STEP 1: UNDERSTANDING THE BUSINESS AND TRANSACTIONS
Business: Business Line Consulting (service business)
Owner: Mr. Dagi
Date: Starting June 1, 2025
Business Type: Full-time consulting business moved from home to rented office
STEP 2: JOURNALIZING TRANSACTIONS (Four-column journal)
I'll create the journal entries first. The four-column journal typically has columns for: Date, Account
Titles & Explanation, Debit, Credit.
June 1 Transactions:
June 1 - Initial investment:
text
Cash 200,000
Accounts Receivable 45,000
Supplies 20,000
Office Equipment 115,000
Mr. Dagi, Capital 380,000
(To record initial investment of assets)
June 1 - Paid three months' rent:
text
Prepaid Rent 60,000
Cash 60,000
(Paid three months' rent in advance)
June 2 - Paid insurance premiums:
text
Prepaid Insurance 24,000
Cash 24,000
(Paid insurance premiums for the year)
June 4 - Received advance payment:
text
Cash 27,000
Unearned Fees 27,000
(Received advance payment for future services)
June 5 - Purchased equipment on account:
text
Office Equipment 35,000
Accounts Payable 35,000
(Purchased office equipment from Office Depot on credit)
June 6 - Received cash from clients:
text
Cash 30,000
Accounts Receivable 30,000
(Collected cash from clients on account)
June 10 - Paid for advertisement:
text
Miscellaneous Expense 2,000
Cash 2,000
(Paid for newspaper advertisement)
June 12 - Made partial payment:
text
Accounts Payable 7,500
Cash 7,500
(Paid part of amount owed to Office Depot)
June 12 - Services provided on account:
text
Accounts Receivable 51,000
Fees Earned 51,000
(Services provided on credit from June 1-12)
June 14 - Paid salary:
text
Salary Expense 11,000
Cash 11,000
(Paid two weeks' salary to receptionist)
June 17 - Cash services:
text
Cash 65,000
Fees Earned 65,000
(Cash received for services rendered June 1-16)
June 18 - Purchased supplies:
text
Supplies 7,500
Cash 7,500
(Purchased additional supplies for cash)
June 20 - Services on account:
text
Accounts Receivable 31,000
Fees Earned 31,000
(Services provided on credit from June 13-20)
June 24 - Cash services:
text
Cash 51,500
Fees Earned 51,500
(Cash received for services rendered June 17-24)
June 26 - Collected receivables:
text
Cash 69,000
Accounts Receivable 69,000
(Collected cash from credit clients)
June 27 - Paid salary:
text
Salary Expense 11,000
Cash 11,000
(Paid two weeks' salary to receptionist)
June 29 - Paid telephone bill:
text
Utility Expense 1,500
Cash 1,500
(Paid June telephone bill)
June 30 - Paid electricity bill:
text
Utility Expense 4,000
Cash 4,000
(Paid June electricity bill)
June 30 - Cash services:
text
Cash 25,000
Fees Earned 25,000
(Cash received for services rendered June 25-30)
June 30 - Services on account:
text
Accounts Receivable 10,000
Fees Earned 10,000
(Services provided on credit for remainder of June)
June 30 - Owner withdrawal:
text
Mr. Dagi, Drawing 50,000
Cash 50,000
(Owner withdrew cash for personal use)
STEP 3: POSTING TO LEDGER (Four-column accounts)
Due to space, I'll summarize the ledger account balances:
Cash (11):
Debits: 200,000 + 27,000 + 30,000 + 65,000 + 51,500 + 69,000 + 25,000 = 467,500
Credits: 60,000 + 24,000 + 2,000 + 7,500 + 11,000 + 7,500 + 11,000 + 1,500 + 4,000 + 50,000 =
178,500
Balance: 289,000 Dr
Accounts Receivable (12):
Beginning: 45,000
Added: 51,000 + 31,000 + 10,000 = 92,000
Subtracted: 30,000 + 69,000 = 99,000
Balance: 38,000 Dr
Supplies (14):
Beginning: 20,000
Added: 7,500
Balance: 27,500 Dr
Prepaid Rent (15):
Balance: 60,000 Dr
Prepaid Insurance (16):
Balance: 24,000 Dr
Office Equipment (18):
Beginning: 115,000
Added: 35,000
Balance: 150,000 Dr
Accounts Payable (21):
Credit: 35,000
Debit: 7,500
Balance: 27,500 Cr
Unearned Fees (23):
Balance: 27,000 Cr
Mr. Dagi, Capital (31):
Balance: 380,000 Cr
Mr. Dagi, Drawing (32):
Balance: 50,000 Dr
Fees Earned (41):
Credits: 51,000 + 65,000 + 31,000 + 51,500 + 25,000 + 10,000 = 233,500
Balance: 233,500 Cr
Salary Expense (51):
Balance: 22,000 Dr
Utility Expense (56):
Balance: 5,500 Dr
Miscellaneous Expense (59):
Balance: 2,000 Dr
STEP 4: UNADJUSTED TRIAL BALANCE
Account Titles Debit Credit
Cash 289,000
Accounts Receivable 38,000
Supplies 27,500
Prepaid Rent 60,000
Prepaid Insurance 24,000
Office Equipment 150,000
Accounts Payable 27,500
Unearned Fees 27,000
Mr. Dagi, Capital 380,000
Mr. Dagi, Drawing 50,000
Fees Earned 233,500
Salary Expense 22,000
Utility Expense 5,500
Miscellaneous Expense 2,000
Totals 668,000 668,000
STEP 5: ADJUSTING ENTRIES
We need to make month-end adjustments. Common adjustments include:
Rent Expense: Prepaid rent covers 3 months (June, July, August)
