First Bruce

Last Garrison
ID 123456789

Jeremy Bentham started a new paralegal practice in November of last year, Bentham Paralegal.
Instructions His bookkeeper set up the chart of accounts, shown on the next worksheet. Here are a few
transactions for his business for the month of November.
1 Journalise these transactions in the General Journal (GJ).
2 Transfer the computed balances from CurrBal to the Worksheet.
3 Record the identified adjustments on the Worksheet.
Complete the remainder of the worksheet (Adjusted Trial Balance, Income Statement, Balance
4
Sheet).
5 What is the net profit (or net loss) for the month?

Transactions
1 November 1: Bentham contributes $2,000 worth of furniture and $50,000 in cash.
2 November 1: Bentham Paralegal arranges for a $15,000 business loan.
November 1: Bentham signs a five-year lease with Chambers Holdings Inc., landlord.
3 Under the lease’s terms, Bentham has to pay six months in advance.
At $3,000 a month, that’s $18,000. Bentham cuts cheque 001 to the landlord for $18,000.
4 November 2: Bentham cuts cheque 002 for $1,200 to cover the purchase of office supplies.
November 4: Bentham cuts cheque 003 for $400 to the Law Society to cover November
5
and December licensing fees. These fees are monthly.
November 5: Bentham Paralegal’s first client arrives. Bentham creates invoice 001 for $650.
6
The client pays immediately.
November 10: Bentham Paralegal’s second client arrives and gives Bentham a $1,000 retainer in
7
trust with a personal cheque. Bentham writes trust receipt 001.
November 11: Bentham Paralegal's third client arrives. Bentham creates invoice 002 for $500.
8
Bentham sends the bill in the mail.
November 13: Bentham writes a firm cheque to cover a filing fee for client two. The amount of
the cheque is $60.
November 15: Bentham completes work for client two and creates invoice 003 for $1,250 in fees
9
and $60 in unbilled disbursements.

November 15: Bentham transfers money from trust to pay invoice 003. He writes trust cheque
10
001 and issues general receipt 001. (The client will still owe money after the payment out of trust.)

11 November 22: Bentham withdraws $1,500 to pay some personal bills.

12 November 28: The lender automatically withdraws $350 in principal and $125 in interest.
Chart of Accounts
100 Bank
102 Trust Bank
105 Unbilled Disbursements
110 Accounts Receivable
120 Prepaid Rent
122 Prepaid Licensing Fees
130 Supplies
170 Furniture
200 Loans Payable
202 Trust Funds Owed
210 Accounts Payable
300 J. Bentham, Capital
350 J. Bentham, Drawing
400 Fees
500 Interest Expense
520 Rent Expense
522 Licensing Expense
540 Supplies Expense
No. Date PR Account Explanation Dr
1 1-Nov 100 Bank 50,000.00
2 1-Nov 170 Furniture 2,000.00
3 1-Nov 300 J. Bentham, Capital
4 Initial Contribution - Cash + Furniture
5
6 1-Nov 100 Bank 15,000.00
7 1-Nov 200 Loans Payable
8 Arranged Bank Loan
9
10 1-Nov 120 Prepaid Rent 18,000.00
11 1-Nov 100 Bank
12 Paid 6 Months Rent in Advance - Cheque 001
13
14 2-Nov 130 Supplies 1,200.00
15 2-Nov 100 Bank
16 Purchased Office Supplies - Cheque 002
17
18 4-Nov 122 Prepaid Licensing Fees 400.00
19 4-Nov 100 Bank
20 Paid 2 months Licensing Fees - Cheque - 003
21
22 5-Nov 110 Accounts Receivable 650.00
23 5-Nov 400 Fees
24 Client #1 Billed - Invoice 001
25
26 5-Nov 100 Bank 650.00
27 5-Nov 110 Accounts Receivable
28 Client #1 Paid Fees - Invoice 001
29
30 10-Nov 102 Trust Bank 1,000.00
31 10-Nov 202 Trust Funds Owed
32 Client #2 Provided Retainer - Trust Receipt 001
33
34 11-Nov 110 Accounts Receivable 500.00
35 11-Nov 400 Fees
36 Client #3 Billed - Invoice 002
37
38 13-Nov 105 Unbilled Disbursements 60.00
39 13-Nov 100 Bank
40 Paid Filing Fee for Client #2 - Cheque 004
41
42 15-Nov 110 Accounts Receivable 1,310.00
43 15-Nov 400 Fees
44 15-Nov 105 Unbilled Disbursements
45 Client #2 Billed - Invoice 003
46
47 15-Nov 202 Trust Funds Owed 1,000.00
48 15-Nov 102 Trust Bank
49 Client #2 - TrustTransfer to Paid Invoice - Trust Cheque 001
50
51 15-Nov 100 Bank 1,000.00
52 15-Nov 110 Accounts Receivable
53 Client #2 - Invoice Payment - Receipt 001
54
55 22-Nov 350 J. Bentham, Drawing 1,500.00
56 22-Nov 100 Bank
57 Owner Cash Withdrawal
58
59 28-Nov 200 Loans Payable 350.00
60 18-Nov 500 Interest Expense 125.00
61 28-Nov 100 Bank
62 Loan Repayment - $200 Principle + $125 Interest
 Cr Make sure:
• You enter account names in Column D and explanations in Column E
• You record debits first, followed by credits (indented)
52,000.00 • You format numbers with commas and two decimal places

