Concept explainers
Net Income: $51,150
Ledger accounts,
The unadjusted
The data needed to determine year-end adjustments are as follows
(a) Supplies on hand at March 31 arc $7,500
(b) Insurance premiums expired during year are $1,800.
(c)
(d) Depreciation of trucks during year is $6,200
(e) Wages accrued but not paid at March 31 are $600
Instructions
1. For each account listed in the trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark (✓) in the Posting Reference column.
2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet Add the account» listed in part (3) as needed.
3-Journalize and post the adjusting entries, inserting balances in the accounts affected. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Lakota Freight Co.’s clean of accounts should lie used: Wages Payable, 22; Supplies Expense, 52; Depreciation Expense—Equipment. 55; Depreciation Expense—Trucks. 56; Insurance Expense. 57.
4. Prepare an adjusted trial balance.
5. Prepare an income statement, a statement of stockholders’ equity, and a
6. Journalize and
7. Prepare a post-closing trial balance.
1, 3, and 6:
To prepare: The T-accounts.
Explanation of Solution
T-Accounts:
T-accounts are referred as T-account because its format represents the letter “T”. The T-accounts consists of the following:
- The title of accounts.
- The debit side (Dr) and,
- The credit side (Cr).
Record the transactions directly in their respective T-accounts, and determine their balances.
Account: Cash Account no. 11 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance | ✓ | 12,000 |
Account: Supplies Account no. 13 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance | ✓ | 30,000 | |||
31 | Adjusting | 26 | 22,500 | 7,500 |
Account: Prepaid Insurance Account no. 14 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance | ✓ | 3,600 | |||
31 | Adjusting | 26 | 1,800 | 1,800 |
Account: Equipment Account no. 16 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance | ✓ | 110,000 |
Account: Accumulated Depreciation-Office equipment Account no. 17 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance | ✓ | 25,000 | |||
31 | Adjusting | 26 | 8,350 | 33,350 |
Account: Trucks Account no. 18 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance | ✓ | 60,000 |
Account: Accumulated Depreciation- Truck Account no. 19 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance | ✓ | 15,000 | |||
31 | Adjusting | 26 | 6,200 | 21,200 |
Account: Accounts Payable Account no. 21 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance | ✓ | 4,000 |
Account: Wages Payable Account no. 22 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Adjusting | 26 | 600 | 600 |
Account: Common Stock Account no. 31 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance |
| 26,000 | 26,000 |
Account: Retained Earnings Account no. 32 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance | ✓ | 70,000 | |||
31 | Closing | 27 | 51,150 | 121,150 | |||
31 | Closing | 27 | 15,000 | 106,150 |
Account: Dividends Account no. 33 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance |
| 15,000 | |||
31 | Closing | 27 | 15,000 |
Account: Income Summary Account no. 34 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Closing | 27 | 160,000 | 160,000 | ||
31 | Closing | 27 | 108,850 | 51,150 | |||
31 | Closing | 27 | 51,150 |
Account: Service revenue Account no. 41 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance | ✓ | 160,000 | |||
31 | Closing | 27 | 160,000 |
Account: Wages expense Account no. 51 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance | ✓ | 45,000 | |||
31 | Adjusting | 26 | 600 | 45,600 | |||
31 | Closing | 27 | 45,600 |
Account: Supplies Expense Account no. 52 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Adjusting | 26 | 22,500 | 22,500 | ||
31 | Closing | 27 | 22,500 |
Account: Rent expense Account no. 53 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance | ✓ | 10,600 | |||
31 | Closing | 27 | 10,600 |
Account: Truck Expense Account no. 54 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Balance | ✓ | 9,000 | |||
31 | Closing | 27 | 9,000 |
Account: Depreciation Expense- Equipment Account no. 55 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Adjusting | 26 | 8,350 | 8,350 | ||
31 | Closing | 27 | 8,350 |
Account: Depreciation Expense- Equipment Account no. 55 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Adjusting | 26 | 8,350 | 8,350 | ||
31 | Closing | 27 | 8,350 |
Account: Depreciation Expense- Trucks Account no. 56 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y4 | |||||||
March | 31 | Adjusting | 26 | 6,200 | 6,200 | ||
31 | Closing | 27 | 6,200 |
Account: Insurance expense Account no. 57 | |||||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||||
Debit ($) | Credit ($) | ||||||||
20Y4 | |||||||||
March | 31 | Adjusting | 26 | 1,800 | 1,800 | ||||
31 | Closing | 27 | 1,800 | ||||||
Account: Miscellaneous expense Account no. 59 | |||||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||||
Debit ($) | Credit ($) | ||||||||
20Y4 | |||||||||
March | 31 | Balance | ✓ | 4,800 | |||||
31 | Closing | 27 | 4,800 |
2.
