Lori Callebaut opened Callebaut Cleaning Service, AG on July 1, 2017. During July the following transactions were completed

Lori Callebaut opened Callebaut Cleaning Service, AG on July 1, 2017. During July the following transactions were completed.

July 1 Shareholders invested €20,000 cash in the business in exchange for ordinary shares.

1 Purchased used truck for €12,000, paying €4,000 cash and the balance on account.

3 Purchased cleaning supplies for €2,100 on account.

5 Paid €3,600 cash on one-year insurance policy effective July 1.

12 Billed customers €5,900 for cleaning services performed.

18 Paid €1,500 cash on amount owed on truck and €1,400 on amount owed on cleaning supplies.

20 Paid €4,500 cash for employee salaries.

21 Collected €4,400 cash from customers billed on July 12.

25 Billed customers €9,400 for cleaning services performed.

31 Paid €400 for the monthly gasoline bill for the truck.

31 Declared and paid a €1,200 cash dividend.

The chart of accounts for Callebaut Cleaning Service contains the following accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation—Equipment, No. 201 Accounts Payable, No. 212 Salaries and Wages Payable, No. 311 Share Capital—Ordinary, No. 320 Retained Earnings, No. 332 Dividends, No. 350 Income Summary, No. 400 Service Revenue, No. 633 Gasoline Expense, No. 631 Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries and Wages Expense.

Instructions

(a) Journalize and post the July transactions. Use page J1 for the journal and the three-column form of account.

(b) Prepare a trial balance at July 31 on a worksheet.

(1) Services performed but unbilled and uncollected at July 31 were €3,300.

(2) Depreciation on equipment for the month was €500.

(3) One-twelfth of the insurance expired.

(4) An inventory count shows €560 of cleaning supplies on hand at July 31.

(5) Accrued but unpaid employee salaries were €2,200.

(d) Prepare the income statement and retained earnings statement for July and a classified statement of financial position at July 31.

(e) Journalize and post adjusting entries. Use page J2 for the journal.

(f) Journalize and post closing entries and complete the closing process. Use page J3 for the journal.

(g) Prepare a post-closing trial balance at July 31.

SOLUTION

(a)

General Journal J1

Date	Account Titles	Ref.	Debit	Credit
July 1	Cash	101	20,000
	Share capital—ordinary	311		20,000
1	Equipment	157	12,000
	Cash	101		4,000
	Accounts Payable	201		8,000
3	Supplies	126	2,100
	Accounts Payable	201		2,100
5	Prepaid Insurance	130	3,600
	Cash	101		3,600
12	Accounts Receivable	112	5,900
	Service Revenue	400		5,900
18	Accounts Payable	201	2,900
	Cash	101		2,900
20	Salaries and Wages Expense	726	4,500
	Cash	101		4,500
21	Cash	101	4,400
	Accounts Receivable	112		4,400
25	Accounts Receivable	112	9,400
	Service Revenue	400		9,400
31	Gasoline Expense	633	400
	Cash	101		400
31	Dividends	332	1,200
	Cash	101		1,200

CONTINUE TO NEXT PAGE…………….

(b) & (c)

CALLEBAUT CLEANING SERVICE, AG Worksheet For the Month Ended July 31, 2017
Account Titles	Trial Balance	Trial Balance	Trial Balance	Adjustments	Adjustments	Adjustments	Adjusted Trial Balance	Adjusted Trial Balance	Adjusted Trial Balance	Income Statement	Income Statement	Income Statement	Statement of Financial sheet	Statement of Financial sheet	Statement of Financial sheet
	Dr.		Cr.	Dr.		Cr.	Dr.		Cr.	Dr.		Cr.	Dr.		Cr.
Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accounts Payable Share Capital—Ordinary Dividends Service Revenue Gasoline Expense Salaries and Wages Expense Totals Depreciation Expense Accum. Depr.—Equipment Insurance Expense Supplies Expense Salaries and Wages Payable Totals Net Income Totals	7,800 10,900 2,100 3,600 12,000 1,200 400 4,500 42,500		7,200 20,000 15,300 42,500	(a) 3,300 (e) 2,200 (b) 500 (c) 300 (d) 1,540 7,840		(d) 1,540 (c) 300 (a) 3,300 (b) 500 (e) 2,200 7,840	7,800 14,200 560 3,300 12,000 1,200 400 6,700 500 300 1,540 48,500		7,200 20,000 18,600 500 2,200 48,500	400 6,700 500 300 1,540 9,440 9,160 18,600		18,600 18,600 18,600	7,800 14,200 560 3,300 12,000 1,200 39,060 39,060		7,200 20,000 500 2,200 29,900 9,160 39,060
Key: (a) Service Revenue Earned; (b) Depreciation Expense; (c) Insurance Expired; (d) Cleaning Supplies Used; (e) Unpaid Salaries.

