Spot-Free Cleaners – Chapter 4
On November 1st, of this year, Gerald O’Neil began his Spot-Free Cleaners with the following
assets and liabilities:
Cash, $30,000; Canada Savings Bonds, $20,000; Equipment, $25,000; Store Fixtures, $2,000;
Furniture, $5,000; Bank Loan Payable, $10,000; A/P—King Furniture Co., $5,000
Chart of Accounts
105 Cash 205 Bank Loan Payable 405 Dry Cleaning Services
110 Canada Savings Bonds 210 Accounts Payable 410 Interest Income
115 Accounts Receivables 305 G. O’Neil, Capital 505 Salaries Expense
120 Equipment 310 G. O’Neil, Drawings 510 Rent Expense
125 Store Fixtures 520 Telephone Expense
130 Furniture 525 Utilities Expense
135 Truck 530 Advertising Expense
535 Interest Expense
(a) Use a two-column General Journal to record the opening investment (entry) of Gerald O’Neil
in his firm (Do not forget to calculate his Capital account balance).
(b) Journalize the rest of the business transactions below for the month of November.
(c) Post to Ledger Accounts (Adjust the size of the Cash account—21 lines.)
(d) Prepare a Trial Balance of the Ledger.
(e) Prepare an Income Statement for the Month of November.
Nov. 2 Gerald O’Neil made an additional investment of $5,000 in the business.
3 He bought a new truck from Swan’s Auto for $15,000 on 60 days’ credit.
4 He provided dry cleaning services for $175 in cash.
5 He paid $700 rent – cheque 101.
7 He rendered dry cleaning services to a customer for $125 on 30 days’ credit.
9 He paid $26 for the business telephone bill – cheque 102.
11 He rendered dry cleaning services for $100 cash.
12 He rendered dry cleaning services for $225 cash.
14 He paid $300 to King furniture on account – cheque 103.
15 He received $50 from a customer on account.
16 He provided dry cleaning services to Eastview Garage for $680 on 30 days’ credit.
19 He paid $120 for utilities – cheque 104.
20 He ordered newspaper advertising at a cost of $90—payment to be made within 30
days to The Daily News.
21 He issued a cheque #105 to Bell Canada for $12 in payment of his personal telephone
bill.
23 He rendered dry cleaning services for $600 cash.
28 He paid a monthly salary of $1,000 each to two employees (cheque 106 & 107); he
paid himself $2,000 as salary for the month (cheque 108);
30 He issued a cheque 109 for $7,500 to Swan’s Auto on account.
30 He received $200 from Eastview Garage on account.
30 He rendered dry cleaning services for $850 cash.
30 He received a cheque for $250 for one month’s interest earned on Canada Savings
Bonds and deposits the cheque in the firm’s bank account.
30 He received a note from the bank informing him that $125 had been deducted from
the bank account of Sport-Free Cleaners for one month’s interest on the demand loan.