Excel exercise

Complete, by hand, exercises 1 – 3 of the comprehensive accounting problem

Comprehensive Accounting Cycle_Exercises 1 – 3.docx

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Name____________________________________________________
_
Comprehensive Accounting Cycle
Exercises 1 – 3
The following post-closing trial balance was prepared for Smith Law, Inc. as
of December 31, 2023.
Smith Law, Inc.
Post-Closing Trial Balance
December 31, 2023
DEBIT
$65,000
25,000
1,500
ACCOUNT
CREDIT
Cash
Accounts Receivable
Supplies
Accounts Payable
$17,500
Common Stock
40,000
Retained Earnings
34,000
TOTALS
$91,500
$91,500
The above represents the beginning balances for 2024 so when you open
t-accounts (page 4), you must include these beginning balances.
Exercise 1 (Step 1 of the accounting cycle): Journalize the following
transactions Smith engaged in during 2024 (omit explanations). A list of
accounts used by Smith is included on pages 4 and 5 in the form of taccounts.
1. Smith purchased, with cash, new equipment for its office space on 1/1/24.
The equipment cost Smith $20,000.
Date
Account Titles
Debit
Credit
2. On 1/5/24, Smith purchased $2,600 of office supplies on account.
Date
Account Titles
Debit
Credit
3. On 1/20/24, Smith collected cash from accounts receivable of $14,000.
1
Date
Account Titles
Debit
Credit
4. In 2024, Smith provided legal services of $550,000 to clients and received cash.
Date
Account Titles
Debit
Credit
2024
5. On 1/31/24, Smith paid vendors $7,100 cash for the amount owed on accounts
payable.
Date
Account Titles
Debit
Credit
6. On 2/1/24, Smith borrowed $100,000 cash from the local bank at 9% interest for
one year. Record the entry that Smith would make on 2/1/24.
Date
Account Titles
Debit
Credit
7. On 3/1/24 Smith rented office space and paid cash for one year’s rent of $30,000
in advance. The rental period began immediately.
Record the entry that Smith would make on 3/1/24.
Date
Account Titles
Debit
Credit
8. On 4/1/24, Smith received $45,000 cash in advance from a client. Smith
agreed to provide legal services for one year beginning immediately.
Record the entry that Smith would make on 4/1/24.
Date
Account Titles
Debit
Credit
2
9. During 2024, Smith incurred and paid cash for expenses totaling $32,400.
The expenses were for utilities $18,000, advertising $7,200, telephone
$4,800, and postage $2,400.
Date
Account Titles
Debit
Credit
2024
10. On 8/1/24 Smith purchased a one-year insurance policy for $9,600 cash. The
coverage is effective immediately.
Record the entry Smith would make on 8/1/24.
Date
Account Titles
Debit
Credit
11.During 2024, Smith paid $310,000 cash to employees for work performed in
2023.
Date
Account Titles
Debit
Credit
2024
12. On 12/1/24, Smith paid dividends of $26,000 cash to its stockholders.
Date
Account Titles
Debit
Credit
Exercise 2: Post transactions 1 – 12 to the following t-accounts (Step 2 in the
Accounting Cycle). Don’t forget to include beginning balances. Once
posted, calculate balances for the Unadjusted Trial Balance (Exercise 3).
3
CASH
ACCOUNTS
RECEIVABLE
PREPAID RENT
PREPAID
INSURANCE
SUPPLIES
EQUIPMENT
ACCOUNTS
PAYABLE
SALARIES
PAYABLE
UNEARNED
REVENUE
INTEREST
PAYABLE
NOTES PAYABLE
COMMON STOCK
RETAINED
EARNINGS
DIVIDENDS
SERVICE
REVENUE
ADVERTISING
EXPENSE
INSURANCE
EXPENSE
INTEREST
EXPENSE
POSTAGE
EXPENSE
RENT EXPENSE
4
SALARIES
EXPENSE
SUPPLIES
EXPENSE
TELEPHONE
EXPENSE
UTILITIES
EXPENSE
Exercise 3: Prepare an Unadjusted Trial Balance (Step 3 in the Accounting
Cycle). I have given you some check figures. The accounts and the balances
reported in the unadjusted trial balance should agree with the balances of
your t-accounts. If your total debits and total credits do not equal the check
figures, try to find your error(s). It could be a mistake in the journal entry, a
posting error, or a simple math error. Only after you have attempted multiple
times to locate the error(s) should you reach out to me for help!
Smith Law, Inc.
5
ACCOUNT
Cash
Accounts Receivable
Prepaid Rent
Prepaid Insurance
Supplies
Equipment
Accounts Payable
Unearned Revenue
Notes Payable
Common Stock
Retained Earnings
Dividends
Service Revenue
Advertising Expense
Postage Expense
Salaries Expense
Telephone Expense
Utilities Expense
TOTALS
Unadjusted Trial Balance
December 31, 2024
DEBIT
CREDIT
9,600
20,000
100,000
34,000
310,000
$782,000
6