Jones Surf Shop has now hired you to be their accountant for all company operations.
As you
role you are going to familiarize yourself with the types of transactions and reports that Jones
going to need in the course of their business.
The following are all transactions that occurred during your first week of work. Journalize each
transactions. Be sure to follow proper journal writing rules
A. On February 3, 2023, Office furniture is purchased. The furniture cost $2,500 and the payment will be due fort
B. On February 4, 2023, An advertisement was run in the newspaper at a total cost of $250. Cash was paid when
C. On February 4, 2023, Jeremy performed a private surf class for a client. The client was billed $535.
D. On February 6, 2023, Office supplies worth $250 are purchased with cash
E. On February 7, 2023, A new rental contract for the shop is signed and six month of rent at $500 a month is pre
F. On February 7, 2023, A utility bill for $150 is paid with cash
G. On February 7, 2023, Jeremy brought in another investor for the shop. This investor contributed $15,000 in ca
A. JOURNAL
Date Description Debit Credit
February 3, 2023 Office Furniture $ 2,500
Accounts Payable $ 2,500
Purchased Office Furniture
B. JOURNAL
Date Description Debit Credit
February 4,2023 Advertising Expense $ 250
Cash $ 250
Purchased advertisement in newspaper
C. JOURNAL
Date Description Debit Credit
February 4,2023 Accounts Receivable $ 535
Revenue $ 535
Billed customer for surf lesson
D. JOURNAL
Date Description Debit Credit
February 6,2023 Office Supplies $ 250
Cash $ 250
Purchased office supplies with cash
E. JOURNAL
Date Description Debit Credit
February 7,2023 Prepaid Rent $ 3,000
Cash $ 3,000
Prepaid Rent for six month
F. JOURNAL
Date Description Debit Credit
February 7,2023 Utilities Expense $ 150
Cash $ 150
Paid utility bill with cash
G. JOURNAL
Date Description Debit Credit
February 7,2023 Cash $ 15,000
Common Stock $ 15,000
Investor contributed cash for common sto
As you finish out the month you are preparing to close our your first month with Jones Surf Sh
look at the unadjusted trial balance and prepare to make adjusting entries.
Jones Surf Shop
Unadjusted Trial Balance
February 28, 2023
Account Debit Credit
Cash $ 51,100
Accounts Receivable $ 1,890
Office Furniture $ 2,500
Supplies $ 250
Prepaid Rent $ 3,000
Accounts Payable $ 3,250
Interest Payable $ -
Salaries Payable $ -
Common Stock $ 50,000
Service Revenue $ 8,790
Advertising Expense $ 250
Interest Expense $ -
Rent Expense $ -
Utilities Expense $ 550
Salaries Expense $ 2,500
Supplies Expense $ -
Total $ 62,040 $ 62,040
You will need to make the following adjusting entries to complete the accounting period
H. On February 28, 2023, you took an inventory of supplies and discovered that $100 of supplies had been used d
I. On February 28, 2023, you need to recognize February rent expense from Prepaid Rent
J. On February 28, 2023, there was an expense for interest on the loan Jeremy took out of $150 - this won't be p
K. On February 28, 2023, a review of the timeclock system found salaries of $750 were earned by employees, bu
Jounalize each of these adjusting entries
H. JOURNAL
Date Description Debit Credit
February 28,2023 Supplies Expense $ 100
Office Supplies $ 100
Recorded supplies used during the month
I. JOURNAL
Date Description Debit Credit
February 28,2023 Rent Expense $ 500
Prepaid Rent $ 500
Recorded february rent expense
J. JOURNAL
Date Description Debit Credit
February 28,2023 Interest Expense $ 150
Interest Payable $ 150
Accrued interest expense for loan
K. JOURNAL
Date Description Debit Credit
February 28,2023 Salaries Expense $ 750
Salaries Payable $ 750
Recorded earned salaries not yet paid
The adjusted trial balance after your adjusting entries is completed below.
Jones Surf Shop
Adjusted Trial Balance
February 28, 2023
Account Debit Credit
Cash $ 51,100
Accounts Receivable $ 1,890
Office Furniture $ 2,500
Supplies $ 150
Prepaid Rent $ 2,500
Accounts Payable $ 3,250
Interest Payable $ 150
Salaries Payable $ 750
Common Stock $ 50,000
Revenue $ 8,790
Advertising Expense $ 250
Interest Expense $ 150
Rent Expense $ 500
Utilities Expense $ 550
Salaries Expense $ 3,250
Supplies Expense $ 100
Total $ 62,940 $ 62,940
Based on the Adjusted Trial Balance prepare the required Financial Statements
Jones Surf Shop
Income Statement
For Month Ended February 28, 2023
Revenue
Revenue $8,790
Total Revenue $8,790
Expenses
Advertising Expense $250
Interest Expense $150
Rent Expense $500
Utilities Expense $550
Salaries Expense $3,250
Supplies Expense $100
Total Expenses $4,800
Net Income $3,990
Jones Surf Shop
Statement of Retained Earnings
For Month Ended February 28, 2023
Beginning Retained Earnings (Feb 1) $ -
Net Income $ 3,990
- Dividends $ -
Ending Retained Earnings (Feb 28) $ 3,990
Jones Surf Shop
Balance Sheet
As of End of Month 1, Year 1
Assets
Cash $51,100
Accounts Receivable $1,890
Prepaid Rent $2,500
Supplies $150
Office Furniture $2,500
Total Assets $58,140
Liabilities
Salaries Payable $750
Interest Payable $150
Accounts Payable $3,250
Total Liabilities $4,150
Stockholder's Equity
Common Stock $50,000
Ending Retained Earnings $3,990
Total Stockholder's Equity $53,990
Total Liabilities & Stockholder's Equity $58,140
Jeremy is really impressed with the work you did in putting the month end reports. He asks if its matters the order in
statements are prepared. What is the order they need to be prepared in and is there a purpose to the order or could
order?
The order in which financial statements are prepared does matter. First, we prepare the Income Statement because
income, which we need for the Statement of retained earnings. Then, using the retained earnings, we can put toget
which shows the company's financial position, and lastly the Cash flow statement. The reason for this order is that e
on the information from the one before it, ensuring everything is accurate and balanced.
perations. As you take your new
reports that Jones Surf Shop is
rk. Journalize each of the following
yment will be due forty-five days after delivery
0. Cash was paid when the order was placed.
illed $535.
at $500 a month is prepaid
tributed $15,000 in cash in exchange for common stock.
2,500
250
535
250
3,000
150
15,000
with Jones Surf Shop. You take a
nting period
pplies had been used during the month
$150 - this won't be paid until maturity of the loan
ned by employees, but not yet paid
100
500
150
750
its matters the order in which financial
se to the order or could they prepared in any
me Statement because it gives us the net
ings, we can put together the Balance sheet
for this order is that each statement builds
