Requirements 1. Record each transaction in the journal using the following chart of accounts.
Cash,
Accounts Receivable,
Office Supplies,
Prepaid Insurance,
Truck Accumulated Depreciation.—Truck,
Accounts Payable,
Salaries Payable,
Unearned Revenue,
Murphy, Capital
Murphy,
Withdrawals,
Income Summary,
Service Revenue,
Salaries Expense,
Depreciation Expense-Truck Insurance Expense,
Fuel Expense,
Rent Expense,
Supplies Expense
Murphy Delivery Service completed the following transactions during December 2018:
1 st Dec. Murphy Delivery Service began operations by receiving $13,000 cash and a truck with a fair value of $9,000 from Russ Murphy. The business issued Murphy capital in exchange for this contribution.
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| No. | Date | Account | Debit (+) | Credit (-) |
| 1 | 12/1/2018 | Cash | 13,000.00 | |
| Truck | 9,000.00 | |||
| Murphy’s Capital | 22,000.00 | |||
1 st Dec. Paid $600 cash for a six-month insurance policy. The policy begins on December 1.
| No. | Date | Account | Debit (+) | Credit (-) |
| 1 | 12/1/2018 | Prepaid Insurance | 600.00 | |
| Cash | 600.00 | |||
4 th Dec paid $750 cash for office supplies.
| Date | Account | Debit (+) | Credit (-) |
| 12/4/2018 | Office Supplies | 750.00 | |
| Cash | 750.00 | ||
12 th Dec Performed delivery services for a customer and received $2,200 cash.
| Date | Account | Debit (+) | Credit (-) |
| 12/12/2018 | Cash | 2,200.00 | |
| Service Revenue | 2,200.00 | ||
15 th Dec. Completed a large delivery job, billed the customer, $3,300, and received a promise to collect the $3,300 within one week.
| Date | Account | Debit (+) | Credit (-) |
| 12/15/2018 | Accounts Receivable | 3,300.00 | |
| Service Revenue | 3,300.00 | ||
18 th Dec paid employee salary, $800
| Date | Account | Debit (+) | Credit (-) |
| 12/18/2018 | Salaries Expense | 800.00 | |
| Cash | 800.00 | ||
20 th Dec Received $7,000 cash for performing delivery services. Collected
| Date | Account | Debit (+) | Credit (-) |
| 12/20/2018 | Cash | 7,000.00 | |
| Service Revenue | 7,000.00 | ||
22 nd Dec $2,200 in advance for delivery service to be performed later.
| Date | Account | Debit (+) | Credit (-) |
| 12/22/2018 | Cash | 2,200.00 | |
| Unearned Revenue | 2,200.00 | ||
25 th Dec Collected $3,300 cash from a customer on account.
| Date | Account | Debit (+) | Credit (-) |
| 12/25/2018 | Cash | 3,300.00 | |
| Accounts Receivable | 3,300.00 | ||
27 th Dec Purchased fuel for the truck, paying $150 on the account. (Credit Accounts Payable)
| Date | Account | Debit (+) | Credit (-) |
| 12/27/2018 | Fuel Expense | 150.00 | |
| Accounts Payable | 150.00 | ||
28 th Dec Performed delivery services on account, $1,400.
| Date | Account | Debit (+) | Credit (-) |
| 12/28/2018 | Accounts Receivable | 1,400.00 | |
| Service Revenue | 1,400.00 | ||
29 th Dec paid office rent, $1,400 for December.
| Date | Account | Debit (+) | Credit (-) |
| 12/29/2018 | Rent Expense | 1,400.00 | |
| Cash | 1,400.00 | ||
30 th Dec paid $150 on the account.
| Date | Account | Debit (+) | Credit (-) |
| 12/30 | Accounts Payable | 150.00 | |
| Cash | 150.00 | ||
31 st Dec 2018 Murphy withdrew cash of $2,500.
