ACCOUNTING CYCLE PROBLEM CORPORATION

ACCOUNTING CYCLE PROBLEM CORPORATION

Directions

Complete the entire accounting cycle for Milton Company. The nine steps are listed below.  Steps 1-3 take place daily. These three steps should be repeated, in order, each time a transaction takes place during the period.

Steps 4-9 take place at the end of the period. These steps should be completed, in order after the period is over.

Daily
Step 1: Analyze transactions

Step 2: Journalize

Step 3: Post

End of Period
Step 4: Unadjusted trial balance
Step 5: Adjusting entries
Step 6: Adjusted trial balance
Step 7: Financial Statements

Step 8: Closing entries

Step 9: Post-closing trial balance

The working papers for this problem begin on the next page.

MILTON COMPANY

On April 1, John Milton opened Milton Company. The company provides services to a variety of clients. The company was organized as a corporation and has a monthly accounting period. The following transactions occurred during April.

Apr.1

Apr.1 Apr.

Apr.4

Apr.7

Apr.14 Apr. 24

Apr. 28 Apr. 30

Apr. 30

Milton invested $50,000 cash in the company in exchange for its common stock.

The company paid $1,500 cash to rent office space for April.

The company paid $720 cash for the premium on a six-month insurance policy.

Coverage begins on April 1.

The company performed services for a client and received $3,800 cash.

The company purchased $1,780 of supplies on account.

The company paid $980 cash for salary earned by an employee.

The company performed services for a client and received $5,400 cash.

The company paid $980 cash for salary earned by an employee.

The company paid $480 cash for this month’s utility bill. The company paid $900 cash in dividends.

The company’s chart of accounts follows:

ASSETS

Cash

Supplies

Prepaid Insurance

LIABILITIES

Accounts Payable Salary Payable

EQUITY

Common Stock

Retained Earnings

DIVIDENDS

Dividends

REVENUES

Service Revenue

EXPENSES

Salary Expense

Rent Expense

Supplies Expense Utilities Expense insurance Expense

CLEARING

Income Summary

Adjustment Data

  1. As of April 30, $120 of insurance coverage has expired.
  2. As of April 30, the company has $849 of supplies remaining.
  3. As of April 30, the company has incurred $140 of unpaid and unrecorded salary.

 

 

 

                             Cash                                                                   Service Revenue
Supplies Salary Expense
Prepaid Insurance                                                              Rent Expense
Accounts   Payable                                                         Supplies Expense
Salary Payable                                                         Utilities Expense
Common Stock

Insurance

Earnings

Income

Dividends

Expense
Retained
Summary
 
 
 

 

MILTON COMPANY
Unadjusted Trial Balance

April 30

Common Stock

Retained Earnings

Dividends

Service Revenue

Salary Expense

Rent Expense

Supplies Expense
Utilities Expense

Insurance Expense

Totals

 

 

MILTON COMPANY
Post-Closing Trial Balance
April 30

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