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Review Exercise
Catherine Gordon is running her own proprietary business called CG Accounting. CG
Accounting provides bookkeeping services to small and mid-sized companies.The company
prepares financial statements on a monthly basis.
The journal entries for the month of June have already been entered in the journal and posted to
the ledger.
At the end of June 2016, CG Accounting had to make the following adjustments.
Jun 30 The prepaid insurance represents a one-year policy that started in June. One month
has now been used.
Jun 30 When examining the balance of unearned revenue, Catherine determined that $450
has now been earned.
Jun 30 Interest has accrued on the balance of the bank loan for the month.The loan interest
rate is 10%. (For simplicity, round the interest to the nearest whole number.)
Jun 30 Depreciation on the equipment for the month must be recorded.The equipment is
depreciated using the straight-line method.The equipment is expected to last five
years and will have no residual value
Jun 30 Catherine started an audit for a new client.The contract is for 20 days of work
starting June 21. At the end of the contract, the client will pay CG Accounting
$1,800. Accrue the revenue earned for June.
Chapter 6 Appendix
The Accounting Cycle: Statements and Closing Entries
