for the past several years shane banovich has operated a part time consulting busine 551333 | Homework Solutions

PR 4-6A Complete accounting cycle

For the past several years, Shane Banovich has operated a part-time consulting business from his home. As of October 1, 2012, Shane decided to move to rented quarters and to operate the business, which was to be known as Epic Consulting, on a full-time basis. Epic Consulting entered into the following transactions during October:

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Oct. 1. The following assets were received from Shane Banovich: cash, $12,000; accounts receivable, $6,000; supplies, $1,500; and offi ce equipment, $9,000. There were no liabilities received.

1. Paid three months’ rent on a lease rental contract, $4,800.

2. Paid the premiums on property and casualty insurance policies, $3,000.

4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $4,000.

5. Purchased additional offi ce equipment on account from Offi ce Station Co., $2,000.

6. Received cash from clients on account, $3,500.

10. Paid cash for a newspaper advertisement, $400.

12. Paid Offi ce Station Co. for part of the debt incurred on October 5, $1,000.

12. Recorded services provided on account for the period October 1–12, $6,000.

14. Paid part-time receptionist for two weeks’ salary, $1,000.

17. Recorded cash from cash clients for fees earned during the period October 1–17, $7,500.

18. Paid cash for supplies, $750.

20. Recorded services provided on account for the period October 13–20, $5,200.

24. Recorded cash from cash clients for fees earned for the period October 17–24, $3,700.

26. Received cash from clients on account, $5,500.

27. Paid part-time receptionist for two weeks’ salary, $1,000.

29. Paid telephone bill for October, $250.

31. Paid electricity bill for October, $300.

31. Recorded cash from cash clients for fees earned for the period October 25–31, $2,800.

31. Recorded services provided on account for the remainder of October, $3,000.

31. Shane withdrew $8,000 for personal use.


1. Journalize each transaction in a two-column journal starting on Page 1, referring tothe following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.)

11 Cash

12 Accounts Receivable

14 Supplies

15 Prepaid Rent

16 Prepaid Insurance

18 Offi ce Equipment

19 Accumulated Depreciation

21 Accounts Payable

22 Salaries Payable

23 Unearned Fees

31 Shane Banovich, Capital

32 Shane Banovich, Drawing

41 Fees Earned

51 Salary Expense

52 Rent Expense

53 Supplies Expense

54 Depreciation Expense

55 Insurance Expense

59 Miscellaneous Expense

2. Post the journal to a ledger of four-column accounts.

3. Prepare an unadjusted trial balance.

4. At the end of October, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6).

a. Insurance expired during October is $250.

b. Supplies on hand on October 31 are $700.

c. Depreciation of office equipment for October is $300.

d. Accrued receptionist salary on October 31 is $250.

e. Rent expired during October is $1,600.

f. Unearned fees on October 31 are $1,800.

5. Optional: Enter the unadjusted trial balance on an end-of-period spreadsheet (work sheet) and complete the spreadsheet.

6. Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal.

7. Prepare an adjusted trial balance.

8. Prepare an income statement, a statement of owner’s equity, and a balance sheet.

9. Prepare and post the closing entries. (Income Summary is account #33 in the chart of accounts.) Record the closing entries on Page 4 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.

10. Prepare a post-closing trial balance.

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