On September 1, John and Pat Kelly opened Cottage Crafts, a small craft store catering to craft enthusiasts in their...

On September 1, John and Pat Kelly opened Cottage Crafts, a small craft store catering to craft enthusiasts in their coastal town in New England. The following transactions occurred during the month:

Sep 1   Opened a checking account to fund this new endeavor with a deposit of $20,000

Sep 1   Hired Sally Green to work at the store

Sep 1   Purchased delivery van for $15,000, paid $3,000 down and remainder on account

Sep 1   Purchased $5,000 in craft supplies on account

            Sep 2   Paid Rent of $1,000 on storefront

            Sep 2   Paid $1,200 for 1-year Insurance policy effective September 1

            Sep 5   Took out ad in local newspaper for $500 on account

            Sep 10  Generated cash sales of $3,500

            Sep 12  Purchased $5,000 of craft supplies, paid $1,000 and charged the balance

            Sep 15  Local school ordered $7,000 of craft supplies on account

Sep 20  Paid wages to Sally Green of $750

Sep 30  Paid $350 for gas and oil used in delivery van during month

Sep 30  Received $7,000 payment from school for supplies ordered

Sep 30  Cash sales of $2,300

The chart of accounts for Cottage Crafts contains the following accounts: Cash, Accounts

Receivable, Craft Supplies, Prepaid Insurance, Equipment, Accumulated Depreciation—

Equipment, Accounts Payable, Salaries Payable, Owners’ Equity, Retained Earnings,

Income Summary, Sales Revenue, Gas & Oil Expense, Craft Supplies

Expense, Depreciation Expense, Insurance Expense, Salaries Expense.

Instructions

(a) Journalize the September transactions.

(b) Post to the ledger accounts. (Use T accounts.)

(c) Prepare a trial balance at September 30.

(d) Journalize the following adjustments.

1. Earned but unbilled revenue at September 30 was $1,800.

2. Depreciation on equipment for the month was $361.

3. One-twelfth of the insurance expired.

4. An inventory count shows $460 of craft supplies on hand at September 30.

5. Accrued but unpaid employee wages were $675.

(e) Post adjusting entries to the T accounts.

(f) Prepare an adjusted trial balance.

(g) Prepare the income statement and a retained earnings statement for September and a

classified balance sheet at September 30.

(h) Journalize and post closing entries and complete the closing process.

(i) Prepare a post-closing trial balance at September 30.