Accounting Cycle:

1. Identify Transactions
2. Record Transactions (Journal Entries)
3. Post to Ledger
4. Prepare Trial Balance
5. Adjusting Entries
6. Adjusted Trial Balance
7. Prepare Financial Statements
8. Closing Entries
9. Post-Closing Trial Balance
10. Reversing Entries (Optional)

Roberto Carlos Services was formed on May 1, 2010. The following events took place during the first
month.
May:
1. Roberto Carlos invested $100,000 into the business as capital.
2. Purchased land for $25,000 in cash.
3. Provided legal services to clients for cash $1,500.
5. Bought cottages for $125,000, part of which was financed by a mortgage of $80,000.
6. Hired a new employee as a Cashier.
7. Bought furniture worth $26,000 on account.
8. Paid $6,000 for insurance for a future period.
10. Borrowed $700 cash from a bank on a note payable.
12. Purchased supplies worth $3,300 in cash.
15. Received $7,400 in advance for future rent services.
16. Carlos gift a new I-phone to his wife.
20. Earned $80,000 in rent revenue during the period.
22. Paid $51,000 in salaries to employees.
25. Paid $9,400 for utility expenses.
27. Spent $3,600 on repairs.
29. The owner, Roberto Carlos, withdrew $5,000 for personal use.
31. Paid $19,500 of the $26,000 accounts payable
 1. Identifying Transaction:
We can call an event as a Transaction, when it involves a monetary or financial impact and
effect the financial statements of the Business.
6. Hired a new employee as a Cashier.
16. Carlos gift a new I-phone to his wife.
As these two events are not involves any monetary impact and they will not effect in the financial
statement as well, These two events are not Transaction.

Transaction of Roberto Carlos Services of May, 2010:

1. Roberto Carlos invested $100,000 into the business as capital.
2. Purchased land for $25,000 in cash.
3. Provided legal services to clients for cash $1,500.
5. Bought cottages for $125,000, part of which was financed by a mortgage of $80,000.
7. Bought furniture worth $26,000 on account.
8. Paid $6,000 for insurance for a future period.
10. Borrowed $700 cash from a bank on a note payable.
12. Purchased supplies worth $3,300 in cash.
15. Received $7,400 in advance for future rent services.
20. Earned $80,000 in rent revenue during the period.
22. Paid $51,000 in salaries to employees.
25. Paid $9,400 for utility expenses.
27. Spent $3,600 on repairs.
29. The owner, Roberto Carlos, withdrew $5,000 for personal use.
31. Paid $19,500 of the $26,000 accounts payable.
2. Record Transactions (Journal Entries):
General Journal
Date Account Title Ref. Debit Credit
Cash 100,000
1-May
Owner's Capital 100,000
Land 25,000
2-May
Cash 25,000
Cash 1,500
3-May
Service Revenue 1,500
Cottages 125,000
5-May Mortgage Payable 80,000
Cash 45,000
Furniture 26,000
7-May
Accounts Payable 26,000
Prepaid Insurance 6,000
8-May
Cash 6,000
Cash 700
10-May
Notes Payable 700
Supplies 3,300
12-May
Cash 3,300
Cash 7,400
15-May
Unearned Revenue 7,400
Cash 80,000
20-May
Rent Revenue 80,000
Salaries Expense 51,000
22-May
Cash 51,000
Utility Expense 9,400
25-May
Cash 9,400
Repairs Expense 3,600
27-May
Cash 3,600
Owner's Draw 5,000
29-May
Cash 5,000
Accounts Payable 19,500
31-May
Cash 19,500
3. Post to Ledger

Cash
Date Description Debit Credit Balance
1-May Owner's Capital 100,000 100,000
2-May Land 25,000 75,000
3-May Service Revenue 1,500 76,500
5-May Cottages 45,000 31,500
8-May Prepaid Insurance 6,000 25,500
10-May Notes Payable 700 26,200
12-May Supplies 3,300 22,900
15-May Unearned Revenue 7,400 30,300
20-May Rent Revenue 80,000 110,300
22-May Salaries Expense 51,000 59,300
25-May Utility Expense 9,400 49,900
27-May Repairs Expense 3,600 46,300
29-May Owner's Draw 5,000 41,300
31-May Accounts Payable 19,500 21,800

