ACC 205 Comprehensive Problem
Booth Consulting
Based on the information that follows, complete the accounting cycle twice including monthly financial statements for April and May 2021 for Booth Consulting. (If you are comfortable with Excel, I encourage you to use it to complete worksheets for each month, but these are optional).
On April 1, 2021, Betty Booth incorporated a consulting business known as Booth Consulting. Booth Consulting entered into the following transactions during April:
Apr. 1. Betty Booth contributed $20,000 cash for 2,000 shares of common
stock.
1. Borrowed $12,000 on a notes payable from the bank. The principal and interest at 6% are due June 30, 2021.
1. Purchased supplies, $1,400 and office equipment, $12,500 for cash.
1. Paid four months’ rent on a lease rental contract, $4,800.
2. Paid the premium on a three-month property and casualty insurance policy, $2,100.
4. Received cash from clients as an advance payment for services to be provided and
recorded it as unearned fees, $6,000.
5. Purchased additional office equipment on account from Office Station Co., $2,000.
6. Provided consulting services on account, $4,700.
10. Paid cash for an April newspaper advertisement, $120.
12. Paid Office Station Co. for part of the debt incurred on April 5, $1,200.
12. Provided consulting services on account, $4,200.
14. Paid part-time receptionist for two weeks’ salary, $750.
17. Recorded cash from cash clients for fees earned, $6,250.
18. Paid cash for supplies, $900.
20. Provided consulting services on account, $2,100.
24. Recorded cash from cash clients for fees earned, $3,850.
26. Received cash from clients on accounts, $5,600.
27. Paid part-time receptionist for two weeks’ salary, $750.
29. Paid telephone bill for April, $330.
30. Paid electricity bill for April, $250.
30. Recorded cash from cash clients for fees earned, $3,250.
30. Provided consulting services on account, $1,500.
30. Paid Betty Booth a $5,000 Dividend.
The company’s chart of accounts is useful in determining which accounts are affected by the transaction. The chart of accounts for Booth Consulting is as follows (you do not need to use referencing as you post transactions):
11 Cash 31 Common Stock
12 Accounts Receivable 32 Retained Earnings
14 Supplies 33 Dividends
15 Prepaid Rent 41 Fees Earned
16 Prepaid Insurance 51 Salary Expense
18 Office Equipment 52 Rent Expense
19 Accumulated Depreciation 53 Supplies Expense
21 Accounts Payable 54 Depreciation Expense
22 Notes Payable 55 Insurance Expense
23 Interest Payable 56 Interest Expense
24 Salary Payable 57 Utilities Expense
25 Unearned Fees 58 Advertising Expense
After analyzing each of Booth Consulting’s transactions for April, prepare journal entries in the general journal, post to the general ledger, update account balances and prepare an unadjusted trial balance.
Use the following data assembled on April 30, 2021, for analysis of possible adjustments for Booth Consulting and complete and post adjusting entries for April (Hint: the adjusting entries should be posted to the same T accounts used for the April transactions when possible – i.e., there is only one salary expense “T”). Update ledger balances and complete an adjusted trial balance. Next, complete financial statements for April (Income Statement, Statement of Shareholder’s Equity, and Balance Sheet):
a. One month of insurance expired during April.
b. Supplies on hand on April 30 are $1,350.
c. Monthly depreciation of office equipment is $350.
d. Accrued receptionist salary on April 30 is $120.
e. One month of rent expired during April.
f. Unearned fees on April 30 are $2,500.
g. One month of interest accrued on the Note Payable.
After completion of April’s financial statements, prepare and post closing entries, update balances, and prepare a post-closing trial balance.
Complete another accounting cycle for Booth Consulting for May given the information below and your knowledge of the company from April.
During May, Booth Consulting entered into the following transactions:
May 3. Received cash from clients as an advance payment for services to be provided and
recorded it as unearned fees, $1,600.
5 Received cash from clients on account, $1,750.
9. Paid cash for a May newspaper advertisement, $100.
13. Paid Office Station Co. for part of the debt incurred on April 5, $400.
15. Provided services on account, $6,100.
16. Paid part-time receptionist for two weeks’ salary including the amount owed on
April 30, $750.
17. Recorded cash from cash clients for fees earned, $8,800.
20. Purchased supplies on account, $650.
21. Provided services on account, $2,900.
25. Recorded cash from cash clients for fees earned, $4,200.
27. Received cash from clients on accounts, $7,000.
28. Paid part-time receptionist for two weeks’ salary, $750.
30. Paid telephone bill for May, $150.
31. Paid electricity bill for May, $225.
31. Recorded cash from cash clients for fees earned, $3,100.
31. Provided services on account, $1,800.
31. Paid Betty Booth a dividend of $7,000.
At the end of May, the following adjustment data were assembled. Record these four adjusting entries plus four additional adjusting entries based on your knowledge from the previous month.
a. Betty performed $1,000 of services on account on a long-term contract and has not accrued this revenue.
b. Supplies on hand on May 31 are $750.
c. Unearned fees on May 31 are $1,300.
d. Accrued receptionist salary on May 31 is $260.
You should complete the accounting cycle for May including similar steps and the same three financial statements completed in April. Complete the entire accounting cycle (through closing) so that Booth Consulting is ready to begin recording June transactions.