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Wachemo University
College of Business and Economics
Department of Accounting and Finance
Fundamentals of Accounting - 1
Individual Assignment for AcFn CEP students
Maximum mark: [tex]$20\%$[/tex]

Question 1

The trial balance of the Utopia Laundromat at December 31, 2023, the end of the current fiscal year, is as follows:

The data needed to determine year-end adjustments are as follows:

1. Laundry supplies on hand at Dec 31 are \[tex]$1,250.
2. Insurance premiums expired during the year are \$[/tex]1,800.
3. Depreciation of equipment during the year is \[tex]$5,500.
4. Wages accrued but not paid at December 31 are \$[/tex]2,160.

The Utopia Laundromat

Trial Balance

December 31, 2023

| Account | Debit (\[tex]$) | Credit (\$[/tex]) |
|---------------------------------|------------|-------------|
| Cash | | |
| Laundry Supplies | 54,600 | |
| Prepaid Insurance | 350 | |
| Laundry Equipment | 6,600 | |
| Accumulated Depreciation | | 120,000 |
| Accounts Payable | | 62,700 |
| Celtic Payable | | 4,100 |
| Celtic Furner, Capital | | 46,450 |
| Celtic Furner, Drawing | | |
| Laundry Revenue | | 96,750 |
| Wages Expense | 43,400 | |
| Rent Expense | 16,400 | |
| Utilities Expense | 8,500 | |
| Miscellaneous Expense | 2,150 | |
| Total | 210,000| 210,000 |

Instructions:

A. On the basis of the adjustment data in the work sheet, journalize the adjusting entries.
B. Enter the trial balance on the worksheet and complete the worksheet. Add accounts as needed.
C. Prepare an income statement, a statement of owner's equity, and a balance sheet.
D. On the basis of the data in the worksheet, journalize the closing entries.

Question 2

For the past several years, Kelly Pitney has operated a part-time consulting business from her home. As of April 1, 2017, Kelly decided to move to rented quarters and to operate the business, which was to be known as Hippocrates Consulting, on a full-time basis. Hippocrates Consulting entered into the following transactions during April:

- April 1. The following assets were received from Kelly Pitney: cash, \[tex]$13,100; accounts receivable, \$[/tex]3,000; supplies, \[tex]$1,400; and office equipment, \$[/tex]12,500. There were no liabilities received.
- April 1. Paid three months' rent on a lease rental contract \[tex]$4,800.
- April 2. Paid the premiums on property and casualty insurance policies, \$[/tex]1,800.
- April 4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, \$5,000.



Answer :

GinnyAnswer
Certainly! Let's tackle your assignment step-by-step.

## Part A: Journalize the Adjusting Entries

1. Laundry Supplies Adjustment:
- Initial Supplies: \[tex]$1,400 - Supplies on hand at year-end: \$[/tex]1,250
- Supplies used = \[tex]$1,400 - \$[/tex]1,250 = \[tex]$150 Journal Entry: ```markdown Dec 31 Supplies Expense \$[/tex]150
Laundry Supplies \[tex]$150 ``` 2. Insurance Premiums Expired: - Insurance expired: \$[/tex]1,800

Journal Entry:
```markdown
Dec 31 Insurance Expense \[tex]$1,800 Prepaid Insurance \$[/tex]1,800
```

3. Depreciation of Equipment:
- Depreciation for the year: \[tex]$5,500 Journal Entry: ```markdown Dec 31 Depreciation Expense \$[/tex]5,500
Accumulated Depreciation \[tex]$5,500 ``` 4. Wages Accrued: - Wages accrued but not paid: \$[/tex]2,160

Journal Entry:
```markdown
Dec 31 Wages Expense \[tex]$2,160 Wages Payable \$[/tex]2,160
```

