Accounting Cycle of a Service Business
As advised by his friend and with your help as someone already knowledgeable in accounting, JM Photocopying Center set up a chart of accounts which will be used as guide in recording all the transactions of the business. At the start of the business, Ji Min invested Php 60,000 cash, Php 50,000 from his father and Php 10,000 from his personal savings. From this seed money, he bought a brand new photocopying machine and paid start-up expenses. Thereafter, a series of business transactions would have to take place. Presented below is the established Chart of Account of JM Photocopying Center, which will be very helpful in identifying the affected accounts in your transaction analysis:
Need assignment help for this question?
If you need assistance with writing your essay, we are ready to help you!
Why Choose Us: Cost-efficiency, Plagiarism free, Money Back Guarantee, On-time Delivery, Total Сonfidentiality, 24/7 Support, 100% originality
July 1, 2021 Mr. Ji Min invested cash of Php 10,000 in his business to be known as JM Photocopying Center.
July 1 Mr. Ji Min invested a photocopying machine amounting to Php 30,000 (with sales invoice) in his business to be known as JM Photocopying Center. The salvage value and useful life were determined to be Php 3,000 and 5 years. The company uses the STRAIGHT LINE METHOD in depreciating its assets.
July 1 Mr. Ji Min invested the following in his business to be known as JM Photocopying Center: Cash, Php 30,000; and Photocopying Equipment, Php 30,000 (with sales invoice – No Salvage Value, 5 years useful life). In addition, his Accounts Payable of Php 50,000 will be assumed by the business.
July 2 JM Photocopying Center paid Php 10,000 for the purchase of bond papers (with sales invoice).
July 3 JM Photocopying Center paid for business permits and licenses amounting to Php 2,000 (with official receipt)
July 6 Mr. Ji Min hired one personnel with a weekly salary of Php 1,000 to look after the business (with employment contract).
July 10 Only July 10, JM Photocopying Center paid salary of the personnel for the week, Php 10,000 (with payroll sheet).
July 16 On July 16, JM Photocopying Center received Php 8,000 cash for services rendered (with official receipt)
July 16 The business received a 60-day, 12% note with a principal amount of Php 5,500 from Andres Cruz.
July 20 Received Php 3,000 cash from a client for a photocopying service expected to be completed on August 05, 2021.
July 21 JM Photocopying Center billed a customer for services rendered during the week, Php 2,000 (with billing statement)
July 21 Issued a 30-day, 12% note with a principal amount of Php 5,000 for the purchase of office tables. The salvage value is Php 500, and the useful life of the office tables is 5 years.
July 27 Mr. Ji Min made a Php 500 cash withdrawal for personal use.
July 28 JM Photocopying Center collected the amount billed to a customer, Php 2,000 (with official receipt)
July 28 Hired an additional employee with a weekly rate of Php 1,000. There are 5 days work from Monday to Friday, and that the payday for this employee is every Monday which fall on August 03.
July 29 JM Photocopying Center paid rent for two months amounting to Php 10,000 (with statement of account)
July 30 JM Photocopying Center received a bill from electric company, Php 2,500 (with statement of account)
July 31 JM Photocopying Center rendered Php 7,500 worth of photocopying services on account.
Complete the Accounting Cycle by:
⦁ Journalizing the transactions
⦁ Posting to the ledger using T-accounts
⦁ Preparing thr Trial Balance
⦁ completing the Worksheet
⦁ preparing Financial Statements (BS, IS, Changes in Equity, Cash Flows)
⦁ preparing the Closing Entries
⦁ preparing the Post-Closing Trial Balance
DATE DESCRIPTION REF DEBIT CREDIT
ADJUSTING ENTRIES WITH SUPPORTING COMPUTATION
DATE ACCOUNTS & DESCRIPTION PR DEBIT CREDIT
31-Jul Photocopying Revenue
to close the revenue into the income summary account
31-Jul Income Summary
Taxes and Licenses Permit Expense
to close the expenses into the income summary account
31-Jul Income Summary
to close net loss into the income summary account
31-Jul Ji Min Capital
Ji Min Drawing
to close the withdrawal into the capital account
POST CLOSING TRIAL BALANCE