To enter: The unadjusted trial balance on an end-of-period spreadsheet, and complete the spreadsheet.
Explanation of Solution
Spreadsheet:
A spreadsheet is a worksheet. It is used while preparing a financial statement. It is a type of form having multiple columns and it is used in the adjustment process. The use of a worksheet is optional for any organization. A worksheet can neither be considered as a journal nor a part of the general ledger.
The unadjusted trial balance on an end-of-period spreadsheet is prepared as follows:
Table (1)
Hence, the unadjusted trial balance on an end-of-period spreadsheet is prepared and completed.
3.
To Journalize and post: The adjusting entries.
Explanation of Solution
Adjusting entries:
An adjusting entry is prepared when the trial balance is not up-to-date, and complete, and they are usually prepared at the end of the accounting period. This adjusting entry is essential for preparing the financial statements of the business.
The adjusting entries are journalized as follows:
Date | Description |
Post Ref. | Debit ($) | Credit ($) | |
20Y4 | Supplies expense | 52 | 22,500 | ||
March | 31 | Supplies | 13 | 22,500 | |
(To record the supplies used) |
Table (2)
Description:
- • Supplies expense is an expense account, and it is increased. Hence, debit the supplies expense account by $22,500.
- • Supplies are the asset account, and it is increased. Hence, credit the supplies account by $22,500.
Date | Description |
Post Ref. | Debit ($) | Credit ($) | |
20Y4 | Insurance expense | 57 | 1,800 | ||
March | 31 | Prepaid insurance | 14 | 1,800 | |
(To record the insurance expired) |
Table (3)
Description:
- • Insurance expense is an expense account, and it is increased. Hence, debit the insurance expense account by $1,800.
- • Prepaid insurance is an asset account, and it is decreased. Hence, credit the prepaid insurance account by $1,800.
Date | Description |
Post Ref. | Debit ($) | Credit ($) | |
20Y4 | Depreciation expense-Equipment | 55 | 8,350 | ||
March | 31 | Accumulated depreciation- Equipment | 17 | 8,350 | |
(To record the equipment depreciation) |
Table (4)
Description:
- • Depreciation expense is an expense account, and it is increased. Hence, debit the wages expense account by $8,350.
- • Accumulated depreciation is a contra asset account, and it is increased. Hence, credit the accumulated depreciation account by $8,350.
Date | Description |
Post Ref. | Debit ($) | Credit ($) | |
20Y4 | Depreciation expense-Truck | 56 | 6,200 | ||
March | 31 | Accumulated depreciation- Truck | 19 | 6,200 | |
(To record the truck depreciation) |
Table (5)
Description:
- • Depreciation expense is an expense account, and it is increased. Hence, debit the wages expense account by $6,200.
- • Accumulated depreciation is a contra asset account, and it is increased. Hence, credit the accumulated depreciation account by $6,200.
Date | Description |
Post Ref. | Debit ($) | Credit ($) | |
20Y4 | Wages expense | 51 | 600 | ||
March | 31 | Wages payable | 22 | 600 | |
(To record the wages accrued) |
Table (6)
Description:
- • Wages expense is an expense account, and it is increased. Hence, debit the wages expense account by $600.
- • Wages payable is a liability account, and it is increased. Hence, credit the wages payable account by $600.
4.
To prepare: An adjusted trial balance for Company L, as of March 31, 20Y4.
Explanation of Solution
Adjusted trial balance:
The unadjusted trial balance is the summary of all the ledger accounts that appears on the ledger accounts before making adjusting journal entries.
Prepare an adjusted trial balance for Company L, as of March 31, 20Y4.
Company L | |||
Adjusted Trial Balance | |||
March 31, 20Y4 | |||
Accounts | Account Number | Debit Balances | Credit Balances |
Cash | 11 | 12,000 | |
Supplies | 13 | 7,500 | |
Prepaid Insurance | 14 | 1,800 | |
Equipment | 16 | 110,000 | |
Accumulated depreciation- Equipment | 17 | 33,350 | |
Trucks | 18 | 60,000 | |
Accumulated depreciation- Trucks | 19 | 21,200 | |
Accounts payable | 21 | 4,000 | |
Wages Payable | 22 | 600 | |
Common stock | 31 | 26,000 | |
Retained earnings | 32 | 70,000 | |
Dividends | 15,000 | ||
Service revenue | 41 | 160,000 | |
Wages expense | 51 | 45,600 | |
Supplies expense | 52 | 22,500 | |
Rent Expense | 53 | 10,600 | |
Truck Expense | 54 | 9,000 | |
Depreciation Expense- Equipment | 55 | 8,350 | |
Depreciation Expense- Trucks | 56 | 6,200 | |
Insurance Expense | 57 | 1,800 | |
Miscellaneous Expense | 59 | 4,800 | |
315,150 | 315,150 |
Table (7)
The debit column and credit column of the adjusted trial balance are agreed, both having balance of $315,150.
