ACCOUNTING CYCLE

COMPLETE ILLUSTRATION

Problem:
On November 1 of the current year J. Wayne opened the Sure Repair Service Shop, and during the month
completed the following transactions:

Nov. 1- Invested P525,000 cash to the business.

2- Paid the rent of the shop space, P18,000
2- Paid the premium on a one-year insurance policy, P12,650
4- Purchased repair equipment worth P54,000. Gave P10,000 and issued a note for the balance.
6- Purchased chairs and other shop furniture from EE Furniture Store, P22,000 on credit
8- Purchased shop supplies, P25,000 cash.
15- Received P51,000 from customers for repair service rendered.
18- Paid one-half of the account due to EE Furniture Store.
20- Paid salaries of the helpers, P10,000
30- Cash received from customers for repair service rendered, P12,000

Required:
1. Prepare journal entries for November and post the accounts to T-accounts.
2. Prepare a trial balance and 10-column worksheet. Complete the worksheet using the following information:
a.) One month’s insurance has expired
b.) An inventory of shop supplies shows P10,000 of supplies on hand.
c.) Fixed assets are estimated to have a 10-year useful life.
3. Prepare a November income statement and balance sheet.
4. Prepare the post-closing entries.
5. Prepare a post-closing trial balance.

CHART OF ACCOUNTS

ASSETS CAPITAL
Cash J. Wayne, Capital
Supplies
Furniture INCOME
Equipment Repair Service Income

LIABILITIES EXPENSE
Account Payable Rent Expense
Notes Payable Insurance Expense
Salaries