Cardinal Window Washing Inc. recorded various business transactions during July 2010, including issuing stock, purchasing a truck, billing and collecting from customers, paying expenses, and declaring a dividend. Net income for the month was $3,800. Post-closing entries closed revenue and expense accounts to the income summary account and dividends account to retained earnings. The adjusted trial balance and financial statements were completed.

1. Problem 4-8A
Linda Blye opened Cardinal Window Washing Inc. on July 1, 2010. During July the following
transactions were completed.
July 1 Issued 11,000 shares of common stock for $11,000 cash.
July 1 Purchased used truck for $9,000, paying $2,000 cash and the balance on
account.
July 3 Purchased cleaning supplies for $900 on account.
July 5 Paid $1,800 cash on 1-year insurance policy effective July 1.
July 12 Billed customers $3,200 for cleaning services.
July 18 Paid $1,000 cash on amount owed on truck and $500 on amount owed on
cleaning supplies.
July 20 Paid $2,000 cash for employee salaries.
July 21 Collected $1,400 cash from customers billed on July 12.
July 25 Billed customers $2,500 for cleaning services.
July 31 Paid $260 for gas and oil used in the truck during month.
July 31 Declared and paid a $600 cash dividend.
Journalize the July transactions. (List multiple debit/credit entries from largest to
smallest amount, e.g. 10, 5, 2.)
Date Account/Description Debit Credit
July 1 Cash 11,000
Common Stock 11,000
(To record the issuance of stock)
July 1 Equipment 9,000
Accounts Payable 7,000
Cash 2,000
(To record the purchase of a truck)
July 3 Cleaning Supplies 900
Accounts Payable 900
July 5 Prepaid Insurance 1,800
Cash 1,800
July 12 Accounts Receivable 3,200
Service Revenue 3,200
July 18 Accounts Payable 1,500
Cash 1,500
July 20 Salaries Expense 2,000
Cash 2,000
July 21 Cash 1,400
Accounts Receivable 1,400
July 25 Accounts Receivable 2,500
Service Revenue 2,500
July 31 Gas & Oil Expense 260
Cash 260
(Paid for gas and oil)
July 31 Dividends 600
Cash 600

2. (Declared and paid a dividend)
Journalize the following adjustments.
1. Services provided but unbilled and uncollected at July 31 were $1,700.
2. Depreciation on equipment for the month was $250.
3. One-twelfth of the insurance expired.
4. An inventory count shows $360 of cleaning supplies on hand at July 31.
5. Accrued but unpaid employee salaries were $400.
Date Account/Description Debit Credit
1. July 31 Accounts Receivable 1,700
Service Revenue 1,700
2. July 31 Depreciation Expense 250
Accumulated Depreciation 250
3. July 31 Insurance Expense 150
Prepaid Insurance 150
4. July 31 Cleaning Supplies Expense 540
Cleaning Supplies 540
5. July 31 Salaries Expense 400
Salaries Payable 400
Post the July transactions to the ledger accounts. (Use T accounts.) Post adjusting entries to
the T accounts. Post closing entries and complete the closing process. (If answer is zero,
please enter 0, do not leave any fields blank.)
Cash Accounts Payable
7/1 11,000 7/1 2,000 7/18 1,500 7/1 7,000
7/21 1,400 7/5 1,800 7/3 900
7/31
7/18 1,500 Bal. 6,400
7/20 2,000
7/31 260 Salaries Payable
7/31 600 7/31 400
7/31 7/31
Bal. 4,240 Bal. 400
Accounts Receivable Common Stock
7/12 3,200 7/21 1,400 7/1 11,000
7/31
7/25 2,500 Bal. 11,000
7/31 1,700
7/31
Bal. 6,000 Retained Earnings
7/31 600 7/31 3,800
7/31
Cleaning Supplies Bal. 3,200
7/3 900 7/31 540
7/31
Dividends
Bal. 360
7/31 600 7/31 600
7/31
Bal 0
Prepaid Insurance
7/5 1,800 7/31 150 Income Summary
7/31 1,650 7/31 3,600 7/31 7,400