5.
The net income or net loss of L Company for the month of January and prepare the statement of retained earnings and balance sheet of L Company.
Explanation of Solution
Income statement:
An income statement is one of the financial statements which shows the revenues, and expenses of the company. The income statement is prepared to ascertain the net income/loss of the company, by deducting the expenses from the revenues.
Company L | ||
Income Statement | ||
For the year ended March 31, 20Y4 | ||
Particulars | Amount ($) | Amount ($) |
Revenue: | ||
Service revenue | $160,000 | |
Expenses: | ||
Wages Expense | 45,600 | |
Supplies Expense | 22,500 | |
Rent Expense | 10,600 | |
Truck Expense | 9,000 | |
Depreciation Expense-Equipment | 8,350 | |
Depreciation Expense-Trucks | 6,200 | |
Insurance Expense | 1,800 | |
Miscellaneous Expense | 4,800 | |
Total Expenses | 108,850 | |
Net Income | $51,150 |
Table (8)
Statement of retained earnings: This statement reports the beginning retained earnings and all the changes which led to ending retained earnings. Net income from income statement is added to and dividends are deducted from beginning retained earnings to arrive at the end result, ending retained earnings.
The statement of retained earnings for the year ended March 31, 20Y4 is as follows:
Company L | ||
Statement of Retained Earnings | ||
For the Year Ended March 31, 20Y4 | ||
Particulars | Amount ($) | Amount ($) |
Balance, April 1, 20Y4 | $70,000 | |
Add: Net income | $51,150 | |
Less: Dividends | (15,000) | |
36,150 | ||
Balance, March 31, 20Y4 | $106,150 |
Table (9)
Balance sheet:
A balance sheet is a financial statement consists of the assets, liabilities, and the stockholder’s equity of the company. The balance of the assets account must be equal to that of the liabilities and the stockholder’s equity account.
Prepare the balance sheet of Company L at March 31, 20Y4.
Company L | |||
Balance Sheet | |||
For the year ended March 31, 20Y4 | |||
Assets | |||
Current Assets: | |||
Cash | $12,000 | ||
Supplies | 7,500 | ||
Prepaid Insurance | 1,800 | ||
Total Current Assets | $21,300 | ||
Property, plant and equipment: | |||
Equipment | $110,000 | ||
Less: Accumulated Depreciation- Equipment | (33,350) | $76,650 | |
Trucks | $60,000 | ||
Less: Accumulated Depreciation- Trucks | (21,200) | 38,800 | |
Total property, plant, and equipment | 115,450 | ||
Total Assets | $136,750 | ||
Liabilities | |||
Current Liabilities: | |||
Accounts Payable | $4,000 | ||
Wages Payable | 600 | ||
Total Liabilities | $4,600 | ||
Owner’s Equity | |||
Common stock | $26,000 | ||
Retained earnings | 106,150 | ||
Total stockholder’s equity | 132,150 | ||
Total Liabilities and Owners’ Equity | $136,750 |
Table (10)
It is one of the financial statements, which shows the assets, liabilities, and stockholders’ equity of a company at a particular point of time. It reveals the financial health of a company. Thus, this statement is also called as the Statement of Financial Position. It helps the users to know about the creditworthiness of a company as to whether the company has enough assets to pay off its liabilities.
Therefore, the net income for the year ended is $51,150, retained earnings for the year ended are $106,150, and the total assets and total liabilities plus stockholders’ equity at March 31, 20Y4 is $136,750 of Company L.
6.
To Journalize: The closing entries for Company L.