June expense = 60,000 ÷ 3 = 20,000
text
Rent Expense 20,000
Prepaid Rent 20,000
Insurance Expense: Assuming annual policy (24,000 for 12 months)
June expense = 24,000 ÷ 12 = 2,000
text
Insurance Expense 2,000
Prepaid Insurance 2,000
Supplies Expense: Need ending supplies count. Let's assume count shows Br.7,000 supplies on
hand
Supplies used = 27,500 - 7,000 = 20,500
text
Supplies Expense 20,500
Supplies 20,500
Depreciation Expense: Assume 10% annual rate on office equipment
Monthly depreciation = 150,000 × 10% ÷ 12 = 1,250
text
Depreciation Expense 1,250
Accumulated Depreciation 1,250
Unearned Fees: Assume Br.9,000 of advance was earned in June
text
Unearned Fees 9,000
Fees Earned 9,000
Accrued Salaries: Assume no salaries accrued at month-end
STEP 6: ADJUSTED TRIAL BALANCE
Account Titles Debit Credit
Cash 289,000
Accounts Receivable 38,000
Supplies 7,000
Prepaid Rent 40,000
Prepaid Insurance 22,000
Office Equipment 150,000
Accumulated Depreciation 1,250
Accounts Payable 27,500
Unearned Fees 18,000
Mr. Dagi, Capital 380,000
Mr. Dagi, Drawing 50,000
Fees Earned 242,500
Salary Expense 22,000
Rent Expense 20,000
Supplies Expense 20,500
Depreciation Expense 1,250
Insurance Expense 2,000
Utility Expense 5,500
Miscellaneous Expense 2,000
Totals 669,250 669,250
STEP 7: FINANCIAL STATEMENTS
INCOME STATEMENT
Business Line Consulting
Income Statement
For the Month Ended June 30, 2025
Fees Earned 242,500
Total Revenue 242,500
Expenses:
Salary Expense 22,000
Rent Expense 20,000
Supplies Expense 20,500
Depreciation Expense 1,250
Insurance Expense 2,000
Utility Expense 5,500
Miscellaneous Expense 2,000
Total Expenses 73,250
NET INCOME 169,250
STATEMENT OF OWNER'S EQUITY
Business Line Consulting
Statement of Owner's Equity
For the Month Ended June 30, 2025
Mr. Dagi, Capital, June 1, 2025 380,000
Add: Net Income 169,250
549,250
Less: Withdrawals 50,000
Mr. Dagi, Capital, June 30, 2025 499,250
BALANCE SHEET
Business Line Consulting
Balance Sheet
June 30, 2025
ASSETS
Current Assets:
Cash | 289,000
Accounts Receivable | 38,000
Supplies | 7,000
Prepaid Rent | 40,000
Prepaid Insurance | 22,000
Total Current Assets | 396,000
Property, Plant & Equipment:
Office Equipment | 150,000
Less: Accumulated Depreciation | (1,250)
Net Office Equipment | 148,750
TOTAL ASSETS | 544,75
LIABILITIES AND OWNER'S EQUITY
Current Liabilities:
Accounts Payable | 27,500
Unearned Fees | 18,000
Total Liabilities | 45,500
Owner's Equity:
Mr. Dagi, Capital | 499,250
TOTAL LIABILITIES AND OWNER'S EQUITY | 544,750
STEP 8: ADDITIONAL TOPICS FROM THE SYLLABUS
The assignment also mentions other topics that are part of the course. Here's a brief overview of
each:
Manual vs. Computerized Accounting Systems:
Manual: Physical journals, ledgers, handwritten entries
Computerized: Software like QuickBooks, Sage, SAP
ERP: Enterprise Resource Planning - integrated business management software
Subsidiary Ledgers and Controlling Accounts:
Subsidiary ledger: Detailed records for individual items (e.g., individual customer accounts)
Controlling account: General ledger account that summarizes subsidiary ledger (e.g., Accounts
Receivable control account)
Special Journals:
Sales Journal: Records all credit sales
Purchases Journal: Records all credit purchases
Cash Receipts Journal: Records all cash received
Cash Payments Journal: Records all cash paid
Internal Control over Cash:
Separation of duties
Bank reconciliations
Petty cash fund management
Cash budgets
Bank Reconciliation:
Process of matching book balance to bank statement balance
Identifies timing differences, errors, unauthorized transaction
Accounting for Receivables:
Types: Accounts receivable, notes receivable
Uncollectible accounts: Allowance method vs. direct write-off method
Estimating bad debts: Percentage of sales, aging method
IMPORTANT NOTES FOR YOUR ASSIGNMENT:
Chart of Accounts Issue: The problem says "Emily Page" in the chart, but the business owner is Mr.
Dagi. Use "Mr. Dagi" in your actual assignment.
Adjusting Entries: Some assumptions were made (like supplies count and unearned fees earned).
In a real assignment, these should be given or clarified.
Presentation: Use proper formatting with headings, alignment, and professional presentation.
Four-column Journal: Make sure to include columns for Date, Explanation, Debit, Credit.
Four-column Ledger: Each ledger account should have columns for Date, Explanation, Debit,
Credit, Balance.
1.
This complete solution walks you through the entire accounting cycle for Business Line Consulting
for June 2025. Make sure to check all calculations and present your work neatly.
