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Accounting 301 Record business transactions and prepare financial statements using the following accounting transactions for Home Cleaning Service, Inc. as of December 31, 2009. a. Brenda, Don, Michael, Trina, and McKenzie each donated $3,250 in exchange for common stock to start the business on January 1,2009. b. On March 1, Home Cleaning paid $6,000 cash for a 2-year insurance policy that was effective immediately. c. On March 15, the company purchased $10,000 of supplies on account. d. 1 On April 5, the company purchased some cleaning equipment for $8,000 cash. 2 The equipment should last for 5 years with no residual value. Home Cleaning will take a full year of depreciation in 2009. e. On May 1, Home Cleaning purchased a year’s worth of advertising in a local newspaper for $1,500 cash. f. On September 1, Home Cleaning obtained a 9-month loan for $15,000 at 12% from City National Bank, with interest and principal payable on June 1,2010. g. On December 31 Home Cleaning paid $7,000 of what it owed on account for supplies; the company had $3,000 of the supplies still on hand at the end of the year. h. For the year ending December 31, 2009, Home Cleaning had revenues of $26,225. The cash had been received for all but $3,000. Required: Prepare journal entries for the transactions. Prepare any adjusting entries. Remember the accounts that we adjusted in class Post the journal entries to the appropriate T-accounts, prepare an adjusted trial balance, and prepare the financial statements for 2009. Then prepare the closing entries using the Retained Earnings Account and the post closing trial balance.
Home Cleaning Service, Inc. Chart of Accounts Cash Accounts receivable Supplies Prepaid Advertising Prepaid Insurance Equipment Accumulated depreciation Accounts payable Interest payable Notes payable Common stock Retained earnings Service revenue Advertising expense Interest expense Insurance expense Depreciation expense Supplies expense
Home Cleaning Service, Inc. General…