accounts Receivable 14. Supplies 15. Prepaid Rent 16. Prepaid Insurance 18. Office Equipment 19. Accumulated Depreciation 31. Kareem Ismail, Capital 32. Kareem Ismail, Drawing 33. Income Summary Revenues 41. Fees Earned Expenses 51. Salary Expense 52. Rent Expense 53. Supplies Expense Liabilities
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Chapter 1- Chapter 4 Accounting Cycle 3 54. Depreciation Expense 55. Insurance Expense 59. Miscellaneous Expense 21. Accounts Payable 22. Salaries Payable 23. Unearned Fees Form 2. Journalizing, Adjusting, and Closing Journal Page 1 Date Descriptions Post Ref. Debit Credit 2010 Oct 1. Cash
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This note was uploaded on 06/30/2011 for the course ACCOUNTING 2301 taught by Professor Sarah during the Fall '10 term at HCCS.

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Account Cycle Illustrative Problem - Chapter 1- Chapter 4 1...

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