A/C No. A/C

15,000.00 100 Bank
102 Trust Bank
105 Unbilled Disbursements
110 Accounts Receivable
18,000.00 120 Prepaid Rent
122 Prepaid Licensing Fees
130 Supplies
170 Furniture
1,200.00 200 Loans Payable
202 Trust Funds Owed
210 Accounts Payable
300 J. Bentham, Capital
400.00 350 J. Bentham, Drawing
400 Fees
500 Interest Expense
520 Rent Expense
650.00 522 Licensing Expense
540 Supplies Expense

650.00

1,000.00

500.00

60.00
 1,250.00
60.00

1,000.00
t Cheque 001

1,000.00

1,500.00

475.00
No. Account Dr Cr
100 Bank 45,015.00
102 Trust Bank
105 Unbilled Disbursements
110 Accounts Receivable 810.00
120 Prepaid Rent 18,000.00
122 Prepaid Licensing Fees 400.00
130 Supplies 1,200.00
170 Furniture 2,000.00
200 Loans Payable 14,650.00
202 Trust Funds Owed
210 Accounts Payable
300 J. Bentham, Capital 52,000.00
350 J. Bentham, Drawing 1,500.00
400 Fees 2,400.00
500 Interest Expense 125.00
520 Rent Expense
522 Licensing Expense
540 Supplies Expense
69,050.00 69,050.00
 Did Bentham's practice make money or lose money? How much?
Bentham MADE money $

Trial Balance Adjustments

Account Dr Cr Dr
Bank 45,015.00 -
Trust Bank - -
Unbilled Disbursements - -
Accounts Receivable 810.00 - a) 2,500.00
Prepaid Rent 18,000.00 -
Prepaid Licensing Fees 400.00 -
Supplies 1,200.00 -
Furniture 2,000.00 -
Loans Payable - 14,650.00
Trust Funds Owed - -
Accounts Payable - -
J. Bentham, Capital - 52,000.00
J. Bentham, Drawing 1,500.00 -
Fees - 2,400.00
Interest Expense 125.00 -
Rent Expense - - c) 3,000.00
Licensing Expense - - d) 200.00
Supplies Expense - - b) 300.00
TOTALS 69,050.00 69,050.00 6,000.00
NET INCOME

Adjustments
a) Bentham calculated $2,500 in unbilled fees.
b) Bentham figures he burnt through about 25% of the office supplies.
c) The business has rented the space for a month.
d) He has been licensed for a month.
se money? How much?
1,275.00

Adjustments Adjusted T/B Income Balance Sheet

Cr Dr Cr Dr Cr Dr
45,015.00 45,015.00

3,310.00 3,310.00
3,000.00 c) 15,000.00 15,000.00
200.00 d) 200.00 200.00
300.00 b) 900.00 900.00
2,000.00 2,000.00
14,650.00

52,000.00
1,500.00 1,500.00
2,500.00 a) 4,900.00 4,900.00
125.00 125.00
3,000.00 3,000.00
200.00 200.00
300.00 300.00
6,000.00 71,550.00 71,550.00 3,625.00 4,900.00 67,925.00
1,275.00
4,900.00 4,900.00 67,925.00
Balance Sheet
Cr

14,650.00

52,000.00

66,650.00
1,275.00
67,925.00
No. Date PR Account Explanation Dr
1 1-Nov 100 Bank 50,000.00
2 1-Nov 170 Furniture 2,000.00
3 1-Nov 300 J. Bentham, Capital
4 Initial contribution of cash and furniture
5
6 1-Nov 100 Bank 15,000.00
7 1-Nov 200 Loans Payable
8 Arrange business loan
9
10 1-Nov 120 Prepaid Rent 18,000.00
11 1-Nov 100 Bank
12 Ch. 001 for six months' rent
13
14 2-Nov 130 Supplies 1,200.00
15 2-Nov 100 Bank
16 Ch. 002 to purchase office supplies
17
18 4-Nov 122 Prepaid Licensing Fees 400.00
19 4-Nov 100 Bank
20 Ch. 003 to LSO to cover two months' licensing fees
21
22 5-Nov 110 Accounts Receivable 650.00
23 5-Nov 400 Fees
24 Invoice 001
25
26 5-Nov 100 Bank 650.00
27 5-Nov 110 Accounts Receivable
28 Payment in full on inv. 001
29
30 10-Nov 102 Trust Bank 1,000.00
31 10-Nov 202 Trust Funds Owed
32 Trust rec. 001 from second client for retainer
33
34 11-Nov 110 Accounts Receivable 500.00
35 11-Nov 400 Fees
36 Inv. 002 for third client
37
38 13-Nov 105 Unbilled Disbursements 60.00
39 13-Nov 100 Bank
40 Ch. 004 for client two's filing fees
41
42 15-Nov 110 Accounts Receivable 1,310.00
43 15-Nov 105 Unbilled Disbursements
44 15-Nov 400 Fees
45 Inv. 003 for second client
46
47 15-Nov 202 Trust Funds Owed 1,000.00
48 15-Nov 102 Trust Bank
49 Trust ch. 001 to partially pay inv. 003
50
51 15-Nov 100 Bank 1,000.00
52 15-Nov 110 Accounts Receivable
53 Deposit trust ch. 001 into general bank to partially pay inv. 003
54
55 22-Nov 350 J. Bentham, Drawing 1,500.00
56 22-Nov 100 Bank
57 Ch. 005 for personal draw
58
59 28-Nov 200 Loans Payable 350.00
60 28-Nov 500 Interest Expense 125.00
61 28-Nov 100 Bank
62 Automatic withdrawal for loan payment
 Cr Make sure:
• You enter account names in Column D and explanations in Column E
• You record debits first, followed by credits (indented)
52,000.00 • You format numbers with commas and two decimal places

