Joan Miller Advertising Agency

Joan Miller
Advertising Agency

This
comprehensive problem involving the Joan Miller Advertising Agency covers all
the learning objectives in this chapter and in the chapters on measuring
business transactions and measuring business income. To complete the problem,
you may sometimes have to refer to this material.
The July 31,
20xx, post-closing trial balance for the Joan Miller Advertising Agency appears
on the facing page. During August, the agency engaged in these transactions:
Joan Miller
Advertising Agency

Post-Closing Trial Balance

July 31, 20xx
Cash

$ 9,140

Accounts Receivable 5,000

Art Supplies

1,300

Office Supplies 600

Prepaid Rent
800

Prepaid Insurance 880

Art Equipment 4200

Accumulated Depreciation, Art. 70

Office Equipment 3,000

Accumulated Depreciation, Office. 50

Accounts Payable

3,240

Unearned Art Fees

600

Wages Payable

360

Joan Miller, Capital

20,600

$24920. $24920

Aug. 1 Received an additional investment of cash from Joan Miller, $6,300.
2 Purchased
additional office equipment with cash, $1,200.

5 Received art equipment transferred to the business from Joan Miller, $1,400.

6 Purchased additional office supplies with cash, $90.

7 Purchased additional art supplies on credit from Taylor Supply Company,

$450.

8 Completed the series of advertisements for Marsh Tire Company that
began on July 31(see page 103) and billed Marsh Tire Company for the total
services performed, including the accrued revenues (fees receivable) that had
been recognized in an adjusting entry in July, $800.

9 Paid the secretary for two weeks’ wages, $1,200.

12 Paid the amount due to Morgan Equipment for the office equipment purchased
last month, $1,500.

13 Accepted an advance in cash for artwork to be done for another agency,

$1,600.

14 Purchased a copier (office equipment) from Morgan Equipment for
$2,100, paying $350 in cash and agreeing to pay the rest in equal payments
over the next five months.

15 Performed advertising services and received a cash fee, $1,450.

16 Received payment on account from Ward Department Stores for services
performed last month 2,800

Aug. 19 Paid amount due for the telephone bill that was received and recorded
at the end of July, $140.

20 Performed advertising services for Ward Department Stores and agreed
to accept payment next month, $3,200.

21 Performed art services for cash, $580.

22 Received and paid the utility bill for August, $220.

23 Paid the secretary for two weeks’ wages, $1,200.

26 Paid the rent for September in advance, $800.

27 Received the telephone bill for August, which is to be paid next month,
$160.

30 Paid cash to Joan Miller as a withdrawal for personal expenses, $1,400.

REQUIRED ~ 1.
Record entries in journal form and post to the ledger accounts the optional
reversing entries on August 1 for Wages Payable and Accounts Receivable
(see Adjustment g on page 101 and Adjustment i on page 103)(Begin the general
journal on page 5) .

2. Record the transactions for August in journal form.

3. Post the August transactions to the ledger accounts.

4. Prepare a trial balance in the Trial Balance columns of a work sheet.

5. Prepare adjusting entries and complete the work sheet using the information
below:

a. One month’s prepaid rent has expired, $800.

b. One month’s prepaid insurance has expired, $80.

c. An inventory of art supplies reveals $600 still on hand on August 31.

d. An inventory of office supplies reveals $410 still on hand on August 31.

e. Depreciation on art equipment for August is calculated to be $100.

£ Depredation on office equipment for August is calculated to be $100.

g. Art services performed for which payment had been received in advance
totaled $1,300.

h. Advertising services performed that Will not be billed until. September
total $290.

i. Three days’ wages had accrued by the end of August (assume a five-day week).
6. From the work
sheet prepare an income statement, a statement of owner’s equity and a
balance sheet.

7. Record the adjusting entries in journal form, and post them to the ledger
accounts.

8. Record the closing entries in journal form, and post them to the ledger
accounts.

9. Prepare a post-closing trial balance.