MGT 111: Principles of Accounting

M.A. Perez

Project no. 2: Accounting cycle step 1 to 10 for service business (Weygant, et al, page
172)
Eve Gracie opened Gracies Window Washing on 1 July 2010. During July the following transactions were
completed.
July

1
1
3
5
12
18
20
21
25
31
31

Gracie invested P1,200 cash in the business.

Purchased used truck for P6,000, paying P3,000 cash and the balance on account.
Purchased cleaning supplies for P1,300 on account.
Paid P1,200 cash on 1-year insurance policy effective 1 July.
Invoiced customers P2,500 for cleaning services.
Paid P1,000 cash on amount owed on truck and P800 on amount owed on cleaning supplies.
Paid P1,200 cash for employee salaries.
Collected
P1,400 cash from customers invoiced on 12 July.
Invoiced customers P3,000 for cleaning services.
Paid petrol expenses for the month on the truck P200.
Withdrew P900 cash for personal use.

The chart of accounts for Gracies Window Washing contains the following accounts: No. 101 Cash; No. 112 Accounts
Receivable; No. 128 Cleaning Supplies; No. 130 Prepaid Insurance; No. 157 Truck; No. 158 Accumulated Depreciation
Truck; No. 201 Accounts Payable; No. 212 Salaries Payable; No. 301 Eve Gracie, Capital; No. 302 Eve Gracie, Drawings;
No. 303 Profit and Loss Summary; No. 401 Service Revenue; No. 501 Petrol Expense; No. 502 Cleaning Supplies
Expense; No. 503 Depreciation Expense; No. 504 Insurance Expense; and No.505 Salaries Expense.
Instructions:
Step 1: Analyzing

Prepare the debit and credit analysis. (You can put this on a bond paper.)

Step 2: Journalizing for you journal (with

Journalized the transactions for July in a 2 column journal. Use page J1 and J2
explanation and PR)

Step 3: Posting

Post July journal entries to ledger. (omit explanation but include PR)

Step 4: Trial Balance

paper)

Prepare a trial balance as at July 31, 2010 (You can write this on a bond

Step5: Necessary
(use 10 column)
adjustments
P1,500
are assembled
Step6: Worksheet

Enter the following adjustments on the worksheet and complete the worksheet.

Step7: Financial
and classified
Statements
bond paper)

Prepare the income statement and a statement of changes in equity for July

1.) Services provided but not invoiced and uncollected as at 31 July were
2.) Depreciation on PPE for the month was P200
3.) One-twelfth of the insurance expired
4.) An inventory count shows P600 of cleaning supplies on hand as at 31 July
5.) Accrued but unpaid employee salaries were P600.

Statement of Financial Position as at 31 July 2010. (You can write this on a

Step 8: Adjusting entries - Journalized and post adjusting entries. Use page J3 for this.
are journalized
and posted
Step 9: Closing entries
Use page J4.
Are journalized
And posted
Step10: Post-Closing
this in bond paper)
Trial Balance

Journalized and post closing entries and complete the closing process.

Prepare a post-closing trial balance as at 31 July 2010. (You can write