Reference no: EM131811306

Question 1. On January 1, 2015, Sheldon Howe and Charlie Bouthat started an accounting firm called Howe, Bouthat and Associates. The following activities took place in January:

January 1: Howe and Bouthat Invested $30,000 of cash, $15,000 of office equipment and $2,000 of office supplies in exchange for 100 shares of capital stock.

2: Billed and received $5,000 from Client GHI for future services to be performed.

3: Purchased a one-year (January 2015 through December 2015) professional liability insurance policy for $1,200.

3: Paid office rent for January $4,500.

5: Purchased an additional $500 of office supplies for cash.

8: Billed client ABC $10,000 for services performed and collected this amount.

15: Paid the secretary his semi-monthly salary of $1,000.

16: Purchased $2,000 of office supplies on account.

20: Purchased a used car for business purposes for $15,000; paid $5,000 down and signed a promissory note for the balance.

20: Received a telephone bill for $100.

21: Purchased and paid for an office computer, $1,500

28: Paid the telephone bill received on January 20.

29: Paid $200 for maintenance costs for the used car.

30: Received an invoice for January cleaning services $1,000.

30: Billed Client DEF $5,000 for services rendered.

31: Paid the secretary his semi-monthly salary of $1,000.

REQUIRED:

1. Record the January transactions in general journal form and post to T accounts.

2. Prepare ALL required adjusting entries in addition to the following:

a. At the end of January there was $1,000 of office supplies on hand.

b. Depreciation on all of the plant assets was $1,000.

c. At the end of January, $2,000 of services for GHI was billed.

3. Prepare an income statement for Howe, Bouthat and Associates.