CONTINUE TO NEXT PAGE……………

(a), (e) & (f)

Cash No. 101

Date		Explanation	Ref.	Debit	Credit	Balance
July 1			J1	20,000		20,000
1			J1		4,000	16,000
5			J1		3,600	12,400
18			J1		2,900	9,500
20			J1		4,500	5,000
21			J1	4,400		9,400
31			J1		400	9,000
31			J1		1,200	7,800
	Accounts Receivable	No. 112

Date		Explanation	Ref.	Debit	Credit	Balance
July 12			J1	5,900		5,900
21			J1		4,400	1,500
25			J1	9,400		10,900
31		Adjusting	J2	3,300		14,200
	Supplies	No. 126

Date		Explanation	Ref.	Debit	Credit	Balance
July 3			J1	2,100		2,100
31		Adjusting	J2		1,540	560
	Prepaid Insurance	No. 130

Date		Explanation	Ref.	Debit	Credit	Balance
July 5			J1	3,600		3,600
31		Adjusting	J2		300	3,300
	Equipment	No. 157

Date		Explanation		Ref.		Debit		Credit		Balance
July 1				J1		12,000				12,000
	Accumulated Depreciation—Equipment	No. 158

Date		Explanation		Ref.		Debit		Credit		Balance
July 31		Adjusting		J2				500		500
	Accounts Payable	No. 201

Date		Explanation	Ref.	Debit	Credit	Balance
July 1			J1		8,000	8,000
3			J1		2,100	10,100
18			J1	2,900		7,200
	Salaries and Wages Payable	No. 212

Date		Explanation		Ref.		Debit		Credit		Balance
July 31		Adjusting		J2				2,200		2,200
	Share Capital—Ordinary	No. 311

Date		Explanation		Ref.		Debit		Credit		Balance
July 1				J1				20,000		20,000
	Retained Earnings	No. 320

Date		Explanation	Ref.	Debit	Credit	Balance
July 1
31		Closing	J3		9,160	9,160
31		Closing	J3	1,200		7,960
	Dividends	No. 332

Date		Explanation	Ref.	Debit	Credit	Balance
July 31			J1	1,200		1,200
31		Closing	J3		1,200	0
	Income Summary	No. 350

Date		Explanation	Ref.	Debit	Credit	Balance
July 31		Closing	J3		18,600	18,600
31		Closing	J3	9,440		9,160
31		Closing	J3	9,160		0
	Service Revenue	No. 400

Date		Explanation	Ref.	Debit	Credit	Balance
July 12			J1		5,900	5,900
25			J1		9,400	15,300
31		Adjusting	J2		3,300	18,600
31		Closing	J3	18,600		0
	Gasoline Expense	No. 633

Date		Explanation	Ref.	Debit	Credit	Balance
July 31			J1	400		400
31		Closing	J3		400	0
	Supplies Expense	No. 631

Date		Explanation	Ref.	Debit	Credit	Balance
July 31		Adjusting	J2	1,540		1,540
31		Closing	J3		1,540	0
	Depreciation Expense	No. 711

Date		Explanation	Ref.	Debit	Credit	Balance
July 31		Adjusting	J2	500		500
31		Closing	J3		500	0
	Insurance Expense	No. 722

Date		Explanation	Ref.	Debit	Credit	Balance
July 31		Adjusting	J2	300		300
31		Closing	J3		300	0
	Salaries and Wages Expense	No. 726

Date	Explanation	Ref.	Debit	Credit	Balance
July 20		J1	4,500		4,500
31	Adjusting	J2	2,200		6,700
31	Closing	J3		6,700	0

(d)

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Lori Callebaut opened Callebaut Cleaning Service, AG on July 1, 2017. During July the following transactions were completed

SOLUTION

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CALLEBAUT CLEANING SERVICE, AG

CALLEBAUT CLEANING SERVICE, AG

CALLEBAUT CLEANING SERVICE, AG

CALLEBAUT CLEANING SERVICE, AG

CALLEBAUT CLEANING SERVICE, AG