Owner’s Capital
Date Description Debit Credit Balance
1-May Cash 100,000 100,000

Land
Date Description Debit Credit Balance
2-May Cash 25,000 25,000

Service Revenue
Date Description Debit Credit Balance
3-May Cash 1,500 1,500
 Cottages
Date Description Debit Credit Balance
5-May Cash, Mortgage Payable 125,000 125,000

Furniture
Date Description Debit Credit Balance
7-May Accounts Payable 26,000 26,000

Accounts Payable
Date Description Debit Credit Balance
7-May Furniture 26,000 26,000
31-May Cash 19,500 6,500

Prepaid Insurance
Date Description Debit Credit Balance
8-May Cash 6,000 6,000

Notes Payable
Date Description Debit Credit Balance
10-May Cash 700 700

Supplies
Date Description Debit Credit Balance
12-May Cash 3,300 3,300
 Unearned Revenue
Date Description Debit Credit Balance
15-Jan Cash 7,400 7,400

Rent Revenue
Date Description Debit Credit Balance
20-May Cash 80,000 80,000

Salaries Expense
Date Description Debit Credit Balance
22-May Cash 51,000 51,000

Utility Expense
Date Description Debit Credit Balance
25-Jan Cash 9,400 9,400

Repairs Expense
Date Description Debit Credit Balance
27-May Cash 3,600 3,600

Owner’s Drawing
Date Description Debit Credit Balance
29-May Cash 5,000 5,000
 4. Prepare Trial Balance

Roberto Carlos Business

Trial Balance
As of May 31, 2025

Account Title Debit Credit

Cash 41,300
Owner's Capital 100,000
Land 25,000
Service Revenue 1,500
Cottages 125,000
Furniture 26,000
Accounts Payable 6,500
Prepaid Insurance 6,000
Notes Payable 700
Supplies 3,300
Unearned Revenue 7,400
Rent Revenue 80,000
Salaries Expense 51,000
Utility Expense 9,400
Repairs Expense 3,600
Owner's Draw 5,000
Total 296,600 296,600

5. Adjusting Entries

1. Insurance expires at the rate of $400 per month.

2. A count on May 31 shows $600 of supplies on hand.
3. Annual depreciation is $6,000 on cottages and $2,400 on furniture.
4. Unearned rent revenue of $4,100 was earned prior to May 31.
5. Salaries of $400 were unpaid at May 31.
6. The mortgage interest rate is 9% per year. (The mortgage was taken out on may 5)
Adjusting Journal Entries
General Journal
Date Account Title Ref, Debit Credit
Insurance Expense 400
31-Aug
Prepaid Insurance 400
Supplies Expense 2,700
31-Aug
Supplies 2,700
Depreciation Expense - Cottages 6,000
31-Aug
Accumulated Depreciation - Cottages 6,000
Depreciation Expense - Furniture 2,400
31-Aug
Accumulated Depreciation - Furniture 2,400
Unearned Revenue 4,100
31-Aug
Rent Revenue 4,100
Salaries Expense 400
31-Aug
Salaries Payable 400
Interest Expense 2,400
31-Aug
Interest Payable 2,400

Adjusting Ledger Posting

Cash

Date Description Debit Credit Balance

31-Aug Adjusting Entries 4,400 41,300

Prepaid Insurance

Date Description Debit Credit Balance

31-Aug Insurance Expense 400 5,600

Supplies
 Date Description Debit Credit Balance
31-Aug Supplies Expense 2,700 600

Cottages

Date Description Debit Credit Balance

31-Aug Depreciation Expense 6,000 119,000

Furniture

Date Description Debit Credit Balance

31-Aug Depreciation Expense 2,400 23,600

Unearned Revenue

Date Description Debit Credit Balance

31-Aug Rent Revenue 4,100 3,300

Rent
Revenue

Date Description Debit Credit Balance

31-Aug Unearned Revenue 4,100 84,100

Salaries Expense

Date Description Debit Credit Balance

31-Aug Salaries Payable 400 51,400

Interest Expense

Date Description Debit Credit Balance

31-Aug Interest Payable 2,400 2,400
Interest Payable

Date Description Debit Credit Balance

31-Aug Interest Expense 2,400 2,400

6. Adjusted Trial Balance

Roberto Carlos Business
Adjusted Trial Balance
As of May 31, 2025

Account Title Debit ($) Credit ($)

