A.

Journal Entries

Accounts Debit Credit

(1) Cash 30,000
Owner’s Capital 30,000
To record the owner’s investment to the business.
(2) Cash 50,000
Notes Payable 50,000
To record the bank loan.
(3) Prepaid supplies 60,000
Cash 60,000
To record the purchase of supplies.
(4) Cash 280,000
Service Fees 280,000
To record service fees.
(5) Utilities expense 4,000
Cash 4,000
To record payment of utilities.
(6) Owner’s drawings 100,000
Cash 100,000
To record the withdrawal of the owner.

B. Posting

Assets

Cash Prepaid Supplies

(1) 30,000
(2) 50,000 (3) 60,000
60,000 (3)
(4) 280,000
4,000 (5)
100,000 (6)
Bal: 196,000 Bal: 60,000

Liabilities

Notes Payable

50,000 (2)

Bal: 50,000

Equity

Owner’s Capital Owner’s Drawings

30,000 (1) (6) 100,000

Bal: 30,000 Bal: 100,000

Income
 Service Fees

280,000 (4)

Bal: 280,000

Expense

Utilities Expense

(5) 4,000

Bal: 4,000

C. Unadjusted Trial Balance

B Accounting Firm
Unadjusted Trial Balance
November 1, 20x1

Accounts Debit Credit

Cash 196,000

Prepaid Supplies 60,000

Notes Payable 50,000

Owner’s Capital 30,000

Owner’s Drawings 100,000

Service Fees 280,000

Utilities Expense 4,000

Total: 360,000 360,000

D. Adjusting Entries

AJE#1 Supplies Expense (60,000-5,000(unused)) 55,000

Prepaid Supplies 55,000

AJE#2 Interest expense (50,000 x 12% x 2/12) 1,000

Interest payable 1,000
F. Closing Entries

CLE#1 Service Fees 280,000

Utilities Expense 4,000
Supplies Expense 55,000
Interest Expense 1,000
Income Summary 220,000

CLE#2 Income Summary 220,000

Owner’s Capital 220,000

CLE#3 Owner’s Capital 100,000

Owner’s Drawings 100,000

E. Balance Sheet and Income Statement

B’s Accounting Firm

Balance Sheet
December 31, 20x1

Assets
Cash 196,000
Prepaid supplies 5,000
Total: 201,000

Liabilities
Notes Payable 50,000
Interest Payable 1,000
Total: 51,000

Equity
Owner’s Capital 150,000
Total: 150,000

Total Liabilities and Equity 201,000

B’s Accounting Firm

Income Statement
December 31, 20x1

Income
Service Fees 280,000

Expenses
Utilities Expense 4,000
Supplies Expense 55,000
Interest Expense 1,000
Total: 60,000

Profit for the Period: 220,000