Journal Entries for Giles Cleaning and Lawn Mowing Service - ACCT 5023

This assignment provides a comprehensive analysis of the accounting cycle for Giles Cleaning and Lawn Mowing Service for June 2019. It meticulously details the journal entries for various transactions, including initial capital contributions, purchases of equipment and supplies, advertising expenses, revenue from cleaning and lawn mowing services, wage payments, and owner drawings. The assignment includes the preparation of cash, bank, current assets, fixed assets, sales, purchases, unearned revenue, and capital ledger accounts. Furthermore, it presents an unadjusted trial balance, adjusting entries for accrued wages, closing stock, and accrued revenues, and an adjusted trial balance. The document also includes closing journal entries, a post-closing trial balance, and a profit and loss account, demonstrating a complete understanding of the accounting cycle.

JOURNAL ENTRIES FOR A NEW OPERATION
“GILES CLEANING and LAWN MOWING SERVICE”
Submitted To:
Dr Elvia Shauki
Course Coordinator
Submitted By:
Name: Tasnia Hasan
Student ID: 110251046
Course Name: Financial Accounting
Course ID: ACCT 5023

Accounting cycle Mind Map
Below is a graphical presentation of the accounting cycle prepared and extracted using mind
map software.
Diagram 1: Ten steps in the accounting cycle
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Accounting cycle entails recording, processing and summarizing of financial information
from initialization of a transaction to preparation of reversing entry to close adjusting entries of
the accounting period. There are ten processes involved in the accounting cycle as outlined
below (Bragg, 2011, 7)
Identify and analyze a transaction
It involves careful examination of a sale to determine how to classify the transaction as per
the accounting tool. The accounting tool states that assets less liabilities should be equal to the
owner's equity. Therefore, the bookkeeper decides whether the transaction is a credit or a debit
(Needles and Crosson, 2014, pp 16).
Prepare Journal entries
Using the double entry or single entry, the bookkeeper details the company’s transactions
for the period under review, and the accounts affected by the transactions. Journal entries
manage transactions for easy decision-making (Juan, 2007, 37).
Posting in the ledger
Posting the journal entries in the ledger summarizes the information contained in the journal
entries by placing them in appropriate accounts depending on the nature of the transaction.
Ledger accounts help classify transactions for a better understanding of the financials (Ryan and
Collett, 2017, 98).
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Unadjusted trial balance
It contains all the information captured in the ledger accounts. It involves the transfer of
financial information from the ledger accounts to the trial balance without passing any
adjustments.
Adjusting entries
Adjusting entries pass amendments to the revenue and expenses account to align them to
the accounting period incurred. The adjusting entries include depreciation expense, deferred
income, deferred expense, accrued expenses, and accrued revenue. According to the accrual
basis of accounting, recording of revenue and expenses is in the accounting period-incurred
(Gilbertson et al., 2014, pp5).
Adjusted trial balance
It involves incorporation of the adjusting entries to the unadjusted trial balance. It's an internal
document prepared by the bookkeeper for a clear understanding of effects the adjusting entries
have on the financial position of the company.
Financial statements
Financial statements entail summary of financial activities of the company to indicate an
accurate financial position for the business. The financial statements include profit and loss
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account, balance sheet, cash flow statements, statement of changes in equity, movement of
assets, and statement of retained earnings among others (Bragg, 2013, 41).
Closing entries
These journal entries prepared at the end of the accounting period, to transfer balances from
the temporary account to permanent accounts such as income statement and the balance sheet.
The process involves resetting of the temporary accounts at the end of the financial year. The
closing of the revenue and expenses accounts is through the income summary.
Post-closing trial balance
The post-closing trial balance account contains all permanent accounts with balances after
zeroing out of the temporary accountants by posting the closing entries. The trial balance
includes real reports after the closure of nominal accounts (Thomas et al., 2019, 42).
Reversing entries
These journal entries prepared at the beginning of an accounting period to cancel out
adjusting entries from the previous accounting period. The purpose of the reversing entries is to
ensure the accuracy of the financial records since the accruals would be settled in the current
accounting period (Warren et al., 2017, 56).
Journal entries for June 2019
Date Account name Debit Credit
June 1 Bank $360,000
