The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts. Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2014. The chart of accounts for Kelly Consulting is shown below: The post-closing trial balance as of April 30, 2014, is shown below: Required: Journalize each of the May transactions using Kelly Consulting’s chart of accounts. (Do not insert the account numbers in the Post. Ref. column of the journal at this time.) For a compound transaction, if an amount box does not require an entry, leave it blank. May 3: Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $4,500. Comprehensive Problem 1 Part 2 and Part 3: The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts. Note: You must complete part 1 before completing parts 2 and 3. Part 2: Using the attached spreadsheet, post the journal entries from part 1 to a ledger of four-column accounts. Part 3: Prepare an unadjusted trial balance. If an amount box does not require an entry, leave it blank. Comprehensive Problem 1 Part 4 and Part 6: The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts. Note: You must complete parts 1, 2 and 3 before completing parts 4 and 6. Please note that part 5 is optional. Part 4: At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during May is $275. b. Supplies on hand on May 31 are $715. c. Depreciation of office equipment for May is $330. d. Accrued receptionist salary on May 31 is $325. e. Rent expired during May is $1,600. f. Unearned fees on May 31 are $3,210. Part 6: Journalize the adjusting entries. Then, post the entries to the attached spreadsheet from part 2. Comprehensive Problem 1 Part 7: The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts. Note: You must complete parts 1, 2, 3, 4, and 6 before completing part 7. Part 5 is optional. Prepare an adjusted trial balance. If an amount box does not require an entry, leave it blank or enter “0”. Comprehensive Problem 1 Part 8: The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts. NOTE: You must complete parts 1, 2, 3, 4, 6 and 7 before completing part 8. Part 5 is optional. Prepare an income statement. home / study / business / accounting / questions and answers / hello everybody,please, review info below and complete … Your question has been answered Let us know if you got a helpful answer. Rate this answer Question: HELLO EVERYBODY,Please, review info below and comp… Bookmark HELLO EVERYBODY,Please, review info below and complete the very last section with the given info. ( Part 8, 9 & 10) Part 1 Comprehensive Problem 1: The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts. Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2014. The chart of accounts for Kelly Consulting is shown below: The post-closing trial balance as of April 30, 2014, is shown below: Required: Journalize each of the May transactions using Kelly Consulting’s chart of accounts. (Do not insert the account numbers in the Post. Ref. column of the journal at this time.) For a compound transaction, if an amount box does not require an entry, leave it blank. May 3: Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $4,500. Comprehensive Problem 1 Part 2 and Part 3: The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts. Note: You must complete part 1 before completing parts 2 and 3. Part 2: Using the attached spreadsheet, post the journal entries from part 1 to a ledger of four-column accounts. Part 3: Prepare an unadjusted trial balance. If an amount box does not require an entry, leave it blank. Comprehensive Problem 1 Part 4 and Part 6: The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts. Note: You must complete parts 1, 2 and 3 before completing parts 4 and 6. Please note that part 5 is optional. Part 4: At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during May is $275. b. Supplies on hand on May 31 are $715. c. Depreciation of office equipment for May is $330. d. Accrued receptionist salary on May 31 is $325. e. Rent expired during May is $1,600. f. Unearned fees on May 31 are $3,210. Part 6: Journalize the adjusting entries. Then, post the entries to the attached spreadsheet from part 2. Comprehensive Problem 1 Part 7: The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts. Note: You must complete parts 1, 2, 3, 4, and 6 before completing part 7. Part 5 is optional. Prepare an adjusted trial balance. If an amount box does not require an entry, leave it blank or enter “0”. Comprehensive Problem 1 Part 8: The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts. NOTE: You must complete parts 1, 2, 3, 4, 6 and 7 before completing part 8. Part 5 is optional. Prepare an income statement. Comprehensive Problem 1 Part 9: The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts. Note: You must complete parts 1, 2, 3, 4, 6, 7 and 8 before completing part 9. Part 5 is optional. Part 9: Prepare the closing entries below. Then, using the attached spreadsheet from part 2, post the entries to your general ledger. (Income Summary is account #33 in the chart of accounts.) If an amount box does not require an entry, leave it blank or enter “0”. Part 10: Comprehensive Problem 1: The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts. Note: You must complete parts 1, 2, 3, 4, 6, 7, 8 and 9 before completing part 10. Part 5 is optional. Prepare a post-closing trial balance. If an amount box does not require an entry, leave it blank or enter “0”.