| Date | Account | Debit (+) | Credit (-) |
| 12/31 | Murphy Withdrawals | 2,500.00 | |
| Cash | 2,500.00 | ||
2. Post the transactions in the T-accounts
Cash
|
Debit |
Credit |
||
|
1 st Dec |
1,300 |
600 |
1 st Dec |
|
12 th Dec |
2,200 |
750 |
4 th Dec |
|
20 th Dec |
7,000 |
800 |
18 th Dec |
|
22 nd Dec |
2,200 |
1,400 |
29 th Dec |
|
25 th Dec |
3,300 |
150 |
30 th Dec |
|
2,500 |
31 st Dec |
||
|
Total |
1,6000 |
6,200 |
Accounts Payable
| Debit | Credit | ||
|
30 th Dec |
150 |
150 |
27 th Dec |
|
0 |
Balance |
Salaries Payable
Accounts Receivable
|
Debit |
Credit |
||
|
15 th Dec |
3,300 |
3300 |
|
|
1,400 |
|||
|
Balance |
1,400 |
Prepaid Insurance
|
Debit |
Credit |
||
|
1 st Dec |
600 |
||
|
Balance |
600 |
Truck
|
Debit |
Credit |
||
|
1 st Dec |
9,000 |
||
|
Balance |
9,000 |
Unearned Revenue
|
Debit |
Credit |
||
|
2,200 |
22 nd Dec |
||
|
2,200 |
Balance |
Office Supplies
|
Debit |
Credit |
||
|
4 th Dec |
750 |
||
|
Balance |
750 |
Murphy’s Capital
|
Debit |
Credit |
||
|
2,200 |
1 st Dec |
||
|
2,200 |
Balance |
Murphy’s Withdrawals
|
Debit |
Credit |
||
|
2,500 |
31 st Dec |
||
|
2,500 |
Balance |
Service Revenue
|
Debit |
Credit |
||
|
1,200 |
12 th Dec |
||
|
3,300 |
15 th Dec |
||
|
7,000 |
20 th Dec |
||
|
1,400 |
28 th Dec |
||
|
12,900 |
Balance |
Salaries Expense
|
Debit |
Credit |
||
|
18 th Dec |
800 |
||
|
Balance |
800 |
Fuel Expense
|
Debit |
Credit |
||
|
27 th Dec |
150 |
||
|
Balance |
150 |
Rent Expense
|
Debit |
Credit |
||
|
29 th Dec |
1,400 |
||
|
Balance |
1,400 |
3. Prepare an unadjusted trial balance as of December 31, 2018.
Murphy’s Delivery Service
Unadjusted Trial Balance
December 31, 2018
|
Account Title |
Debit |
Credit |
|
Cash |
21500 |
|
|
Accounts Receivable |
1400 |
|
|
Office Supplies |
750 |
|
|
Prepaid Insurance |
600 |
|
|
Truck |
9000 |
|
|
Unearned Revenue |
2200 |
|
|
Murphy’s Capital |
22,000 |
|
|
Murphy’s Withdrawal |
2,500 |
|
|
Service Revenue |
13,900 |
|
|
Salaries Expense |
800 |
|
|
Fuel Expense |
150 |
|
|
Rent Expense |
1,400 |
|
|
Total |
38,100 |
38,100 |
4. Prepare a worksheet as of December 31, 2018 (optional).
5. Journalize the adjusting entries using the following adjustment data and also by reviewing the journal entries prepared in Requirement 1. Post adjusting entries to
Adjustment data:
Accrued Salaries Expense, $800.
|
Date |
Account | Debit (+) | Credit (-) |
| 12/31/2018 | Salary Expense | 800.00 | |
| Adj. a | Salaries Payable | 800.00 |
Depreciation was recorded on the truck using the straight-line method. Assume a useful life of five years and a salvage value of $3,000.
| Date | Account | Debit (+) | Credit (-) |
| 12/31/2018 | Depreciation Expense | 3,000.000 | |
| Adj. b | Accumulated Depreciation | 3,000.00 |
Prepaid Insurance for the month has expired.
| Date | Account | Debit (+) | Credit (-) |
| 12/31/2018 | Prepaid Expense | 100.000 | |
| Adj. c | Prepaid Insurance | 100.00 |
Office Supplies on hand, $450.
| Date | Account | Debit (+) | Credit (-) |
| 12/31/2018 | Supplies Expense | 350.000 | |
| Adj. d | Office Supplies | 350.00 |
Unearned Revenue earned during the month, $700
| Date | Account | Debit (+) | Credit (-) |
| 12/31/2018 | Unearned Revenue | 700.000 | |
| Adj. e | Service Revenue | 700.00 |
Accrued Service Revenue, $450.