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Capital $360,000
Being own contribution to the business
Prepaid rent 23,500
cash 23,500
Being rent paid in advance
June 2 Equipment 120,960
Cash 25,500
Account payable 95,460
Being part of the payment for equipment purchase
Washing supplies 3,180
Cash 3,180
Being purchase of washing supplies
Oil and fuel supplies 5,220
Cash 5,220
Being purchase for oil and fuel supplies
June 3 Advertisement
expense
2,880
Cash 2,880
Being payment for advertisement expense
June 6 Cash 540
Unearned revenue 540
Being earned revenue from cleaning services
Cash 8,400
Lawn Mowing 8,400
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Being cash received for lawn mowing
June 8 Cash 19,200
Prepayment A/C 19,200
Being unearned revenue
June 13 Cash 9,600
Lawn Mowing 9,600
Being cash received for lawn mowing
June 14 Wages 4,620
Cash 4,620
Being payment of wages
June 17 Account payable 95,460
Cash 95,460
Being payment for the outstanding balance on the equipment purchase
June 21 Cash 3,900
Account receivable 900
Cleaning services 4,800
Being cash received for cleaning services and accrued revenue
Cash 8,370
Lawn Mowing 8,370
Being cash received for mowing services
June 28 Cash 5,280
Cleaning services 5,280
Being cash received for cleaning services
Cash 7,590
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Lawn Mowing 7,590
Being cash received for lawn mowing services
Wages 5,010
Cash 5,010
Being payment for wages
June 30 Drawings 12,000
Cash 12,000
Being cash drawn from business for mortgage repayment
Depreciation expense 1,680
Accumulated
depreciation
1,680
Being depreciation on the washing equipment
Running balance ledger accounts
Cash ledger account
Account No.1
Date Description Ref Debit Credit balance
1 Prepaid rent 23,400 (23,400)
2 Cleaning equipment
purchase
25,500 (48,900)
Purchase of washing
supplies
3,180 (52,080)
Purchase of fuel and oil 5,220 (57,300)
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3 Advertising expense 2,880 (60,180)
6 Receipt for unearned
revenue on cleaning
services
540 (59,640)
Receipt for lawn mowing
services
8,400 (51,240)
8 Prepayment for cleaning
services
19,200 (32,040)
13 Receipt for lawn mowing
services
9,000 (23,040)
14 Payment of wages 4,620 (27,660)
21 Receipt for cleaning
services
3,900 (23,760)
Receipt for lawn mowing
services
8,370 (15,390)
28 Receipt for cleaning
services
5,280 (10,110)
Receipt for lawn mowing
services
7,590 (2,520)
Payment of wages 5,010 (6,930)
30 Drawings to repay the loan 12,000 (18,930)
Payment for equipment 95,460 (114,990)
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The cash ledger account gives a full picture of the cash position for the company for the
period under review. It helps the bookkeeper in decision making regarding the liquidity of the
business (Collis, 2016, 13).
Bank ledger account
Account No.2
Date Description Ref Debit Credit balance
1 Capital injection 360,000 360,000
30 Balance from the cash
account
114,990 245,010
The bank ledger account includes the summary of balance from the cash ledger account,
which in this case has a debit balance (Dyckman et al., 2017, 15).
Current assets ledger account
Account No.3
Date Description Ref Debit Credit balance
1 Rent paid in advance 23,500 23,500
The rent paid in advance unutilized. Therefore, it's an asset to the company until its
expensed (Fortes, 2011, 14).
Fixed asset ledger account
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Account No.4
Date Description Ref Debit Credit balance
1 Acquisition of equipment 120,960 120,960
The acquisition of the equipment is on both cash and credit. The entry in the long term
assets is at the original price based on the accrual method of accounting.
Sales ledger account
Account No.5
Date Description Ref Debit Credit balance
6 Lawn Mowing 8,400 8,400
Cleaning services 540 8,940
13 Lawn Mowing 9,600 18,540
21 Lawn Mowing 8,370 26,910
Cleaning services 4,800 31,710
28 Lawn Mowing 7,590 39,300
Cleaning services 5,280 44,580
The core activity of the company is cleaning services and lawn mowing. Therefore, the
revenue stream is from the services offered as indicated in the sales ledger.
Purchases ledger
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Account No.6
Date Description Ref Debit Credit balance
2 Washing supplies 3,180 3,180
Fuel and oil supplies 5,220 8,400
These are the materials required to offer revenue-generating services. The recording is at
cost.
Unearned revenue ledger
Account No.8
Date Description Ref Debit Credit balance
6 Prepaid cleaning services 540 540
Prepaid cleaning services 19,200 19,740
Unearned revenue is a liability to the company as the business receives payment whose
services is due. A reversing entry is passed on rendering the service. The recording of the
transaction is as per the accrual basis of accounting and the prudence principal (Weygandt, 2019,
89).
Capital ledger account
Account No.7
Date Description Ref Debit Credit balance
1 Capital injection 360,000 360,000
The capital was the owner's contribution to the business's bank account.
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