Cash 41,300
Owner's Capital 100,000
Land 25,000
Service Revenue 1,500
Cottages 119,000
Furniture 23,600
Accounts Payable 6,500
Prepaid Insurance 5,600
Notes Payable 700
Supplies 600
Unearned Revenue 3,300
Rent Revenue 84,100
Salaries Expense 51,400
Utility Expense 9,400
Repairs Expense 3,600
Owner's Draw 5,000
Interest Expense 2,400
Salaries Payable 400
Interest Payable 2,400
Total 296,300 296,300

7. Prepare Financial Statements

 Roberto Carlos Business
Income Statement
For the Period Ended May 31, 2010

Revenues:
Rent Revenue: 84,100
Service Revenue: 1,500
Total Revenues: 85,600

Expenses:
Salaries Expense: 51,400
Utility Expense: 9,400
Repairs Expense: 3,600
Depreciation Expense - Cottages: 6,000
Depreciation Expense - Furniture: 2,400
Interest Expense: 2,400
Total Expenses: 75,200

Net Income: 10,400

Roberto Carlos Business

Owner's Equity Statement
For the Period Ended May 31, 2010

Owner's Capital, Beginning: 100,000

Add: Net Income: 10,400
Less: Owner's Draw: (5,000)

Owner's Capital, Ending: 105,400

 Roberto Carlos Business
Balance Sheet
As of May 31, 2010
Assets
Current Assets:
Cash: 41,300
Supplies: 600
Prepaid Insurance: 5,600
Total Current Assets: 47,500

Non-Current Assets:
Land: 25,000
Cottages: 119,000
Furniture: 23,600
Total Non-Current Assets: 167,600

Total Assets: 215,100

Liabilities
Current Liabilities:
Accounts Payable: 6,500
Salaries Payable: 400
Interest Payable: 2,400
Unearned Revenue: 3,300
Total Current Liabilities: 12,600

Non-Current Liabilities:
Notes Payable: 700
Total Non-Current Liabilities: 700

Total Liabilities: 13,300

Owner's Equity
Owner's Capital: 100,000
Add: Retained Earnings: 10,400
Less: Owner's Draw: (5,000)
Total Owner's Equity: 105,400

Total Liabilities and Owner's Equity: 215,100

 8. Closing Entries

Closing Journal

Date Account Title Ref. Debit Credit

Rent Revenue 84,100
31-May Service Revenue 1,500
Income Summary 85,600
Income Summary 75,200
Salaries Expense 51,400
Utility Expense 9,400
31-May
Repairs Expense 3,600
Depreciation Expense 8,400
Interest Expense 2,400
Income Summary 10,400
31-May
Owner's Capital 10,400
Owner's Capital 5,000
31-May
Owner's Drawing 5,000
Closing Ledger
Rent Revenue

Date Ref. Debit Credit Balance

31-May 84,100 0

Service Revenue

Date Ref. Debit Credit Balance

31-May 1,500 0

Income Summary

Date Ref. Debit Credit Balance

31-May Rent Revenue 84,100 84,100
31-May Service Revenue 1,500 85,600
31-May Salaries Expense 51,400 34,200
31-May Utility Expense 9,400 24,800
31-May Repairs Expense 3,600 21,200
31-May Depreciation Exp 8,400 12,800
31-May Interest Expense 2,400 10,400
31-May Owner's Capital 10,400 0

Salaries Expense

Date Ref. Debit Credit Balance

31-May 51,400 0

Utility Expense
 Date Ref. Debit Credit Balance
31-May 9,400 0

Repairs Expense

Date Ref. Debit Credit Balance

31-May 3,600 0

Depreciation Expense

Date Ref. Debit Credit Balance

31-May 8,400 0

Interest Expense

Date Ref. Debit Credit Balance

31-May 2,400 0

Owner's Capital

Date Ref. Debit Credit Balance

31-May Income Summary 10,400 10,400
31-May Owner's Drawing 5,000 5,400

Owner's
Drawing

Date Ref. Debit Credit Balance

31-May 5,000 0

9. Post-Closing Trial Balance

 Roberto Carlos Business
Adjusted Trial Balance
As of May 31, 2025
Account Debit Credit
Cash 41,300
Supplies 600
Prepaid Insurance 5,600
Land 25,000
Cottages 125,000
Accumulated Depreciation - Cottages 6,000
Furniture 26,000
Accumulated Depreciation - Furniture 2,400
Accounts Payable 6,500
Salaries Payable 400
Interest Payable 2,400
Unearned Rent Revenue 3,300
Notes Payable 700
Mortgage Payable 80,000
Owner's Capital 105,400
Totals 223,500 223,500

10. Reversing Entries (Optional)