3. Bal.
7/31 3,800
7/31
Equipment Bal. 0
7/1 9,000
7/31
Service Revenue
Bal. 9,000
7/31 7,400 7/12 3,200
Accumulated Depreciation - Equipment 7/25 2,500
7/31 250 7/31 1,700
7/31 7/31
Bal. 250 Bal. 0
Gas and Oil Expense Insurance Expense
7/31 260 7/31 260 7/31 150 7/31 150
7/31 7/31
Bal. 0 Bal. 0
Cleaning Supplies Expense Salaries Expense
7/31 540 7/31 540 7/20 2,000 7/31 2,400
7/31
Bal. [no answer] 7/31 400
7/31
Bal. 0
Depreciation Expense
7/31 250 7/31 250
7/31
Bal. 0
Complete the Trial Balance and Adjusted Trial Balance at July 31. (If an answer is zero,
please enter 0, do not leave any fields blank.)
CARDINAL WINDOW WASHING INC.
Trial Balance
July 31, 2010
Before Adjustment After Adjustment
Debit Credit Debit Credit
Cash $ 4,240 $[no answer] $ 4,240 $[no answer]
Accounts
4,300 [no answer] 6,000 [no answer]
Receivable
Cleaning Supplies 900 [no answer] 360 [no answer]
Prepaid Insurance 1,800 [no answer] 1,650 [no answer]
Equipment 9,000 [no answer] 9,000 [no answer]
Acc. Depr. -
[no answer] [no answer] [no answer] 250
Equipment
Accounts Payable [no answer] 6,400 [no answer] 6,400
Salaries Payable [no answer] [no answer] [no answer] 400
Common Stock [no answer] 11,000 [no answer] 11,000
Dividends 600 [no answer] 600 [no answer]
Service Revenue [no answer] 5,700 [no answer] 7,400
Salaries Expense 2,000 [no answer] 2,400 [no answer]
Gas & Oil Expense 260 [no answer] 260 [no answer]
Depreciation
[no answer] [no answer] 250 [no answer]
Expense
Insurance Expense [no answer] [no answer] 150 [no answer]
Cleaning Supplies
[no answer] [no answer] 540 [no answer]
Expense
$ 23,100 $ 23,100 $ 25,450 $ 25,450
Complete the income statement and a retained earnings statement for July and a classified

4. balance sheet at July 31 (List expenses from largest to smallest amount, e.g. 10, 5, 2.
List assets in order of liquidity and liabilities from largest to smallest amount, e.g.
10, 5, 2.)
CARDINAL WINDOW WASHING INC.
Income Statement
For the Month Ended July 31, 2010
Revenues
Service revenue $ 7,400
Expenses
Salaries Expense $ 2,400
Cleaning Supplies Expense 540
Gas & Oil Expense 260
Depreciation Expense 250
Insurance Expense 150
Total Expenses 3,600
Net Income $ 3,800
CARDINAL WINDOW WASHING INC.
Retained Earnings Statement
For the Month Ended July 31, 2010
Retained earnings, July 1 $0
Add: Net income 3,800
3,800
Less: Dividends 600
Retained earnings, July 31 $ 3,200
CARDINAL WINDOW WASHING INC.
Balance Sheet
July 31, 2010
Assets
Current assets
Cash
Accounts Receivable
Cleaning supplies
Prepaid Insurance
Total current assets
Property, plant, and equipment
Equipment
Less: Accumulated Depreciation
Total assets
Liabilities and Stockholders’ Equity
Current liabilities
Accounts Payable
Salaries Payable
Total current liabilities
Stockholders’ equity
Common stock
Retained earnings
Total stockholders’ equity
Total liabilities and stockholders’ equity
Journalize the post closing entries. (List multiple debit/credit entries from largest to
smallest amount, e.g. 10, 5, 2.)
Date Account/Description Debit Credit
July 31 Service Revenue 7,400
Income Summary 7,400
(To close revenue accounts.)
July 31 Income Summary 3,600
Salaries Expense 2,400

5. Cleaning Supplies Expense 540
Gas & Oil Expense 260
Depreciation Expense 250
Insurance Expense 150
(To close expense accounts.)
July 31 Income Summary 3,800
Retained Earnings 3,800
(To close income summary. )
July 31 Retained Earnings 600
Dividends 600
(To close dividends.)
Complete the post closing Trial Balance below. (If answer is zero please enter 0, do not
leave any fields blank.)
CARDINAL WINDOW WASHING INC.
Post-Closing Trial Balance
July 31, 2010
Debit Credit
Cash $ 4,240 $[0]
Accounts Receivable 6,000 0]
Cleaning Supplies 360 [0]
Prepaid Insurance 1,650 [0]
Equipment 9,000 [0]
Accumulated Depreciation [0] 250
Accounts Payable [0] 6,400
Salaries Payable [0] 400
Common Stock [0] 11,000
Retained Earnings [0] 3,200
Dividends [0] 0
Service Revenue [0] 0
Salaries Expense [0] 0
Gas & Oil Expense [0] 0
Depreciation Expense [0] 0
Insurance Expense [0] 0
Cleaning Supplies Expense [0] 0
$ 21,250 $ 21,250