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
- As of April 30, $120 of insurance coverage has expired.
- As of April 30, the company has $849 of supplies remaining.
- 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 |