| Date | Account | Debit (+) | Credit (-) |
| 12/31/2018 | Accounts Receivable | 450.000 | |
| Adj. f | Service Revenue | 450.00 |
6. Prepare an adjusted trial balance as of December 31, 2018.
|
Account Title |
Debit |
Credit |
|
Cash |
21500 |
|
|
Accounts Receivable |
1850 |
|
|
Office Supplies |
450 |
|
|
Prepaid Insurance |
500 |
|
|
Truck |
9000 |
|
|
Accumulated Depreciation-Truck |
100 |
|
|
Salaries Payable |
800 |
|
|
Unearned Revenue |
1500 |
|
|
Murphy’s Capital |
22000 |
|
|
Murphy’s Withdrawal |
2500 |
|
|
Service Revenue |
15,050 |
|
|
Salaries Expense |
1600 |
|
|
Depreciation Expense-Truck |
100 |
|
|
Insurance Expense |
100 |
|
|
Fuel Expense |
150 |
|
|
Rent Expense |
1400 |
|
|
Supplies Expense |
300 |
|
|
Total |
39,450 |
39450 |
7. Prepare Murphy Delivery Service’s income statement and statement of owner’s equity for the month ended December 31, 2018, and the classified balance sheet on that date. On the income statement, list expenses in decreasing order by amount—that is, the largest expense first, the smallest expense last.
Murphy’s Delivery Service
Income Statement ($)
For the Month Ended 31 st Dec 2018.
| Service Revenue | 15,050 | |
| Less: Expenses | ||
| Salaries Expense | 1,600 | |
| Rent Expense | 1,400 | |
| Supplies Expense | 300 | |
| Fuel Expense | 150 | |
| Depreciation Expense-Truck | 100 | |
| Insurance Expense | 100 | |
| Total Expenses | 3,650 | |
| Net Income | 11,400 |
Statement of Owner’s Equity
Murphy’s Delivery Service
Statement of Owner’s Equity
For the Month Ended 31 st Dec 2018.
| Murphy’s Capital, Beginning | 22,000 |
| Add. Net Income | 11,400 |
| 33,400 | |
| Less: withdrawals | 2500 |
| Murphy’s Capital, Ending | 30,900 |
Classified Balance Sheet
Murphy’s Delivery Service
Statement of Owner’s Equity
For the Month Ended 31 st Dec 2018.
|
Amount ($) |
||
| Assets | ||
| Current Assets: | ||
| Cash | 21,500 | |
| Accounts Receivable | 1,850 | |
| Office supplies | 450 | |
| Prepaid Insurance | 500 | |
| Total Current Assets | 24,300 | |
| Property, Plant, and Equipment | ||
| Truck | 9,000 | |
| Less: Accumulated Depreciation-Truck | 100 | |
| Total property, plant, and Equipment | 8,900 | |
| Total Assets | 33,200 | |
| Liabilities and Owners Equity | ||
| Current Liabilities | ||
| Salaries Payable | 800 | |
| Unearned Revenue | 1,500 | |
| Total Current liabilities | 2,300 | |
| Owner’s Capital: | ||
| Murphy’s Capital | 30,900 | |
| Total Liabilities and Owner’s Equity | 33,200 | |
8. Journalize the closing entries, and post to the T-accounts. 9. Prepare a post-closing trial balance as of December 31, 2018.
| Date | Account Titles and Explanations | Debit | Credit |
|
31/12/2018 |
Service Revenue | 15,050 | |
| Income Summary | 15,050 | ||
| (To close revenue account) | |||
| 31/12/2018 | Income Summary | 3,650 | |
| Salary Expense | 1,600 | ||
| Depreciation Expense-Truck | 100 | ||
| Insurance Expense | 100 | ||
| Fuel Expense | 150 | ||
| Rent Expense | 1,400 | ||
| Supplies Expense | 300 | ||
| (To close expense account) | |||
| 31/12/2018 | Income Summary (15,050-3,650) | 11,400 | |
| Murphy’s Capital | 11,400 | ||
| (To transfer net income to capital account) | |||
| 31/12/2018 | Murphy’s Capital | 2,500 | |
| 2,500 | |||
| To adjust withdrawals to capital account |
9. Post-Closing trial balance
|
Balance |
||
| Account Title |
Debit |
Credit |
| Cash | 21,500 | |
| Accounts Receivable | 1,850 | |
| Office Supplies | 450 | |
| Prepaid Insurance | 500 | |
| Truck | 9000 | |
| Accumulated Depreciation-Truck | 100 | |
| Salaries Payable | 800 | |
| Unearned Revenue | 1,500 | |
| Murphy’s Capital | 30,900 | |
| Total | 33,300 | 33,300 |
