Aqua Elite, Inc.-Because Aqua Elite, Inc. is a new startup business, the beginning

Aqua Elite, Inc.-Because Aqua Elite, Inc. is a new startup business, the beginning

Question
	
Because Aqua Elite, Inc. is a new startup business, the

beginning balances in all the general ledger accounts are

zero to start.

n The length of the accounting periods are three months

using a fiscal calendar year. (A fiscal calendar is on a

yearly basis other than a calendar year—January 1st to

December 31st. For example, a fiscal calendar year can

be May 1, 2009, through April 30, 2010). Therefore,

posting to the general
ledger, adjustments and closing 

entries are made on a fiscal quarterly basis.

n Accounts Receivable and Accounts Payable subsidiary

ledgers aren’t being used. Any references to invoicing,

receipts, or payments “on account” assume changes to

the running balance in the Accounts Receivable and

Accounts Payable general ledger accounts.

n Payroll calculations aren’t necessary. Assume the salary

is the gross pay with no deductions taken. Therefore, the

net pay is the same as the gross pay, requiring a simplified
journal entry to record the expense.

n Use the information in the Chart of Accounts that’s
provided after the Requirements section below. Add general

ledger accounts if necessary.

Requirements

1. Journalize the transactions. Omit explanations.

2. Post the transactions to the general ledger, creating new

ledger accounts as necessary. Calculate the new general

ledger account balances.

3. Prepare the unadjusted trial balance for Aqua Elite,
Inc.,

at the end of July.

4. Journalize and post the adjusting entries for July based

on the following adjustment information:

a. Record the expired rent.

b. Supplies on hand, $350.

c. Depreciation: $400 equipment, $210 furniture, $650

vehicles.

d. Services performed but unbilled, $1,900.

e. Accrued salaries, $675.

f. Unearned service revenue earned as of July 31, $800.

5. Prepare an adjusted trial balance for Aqua Elite, Inc.,
at

the end of July.

6. Prepare the Income Statement, Statement of Retained

Earnings, and Balance Sheet for the three-month period

May through July 20XX.

7. Prepare, journalize, and post closing entries.

8. Prepare a Post-Closing Trial Balance for the end of the

period.

May

1

Mike invested $15,000 cash and a used truck worth $13,500 in
the business in exchange

for company stock.

3 Paid $4,700 cash to purchase office equipment.

7 Purchased $860 of supplies on account.

12 Performed services for cash customers and received $850.

15 Paid salaries of $675 to the office receptionist.

16 Sold the company truck for $13,500.

18 Signed a note payable for $31,000 to purchase a new
truck.

21 Performed $3,200 of services on account for a local hotel
chain.

27 Paid $500 of the amount owed from the purchase of
supplies on May 7.

30 Received $2,000 on account from credit customers.

31

Received the utility bill for the month of May, $480. The
bill is not due until the 15th 

of June.

31 Paid $1,000 dividends to the shareholder, XXXXX XXXXXson.

June

1 Paid receptionist’s salary, $675.

2 Paid cash to acquire land for a future office site,
$15,000.

3 Moved into a new location for the business and paid the
first month’s rent, $1,800.

4 Performed service for a customer and received cash,
$1,700.

5 Received $500 on account.

8 Purchased $750 of supplies on account.

11 Billed customers for services performed, $3,800.

13 Sold an additional $10,000 of stock to XXXXX XXXXXson.

16 Paid receptionist’s salary, $675.

17 Received $1,350 cash for services performed.

18 Received $1,500 from customers on account.

19 Paid $325 to be listed in the yellow pages telephone
directory.

21 Paid $1,000 on account.

22 Purchased office furniture on account, $3,300.

24 Paid miscellaneous expenses, $275.

26 Billed customers for services provided, $1,000.

28 Received $300 from customers on account.

30 Paid utility bill, $745.

30 Paid receptionist’s salary, $675.

30 Paid $1,800 of dividends.

July

1 Paid three months’ rent, $4,500.

4 Performed service for a customer and received cash,
$2,100.

9 Received $3,600 from customers for services to be
performed later.

12 Purchased $750 of supplies on account.

15 Billed customers for services performed, $2,800.

16 Paid receptionist’s salary, $675.

22 Received $3,100 on account.

25 Paid $2,800 on account.

28 Received $1,200 cash for services performed.

30 Paid $600 of dividends.



NEEDED

Balance Sheet

Income Statement

Statement of Retained Earnings

Post-Closing Trial Balance