A/C No. A/C

15,000.00 100 Bank
102 Trust Bank
105 Unbilled Disbursements
110 Accounts Receivable
18,000.00 120 Prepaid Rent
122 Prepaid Licensing Fees
130 Supplies
170 Furniture
1,200.00 200 Loans Payable
202 Trust Funds Owed
210 Accounts Payable
300 J. Bentham, Capital
400.00 350 J. Bentham, Drawing
ths' licensing fees 400 Fees
500 Interest Expense
520 Rent Expense
650.00 522 Licensing Expense
540 Supplies Expense

650.00

1,000.00
for retainer

500.00

60.00
 60.00
1,250.00

1,000.00

1,000.00
bank to partially pay inv. 003

1,500.00

475.00
ns in Column E
No. Account Dr Cr
100 Bank 45,015.00
102 Trust Bank
105 Unbilled Disbursements
110 Accounts Receivable 810.00
120 Prepaid Rent 18,000.00
122 Prepaid Licensing Fees 400.00
130 Supplies 1,200.00
170 Furniture 2,000.00
200 Loans Payable 14,650.00
202 Trust Funds Owed
210 Accounts Payable
300 J. Bentham, Capital 52,000.00
350 J. Bentham, Drawing 1,500.00
400 Fees 2,400.00
500 Interest Expense 125.00
520 Rent Expense
522 Licensing Expense
540 Supplies Expense
69,050.00 69,050.00
 Did Bentham's practice make money or lose money? How much?
Bentham MADE money $

Trial Balance Adjustments

Account Dr Cr Dr
Bank 45,015.00
Trust Bank
Unbilled Disbursements
Accounts Receivable 810.00 a) 2,500.00
Prepaid Rent 18,000.00
Prepaid Licensing Fees 400.00
Supplies 1,200.00
Furniture 2,000.00
Loans Payable 14,650.00
Trust Funds Owed
Accounts Payable
J. Bentham, Capital 52,000.00
J. Bentham, Drawing 1,500.00
Fees 2,400.00
Interest Expense 125.00
Rent Expense c) 3,000.00
Licensing Expense d) 200.00
Supplies Expense b) 300.00
TOTALS 69,050.00 69,050.00 6,000.00
NET INCOME

Adjustments
a) Bentham calculated $2,500 in unbilled fees.
b) Bentham figures he burnt through about 25% of the office supplies.
c) The business has rented the space for a month.
d) He has been licensed for a month.
se money? How much?
1,275.00

Adjustments Adjusted T/B Income Balance Sheet

Cr Dr Cr Dr Cr Dr
45,015.00 45,015.00

3,310.00 3,310.00
3,000.00 c) 15,000.00 15,000.00
200.00 d) 200.00 200.00
300.00 b) 900.00 900.00
2,000.00 2,000.00
14,650.00

52,000.00
1,500.00 1,500.00
2,500.00 a) 4,900.00 4,900.00
125.00 125.00
3,000.00 3,000.00
200.00 200.00
300.00 300.00
6,000.00 71,550.00 71,550.00 3,625.00 4,900.00 67,925.00
1,275.00
4,900.00 4,900.00 67,925.00

Net Profit because

Solution income (Cr) exceeds
a) Debit A/R, Credit Fees expense (Dr).
b) $1,200 × 25% = 300. We want the Supplies asset to decrease, so Credit it, Debit the related ex
c) As each month goes by, Prepaid Rent will lose $3,000 in value. Debit the expense, credit the as
d) Similarly, Prepaid Licensing will lose $200 a month: $400 paid in early November to last two m
Debit the expense (as always) and credit the related asset to decrease its value.
 Balance Sheet
Cr

14,650.00

52,000.00

66,650.00
1,275.00
67,925.00

t, Debit the related expense, Supplies Expense.

expense, credit the asset.
ovember to last two months.