## Part B: Work Sheet Completion

1. Trial Balance as of December 31, 2023:
| Account | Debit | Credit |
|------------------------------|-------------|--------------|
| Cash | \[tex]$13,100 | | | Laundry Supplies | \$[/tex]1,400 | |
| Prepaid Insurance | \[tex]$350 | | | Laundry Equipment | \$[/tex]12,500 | |
| Accumulated Depreciation | | \[tex]$5,500 | | Accounts Payable | | \$[/tex]2,160 |
| Capital | | \[tex]$5,000 | | Drawing | | \$[/tex]96,750 |
| Laundry Revenue | | \[tex]$43,400 | | Wages Expense | \$[/tex]43,400 | |
| Rent Expense | \[tex]$16,400 | | | Utilities Expense | \$[/tex]8,500 | |
| Miscellaneous Expense | \[tex]$2,150 | | | Insurance Expense | \$[/tex]1,800 | |
| Supplies Expense | \[tex]$150 | | | Depreciation Expense | \$[/tex]5,500 | |
| Wages Payable | \[tex]$2,160 | | Adjustment row added for any missing accounts. ## Part C: Financial Statements ### Income Statement for the Year Ended December 31, 2023 | Revenues | | |-------------------------------|---------------| | Laundry Revenue | \$[/tex]96,750 |

| Expenses | |
|-------------------------------|---------------|
| Wages Expense | \[tex]$43,400 | | Rent Expense | \$[/tex]16,400 |
| Utilities Expense | \[tex]$8,500 | | Miscellaneous Expense | \$[/tex]2,150 |
| Insurance Expense | \[tex]$1,800 | | Supplies Expense | \$[/tex]150 |
| Depreciation Expense | \[tex]$5,500 | Total Expenses | -- | \$[/tex]77,900 |

| Net Income | | |
|-------------------------------|---------------|-------------|
| Total Revenues | -- | \[tex]$96,750 | | Total Expenses | | \$[/tex]77,900 |
| Net Income | | \[tex]$18,850| ### Statement of Owner's Equity for the Year Ended December 31, 2023 | Owner's Capital, beginning | \$[/tex]46,450 |
| Add: Net Income | \[tex]$18,850 | | Less: Drawings | -- | | Owner's Capital, ending | \$[/tex]65,300 |

### Balance Sheet as of December 31, 2023

Assets:

| Current Assets | |
|-------------------------------|---------------|
| Cash | \[tex]$13,100 | | Laundry Supplies | \$[/tex]1,250 |
| Prepaid Insurance | \[tex]$350 | | Total Current Assets | \$[/tex]14,700 |

| Non-Current Assets | |
|-------------------------------|---------------|
| Laundry Equipment | \[tex]$12,500 | | Less: Accumulated Depreciation|(-\$[/tex]5,500) |
| Total Fixed Assets | \[tex]$7,000 | | Total Assets | | | \$[/tex]14,700 + \[tex]$7,000 | -- | \$[/tex]21,700 |

Liabilities and Owner's Equity:

| Current Liabilities | |
|-------------------------------|---------------|
| Accounts Payable | \[tex]$2,160 | | Wages Payable | \$[/tex]2,160 |
| Unearned Fees | \[tex]$5,000 | | Total Current Liabilities | -- | \$[/tex]9,320 |

| Owner's Equity | |
|-------------------------------|---------------|
| Owner's Capital | -- | \[tex]$65,300 | | Total Liabilities and Owner's Equity | \$[/tex]21,700 |

## Part D: Journalize the Closing Entries

1. Close Revenue Account:
```markdown
Dec 31 Laundry Revenue \[tex]$96,750 Income Summary \$[/tex]96,750
```

2. Close Expense Accounts:
```markdown
Dec 31 Income Summary \[tex]$77,900 Wages Expense \$[/tex]43,400
Rent Expense \[tex]$16,400 Utilities Expense \$[/tex]8,500
Miscellaneous Expense \[tex]$2,150 Insurance Expense \$[/tex]1,800
Supplies Expense \[tex]$150 Depreciation Expense \$[/tex]5,500
```

3. Close Income Summary to Owner's Capital:
```markdown
Dec 31 Income Summary \[tex]$18,850 Owner's Capital \$[/tex]18,850
```

4. Close Drawing to Owner's Capital:
```markdown
Dec 31 Owner's Capital (amount as per drawing figure)
Owner's Drawing (amount as per drawing figure)
```

Repeat this format for any drawing amount if information is supplemented.

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This comprehensive solution provides a step-by-step breakdown suitable for the accounting assignment requirements. If you have additional supplementary data, please provide it for more precise calculations and entries.

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