Jim Arnold’s



Comprehensive Review Problem I Jim Arnold’s Photography Studio
Jim Arnold’s Photography Studio – CRP1 – Comprehensive Review Problem I
Jim Arnold has been a photographer since his graduation from high school several years ago. On February 1, 2011, he decided to open his own photography firm called Arnold’s Photos. To start his accounting system, Jim developed the chart of accounts shown below.
Comprehensive Review Problem I – Jim Arnold’s Photography Studio
JUL. 1. Jim invested 40,000 cash and photography equipment valued at 20,000 in the business
1 Purchased office supplies for cash, 1300
1 Purchased photography supplies on account, 6700
1 Paid july rent, 1700
1 Paid for a newspaper ad, 500
2 Purchased office equipment on account, 6750
2 Paid property insurance for the upcoming year, 3600
3 Purchased a computer system and software, 3200, by issuing a note payable
5 Paid for promotional handouts, 150
6 Paid miscellaneous expenses, 175
7 Paid salaries of employees, 1400
7 Recorded week’s cash receipts for photo work, 1350
8 Paid for carpet cleaning (a miscellaneous expense), 75
9 Recorded photo work done for a customer on account, 855
9Purchased additional photography supplies on account, 3200
10 Purchased additional photography equipment for cash, 3500
10 Entered into a contract with Southside Food Vendors to place vending machines in the waiting room. Jim is to receive 10% of all sales, with a minimum payment of 200 monthly. Received 200 as an advance payment
11 Purchased furniture for the lobby area, 1700. Paid cash in full
12 Paid cash for the installation of overhead lighting fixtures, 900
15 recorded second week’s cash receipts for photo work, 2170
15 Paid weekly salaries, 1400
17 Jim withdrew cash for personal use, 800
18 Paid for TV ad, 710
19 Paid for repair to equipment, 80
19 Collected 500 for the photo work done on account on July 9
22 Recorded third weeks cash receipts for photo work, 2045
22 Paid weekly salaries, 1400
23 Did a special wedding photo session for a customer on credit, 550
28 Recorded fourth week’s cash receipts for photo work, 1995
29 Paid salaries of employees, 1400
30 Paid water bill for July, 75
30 Paid electric bill for July, 1095
31 Made a 500 payment on the note for the computer purchased on July 3
31 Made a payment for the office equipment purchased on account, 2000
31 Made a payment on the photography supplies purchased on account, 1000
31 Wrote a business check to pay for Jim’s home phone bill, 310

31 Southside Food Vendors reported a total of 2800 of vending machines sales for July. Ten percent of these sales is 280. Since 200 had already been received and recorded in July, Jim was owed 80. Received the 80 check
1. Open an account in the ledger for each account shown in the chart of accounts.
2. Journalize each of the transactions for July, beginning on page 1 of the general journal.
3. Post the journal entries to the ledger
4. Prepare a trial balance of the ledger in the first two columns of a 10-column work sheet
5. Complete the 10-column work sheet. Assume for the purposes of this problem that Jim has a one-month accounting period. Data for adjustments are as follows:
a. Office supplies on hand, 850
b. Photography supplies on hand, 5550
c. Insurance expired, 300
d. Salaries unpaid, two days of a five-day week, weekly salaries are 1400
e. Depreciation of office equipment, 190
f. Depreciation of photography equipment, 275
g. Depreciation of furniture and fixtures, 75
6. Prepare an income statement for the month ended July 31
7. Prepare a statement of owners equity for the month ended July 31
8. Prepare a balance sheet as of July 31
9. Journalize adjusting entries from the completed work sheet
10. Journalize closing entries
11. Post adjusting and closing entries to the ledger
12. Prepare a post-closing trial balance