Applying the accounting cycle On July 1, 2013, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred...

Applying the accounting cycleOn July 1, 2013, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during the company’s first month.July1Plume invested $30,000 cash and buildings worth $150,000 in the company.2The company rented equipment by paying $2,000 cash for the first month’s (July) rent.5The company purchased $2,400 of office supplies for cash.10The company paid $7,200 cash for the premium on a 12-month insurance policy. Coverage begins on July 11.14The company paid an employee $1,000 cash for two weeks’ salary earned.24The company collected $9,800 cash for storage fees from customers.28The company paid $1,000 cash for two weeks’ salary earned by an employee.29The company paid $950 cash for minor repairs to a leaking roof.30The company paid $400 cash for this month’s telephone bill.31Plume withdrew $2,000 cash from the company for personal use.The company’s chart of accounts follows:figure101 Cash106 Accounts Receivable124 Office Supplies128 Prepaid Insurance173 Buildings174 Accumulated Depreciation-Buildings209 Salaries Payable301 L. Plume, Capital302 L. Plume, Withdrawals401 Storage Fees Earned606 Depreciation Expense-Buildings622 Salaries Expense637 Insurance Expense640 Rent Expense650 Office Supplies Expense684 Repairs Expense688 Telephone Expense901 Income SummaryRequired1.Use the balance column format to set up each ledger account listed in its chart of accounts.2.Prepare journal entries to record the transactions for July and post them to the ledger accounts. Record prepaid and unearned items in balance sheet accounts.3.Prepare an unadjusted trial balance as of July 31.4.Use the following information to journalize and post adjusting entries for the month:a.Two-thirds of one month’s insurance coverage has expired.b.At the end of the month, $1,525 of office supplies are still available.c.This month’s depreciation on the buildings is $1,500.d.An employee earned $100 of unpaid and unrecorded salary as of month-end.e.The company earned $1,150 of storage fees that are not yet billed at month-end.5.Prepare the adjusted trial balance as of July 31. Prepare the income statement and the statement of owner’s equity for the month of July and the balance sheet at July 31, 2013.6.Prepare journal entries to close the temporary accounts and post these entries to the ledger.7.Prepare a post-closing trial balance.Check(3) Unadj. trial balance totals, $189,800(4a) Dr. Insurance Expense, $400(5) Net income, $2,725; L. Plume, Capital (7/31/2013), $180,725; Total assets, $180,825(7) P-C trial balance totals, $182,325