The Correct Answer and Explanation is :
To tackle the problem, we need to follow the steps methodically, adhering to the requirements of the comprehensive problem at each stage.
Part 1: Journalizing May Transactions
The first step is to journalize the transactions for May. For the specific transaction on May 3:
- Received cash from clients as an advance payment for services to be provided: This means that Kelly Consulting is receiving payment before the service is provided, so the business records the cash received as Unearned Fees, which is a liability. The entry will be:
Date: May 3
Journal Entry:
- Debit Cash $4,500 (Asset increase)
- Credit Unearned Fees $4,500 (Liability increase)
Part 2: Posting to the Ledger
After the journal entries are made, the next step involves posting these entries to the ledger. You’ll need to record each of these entries under the appropriate accounts in a four-column ledger, ensuring that debits and credits are posted accurately to their corresponding account balances.
Part 3: Preparing the Unadjusted Trial Balance
Once the ledger is updated, you can then prepare the unadjusted trial balance. The trial balance includes all account balances after posting the May transactions. The sum of the debits should equal the sum of the credits.
Part 4: Adjustment Data
At the end of May, you have adjustment data:
- Insurance expired: Debit Insurance Expense $275, Credit Prepaid Insurance $275.
- Supplies on hand: Debit Supplies Expense, Credit Supplies, adjusting to the amount on hand.
- Depreciation: Debit Depreciation Expense, Credit Accumulated Depreciation.
- Accrued receptionist salary: Debit Salary Expense, Credit Accrued Liabilities $325.
- Rent expired: Debit Rent Expense $1,600, Credit Prepaid Rent $1,600.
- Unearned fees adjustment: Debit Unearned Fees $1,290, Credit Service Revenue $1,290 (to adjust unearned fees to actual services rendered).
Part 6: Journalizing Adjusting Entries
After determining the adjusting entries, you will journalize them and post them to the ledger.
Part 7: Preparing the Adjusted Trial Balance
With the adjusting entries posted, prepare the adjusted trial balance. This trial balance will now reflect the adjustments made to the various accounts.
Part 8: Income Statement
Using the adjusted trial balance, you can now prepare the income statement. The income statement reports the revenues and expenses, showing the net income or loss.
Part 9: Closing Entries
Next, you will journalize the closing entries. These entries reset the temporary accounts (revenues, expenses, and dividends) to zero for the next period, transferring balances to the Income Summary and ultimately to Retained Earnings.
Closing Entry Example:
- Debit Service Revenue, Credit Income Summary (for revenue).
- Debit Income Summary, Credit Expense accounts (for expenses).
- Transfer the net income to Retained Earnings.
Part 10: Post-Closing Trial Balance
Finally, prepare the post-closing trial balance. This will include only the permanent accounts—assets, liabilities, and equity—since temporary accounts have been closed.
300-word Explanation:
In accounting, each of the steps above ensures that financial transactions are recorded accurately and that financial statements reflect a true and fair view of the business’s financial position. Journalizing transactions ensures that all activities are captured in the accounting records. Posting these transactions to the ledger helps to organize them by account type (assets, liabilities, etc.), allowing for a clearer understanding of how each transaction affects specific accounts.
Adjusting entries are crucial for ensuring that revenues and expenses are recognized in the correct period, which is the essence of accrual accounting. For example, unearned fees are initially recorded as liabilities and only recognized as revenue when the services are provided. Similarly, expenses like insurance and rent must be matched with the period in which they are used.
The trial balances (unadjusted and adjusted) are prepared to ensure that the accounting equation (Assets = Liabilities + Equity) remains in balance after all transactions and adjustments. The income statement shows whether the business is profitable over the period, and the closing entries ensure that temporary accounts are reset for the new accounting period. Finally, the post-closing trial balance confirms that only permanent accounts remain, reflecting the true financial standing of the company.
By completing all of these steps, we ensure accurate and compliant financial reporting for Kelly Consulting.