Question

Shane Banovich founded a consulting business on October 1 andmade the following transactions:

Oct. 1: Shane deposited $20,000 from his checking account intothe checking account of the new business.

Oct. 1: Purchased office equipment for $9,000 and paid cash.

Oct. 1: Paid three months’ rent on a lease rental contract,$4,800.

Oct. 1: Paid the premium on a one year insurance policy,$3,000.

Oct. 1: Purchased office supplies on account, $1,000.

Oct. 1: Received a loan from the bank for $5,000. The principaland 6% interest must be repaid on December 31.

Oct. 4: Received cash from clients as an advance payment forservices to be provided later, $4,000.

Oct. 7: Received cash from a client for services performed,$3,500.

Oct. 10: Paid cash for a newspaper ad, $500.

Oct. 15: Paid the office assistant and a secretary salariestotaling $3,000. These employees are paid this salary twice amonth.

Oct. 20: Purchased office supplies, $200.

Oct. 25: Paid for the office supplies purchased on October1.

Oct. 30: Billed clients for services performed, $10,000.

Journalize the preceding transactions, post to T accounts.

At the end of the workday on October 31, the following adjustingdata were provided.

a. Received the utility bill, $300.

b. Recognize insurance expense.

c. Recognize rent expense.

d. Recognize interest expense.

e. Documents indicate that the services to be provided in theOctober 4 transaction have been performed.

f. The depreciation for the office equipment is $200.

g. The office assistant and secretary were not paid on October31 as scheduled.

h. An inventory revealed that office supplies on hand were$550.

Journalize these adjusting entries and post to T accounts. Usethese adjusted balances to prepare an adjusted trial balance.Journalize and post the necessary closing entries. Prepare theincome statement and the balance sheet.