Question

During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation,

completed the following transactions.

July 1

Began business by making a deposit in a company bank account of $40,000, in exchange

for 4,000 shares of $10 par value common stock.

July 3

Paid the current month's rent, $2,500

July 5

Paid the premium on a 1-year insurance policy, $3,600

July 7

Purchased supplies on account from Little Company, $700.

July 10

Paid employee salaries, $2,800

July 14

Purchased equipment from Lake Company, $9,500. Paid $1,500 down and the balance was

placed on account. Payments will be $500.00 per month for 20 months. The first payment is due 8/1.

Note: Use accounts payable for the balance due.

July 15

Received cash for preparing tax returns for the first half of July, $6,500

July 19

Made payment on account to Lake Company, $500.

July 31

Received cash for preparing tax returns for the last half of July, $8,250

July 31

Declared and paid cash dividends of $450.

Requirement #3:

Prepare a trial balance for July in the space below.

Quick Tax Corporation

Trial Balance

July 31

0

0

Requirement #4:

Prepare adjusting entries using the following information in the General Journal

below. Show your calculations!

a) One month's insurance has expired.

b) The remaining inventory of supplies is $300.

c) The estimated depreciation on equipment is $125.

d) The estimated income taxes are $2700.

General Journal

Date

Description (Account Name)

Debit

Credit

Requirement #5:

Post the adjusting entries to the General Ledger T-accounts and compute adjusted balances.

Just add to the balances that are already listed.

Requirement #6:
Prepare an adjusted trial balance in the space below.
Quick Tax Corporation
Adjusted Trial Balance
July 31
	0	0

Answer 1

Requirement 3)
Quick Tax Corporation
Trial Balance
July 31
	Debit	Credit	Working Notes
Cash	$43,400.00		40000-2500-3600-2800-1500+6500-500-450+8250
Prepaid Insurance	$3,600.00
Supplies	$700.00
Equipment	$9,500.00
Accounts Payable		$8,200.00	8000+700-500
Common Stock		$40,000.00
Dividend	$450.00
Tax preparation Revenue		$14,750.00	6500+8250
Store Rent Expense	$2,500.00
Salaries Expense	$2,800.00
Total	$62,950.00	$62,950.00
Requirement #4:
Prepare adjusting entries using the following information in the General Journal
below. Show your calculations!
a) One month's insurance has expired.
b) The remaining inventory of supplies is $300.
c) The estimated depreciation on equipment is $125.
d) The estimated income taxes are $2700.
	General Journal
Date	Description (Account Name)	Debit	Credit
July 31	Insurance Expense	$300.00
	Prepaid Insurance		$300.00
	($3600/12 months)
July 31	Supplies Expenses	$400.00
	Supplies		$400.00
	($700 - $300)
July 31	Depreciation Expenses-Equipment	$125.00
	Accumulated Dep.- Equipment		$125.00
July 31	Income Tax Expense	$2,700.00
	Income Tax Payable		$2,700.00
Requirement #4
Quick Tax Corporation
Trial Balance
July 31
	Debit	Credit
Cash	$43,400.00
Prepaid Insurance ($3600 - $300)	$3,300.00
Insurance Expense	$300.00
Supplies ($700-$400)	$300.00
Equipment	$9,500.00
Accumulated Depreciation - Equipment		$125.00
Depreciation Expense - Repair Equipment	$125.00
Accounts Payable		$7,800.00
Common Stock		$40,000.00
Dividend	$450.00
Tax preparation Revenue		$14,750.00
Store Rent Expense	$2,500.00
Salaries Expense	$2,800.00
Income Tax	$2,700.00
Income Tax payable		$2,700.00
Total	$65,375.00	$65,375.00