Requirements:

A. Journalize the July transactions. Use the provided Chart of Accounts. Do not invent
new accounts. (journal entry forms attached; include a description and PLEASE skip
a line between journal entries)

B. Post to the general ledger accounts (T accounts)

C. Journalize the adjustments and post to the general ledger accounts (use attached
journal entries and T accounts)

D. Note the ending balances on the general ledger accounts in good form. (T accounts)

E. Prepare a trial balance in good form. (Use trial balance form)

F. Prepare an Income Statement, Balance Sheet, and Retained Earnings Statement for
July.

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1. Brett Farve opened Cornelian Window Washing Inc. on July 1, 2011. During July the
following transactions were completed. The chart of accounts is given so you do not have to
create your own. It is on page 3.

July 2011

# Day Description
1 1 Issued $9,000 of common stock for $9,000 of cash.

2 1 Purchased used truck for $6,000, paying $3,000 in cash and the balance
on account.

3 3 Purchased cleaning supplies for $900 on account.

4 5 Paid $1,200 cash on a 1-year insurance policy, effective July 1.

5 12 Billed customers $2,500 for cleaning services.

6 13 Brett got a phone call from a manager of a large office building (Axis
Building). The manager asked Brett to prepare a bid sheet for washing all
of his windows 4 times per month.

7 18 Paid $1,000 cash on amount owed on truck and $500 on amount owed on
cleaning supplies.

8 20 Paid $1,200 cash for employee salaries.

9 20 Brett met with the manager of the large office building (Axis Building)
and submitted a bid of $5,500 for complete window washing maintenance
4 times per month. The manager liked the bid but had to discuss this large
a contract with the owner. Brett is almost sure the work will come in
starting August 1.

10 21 Collected $1,400 cash from customers billed on July 12.

11 25 Billed customers $2,000 for cleaning services.

12 26 Brett got a phone call from the manager of the Axis Building. The owner
was willing to pay $5,000 per month for 4 window washings. Brett
considered the offer and said it seemed acceptable for him. The manager
said to bring over the contract and start during the week of August 5th.

13 31 Paid cash for gas and oil for month for truck of $200.

14 31 When he picked up the truck after servicing the maintenance man told
him the truck should be winterized before November. The cost for all the
work would be $75. Brett made an appointment for winterization of the
truck on September 13.

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 15 31 Declared and paid a $300 dividend.

16 31 An employee approached Brett with a salary request. The employee was

willing to work for $3 less an hour if Brett would pay the salary ‘under
the table’. The employee’s spouse had a good job and the salary the
employee was getting would put the family into a new income tax
bracket. The employee was a good employee and would have to quit if
Brett did not oblige. Brett saw the savings opportunity but said he’d have
to talk to his advisor.

In addition the following adjustments were necessary

# Day Description
17 31 Services provided but unbilled and uncollected at July 31 were $1,100.

18 31 Depreciation on equipment for month was $200.

19 31 One-twelfth of the insurance expired.

20 31 An inventory count shows $600 of cleaning supplies on hand.

21 31 Accrued but unpaid employee salaries were $400.

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 Cornelian Window Washing Inc. Chart of Accounts:

100 Cash Cash in bank and in petty cash funds

120 Accounts Receivable Revenue billed but not yet received

130 Cleaning Supplies Supplies used in the cleaning business

140 Prepaid Insurance Insurance policy for the operations of the business

150 Equipment Equipment used in the operations of the business

155 Accumulated Depreciation - Equipment

Amounts of equipment values previously assigned as an
expense of business. (Contra Account)

200 Accounts Payable

Amounts owed by the business for items purchased and
delivered but not paid for.

210 Salaries Payable Amounts owed to employees of business for wages

300 Common Stock Ownership investment

310 Retained Earnings Net income retained in the business

330 Dividends Amounts paid to stockholders during the period.

340 Income Summary Clearing account to close nominal accounts

400 Service Revenue Revenues for operating purpose of the company

500 Gas & Oil Expense Cost of operating equipment fuel and oil

510 Cleaning Supplies Expense Expense of cleaning supplies

520 Depreciation Expense Amounts recognized as equip. expense

530 Insurance Expense Amounts recognized as insurance used

540 Salaries Expense Amounts owed / or paid/ to employees

560 Repair & Maintenance Expense Normal/ordinary costs owed / or paid/ to

keep assets in working order

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 General Journal—always, always, include description. Put debits first, then credits, then one
description for entire entry, then skip a space before next journal entry.
# DATE Account Titles AND Description Debit Credit
1 1 Cash 9,000
Common stock 9,000

2 1 Equipment - Truck 6,000

Cash 3,000
A/P 3,000

3 3 Cleaning Supplies 900

A/P 900

4 5 Insurance expense 1,200

Cash 1,200

5 12 A/R 2,500
Service revenue 2,500

6 13 No Entry

7 18 A/P (cleaning supply and truck) 1,500

Cash 1,500

8 20 Salaries expense 1,200

Cash 1,200

9 20 No Entry

10 21 Cash 1,400
Service revenue 1,400

Journal entry conventions:

1. List ALL debits first, then credits
2. Always put a journal description on submitted work!! (e.g., exams)
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 3. Always, always make sure for each journal entry that the total $ in debits =
total $ in credits!

# DATE Account Titles AND Description Debit Credit

11 25 A/R 2,000
Service revenue 2,000

12 26 No Entry

13 31 Gas & Oil expense 200

Cash 200

14 31 No Entry

15 31 Dividend 300
Cash 300

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# DATE Account Titles AND Description Debit Credit

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 T Accounts
Cornelian Window
Washing T Accounts
Cash Equipment

Accounts Receivable Accum. Deprec, Equipment

Cleaning Supplies Accounts Payable

Prepaid Insurance Salaries Payable

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 Common Stock Gas & Oil Expense

Retained Earnings Cleaning Supplies Expense

Dividends Depreciation Expense

Service Revenue Insurance Expense

Salaries Expense

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 Cornelian Window Washing
Trial Balance
July 31, 20___

Account
Account Title Debit Credit
Number

TOTAL

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 Cornelian Window Washing
INCOME STATEMENT
July 31, 20___

Cornelian Window Washing

STATEMENT OF RETAINED EARNINGS
July 31, 20___

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 Cornelian Window Washing
BALANCE SHEET
July 31, 20___

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