Answer to Problem 4.4APR
Closing entry for revenue and expense accounts:
Date | Accounts title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
March 31, 20Y4 | Service revenue | 41 | 160,000 | |
Wages expense | 51 | 45,600 | ||
Supplies Expense | 52 | 22,500 | ||
Rent Expense | 53 | 10,600 | ||
Truck Expense | 54 | 9,000 | ||
Depreciation Expense–Equipment | 55 | 8,350 | ||
Depreciation Expense–Trucks | 56 | 6,200 | ||
Insurance Expense | 57 | 1,800 | ||
Miscellaneous Expense | 59 | 4,800 | ||
Retained Earnings | 34 | 160,000 | ||
(To close the revenues and expenses account. Then the balance amount are transferred to retained earnings account) | 32 | 51,150 | ||
March 31, 20Y4 | Retained earnings | 32 | 15,000 | |
Dividends | 33 | 15,000 | ||
(To close the dividend account to retained earnings account) |
Table (11)
Explanation of Solution
Closing entries
Closing entries are recorded in order to close the temporary accounts such as incomes and expenses by transferring them to the permanent accounts such as retained earnings. It is passed at the end of the accounting period, to transfer the final balance.
Process of closing:
- • The balance of revenue and expense are transferred to retrained earnings account.
- • The balance of dividend account is transferred to retained earnings account to close the temporary accounts.
Rules of Debit and Credit:
- • Debit, the revenue account and retained earnings account balance. In addition debit retained earnings account if it suffer loss (net loss)
- • Credit, the expense account, retained earnings if it earn income (net income) and dividend account.
- • Fees earned are a revenue account. Since the amount of revenue is closed and transferred to retained earnings account. Here, AS Company earned an income of $51,150. Therefore, it is debited.
- • Wages Expense, Rent Expense, Insurance Expense, Utilities Expese, Supplies Expense, Depreciation Expense and Miscellaneous Expense are expense accounts. Since the amount of expenses are closed to Income Summary account. Therefore, it is credited.
Working Note:
Calculate net income on income summary account:
- • The Dividend is paid to the shareholders out of the Retained Earnings. Thus, Retained Earnings is debited since the earnings are decreased on payment of dividend.
- • Dividends is a component of stockholders’ equity account. It is credited because dividends are transferred to Retained Earnings account.
7.
To prepare: The post–closing trial balance of Company L for the month ended March 31, 20Y4.
Explanation of Solution
Post-Closing Trial Balance:
After passing all the journal entries and the closing entries of the permanent accounts and then further posting them to each of the respective accounts, a post-closing trial balance is prepared which consists of a list of all the permanent accounts. A post-closing trial balance serves as an evidence to prove that the balance of the permanent accounts is equal.
Prepare a post–closing trial balance of Company L for the month ended March 31, 20Y4 as follows:
Company L Post-closing Trial Balance March 31, 20Y4 | |||
Particulars |
Account Number | Debit $ | Credit $ |
Cash | 11 | 12,000 | |
Supplies | 13 | 7,500 | |
Prepaid insurance | 14 | 1,800 | |
Equipment | 16 | 110,000 | |
Accumulated depreciation- Equipment | 17 | 33,350 | |
Trucks | 18 | 60,000 | |
Accumulated depreciation- Trucks | 19 | 21,200 | |
Accounts payable | 21 | 4,000 | |
Wages payable | 22 | 600 | |
Common stock | 31 | 26,000 | |
Retained earnings | 106,150 | ||
Total | 191,300 | 191,300 |
Table (12)
The debit column and credit column of the post–closing trial balance are agreed, both having balance of $191,300.
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Chapter 4 Solutions
Corporate Financial Accounting
- Ledger accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of Recessive Interiors at January 31, 20Y2, the end of the year, follows: The data needed to determine year-end adjustments are as follows: (a) Supplies on hand at January 31 are 2,850. (b) Insurance premiums expired during the year are 3,150. (c) Depreciation of equipment during the year is 5,250. (d) Depreciation of trucks during the year is 4,000. (e) Wages accrued but not paid at January 31 are 900. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark () in the Posting Reference column. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (3) as needed. 3. Journalize and post the adjusting entries, inserting balances in the accounts affected. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Recessive Interiors chart of accounts should be used: Wages Payable, 22; Depreciation Expense Equipment, 54; Supplies Expense, 55; Depreciation ExpenseTrucks, 56; Insurance Expense, 57. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of stockholders equity, and a balance sheet. During the year ended January 31, 20Y2, additional common stock of 7,500 was issued. 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.arrow_forwardT accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of La Mesa Laundry at August 31, 20Y5, the end of the fiscal year, follows: The data needed to determine year-end adjustments are as follows: (a) Wages accrued but not paid at August 31 are 2,200. (b) Depreciation of equipment during the year is 8,150. (c) Laundry supplies on hand at August 31 are 2,000. (d) Insurance premiums expired during the year are 5,300. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as Aug. 31 Bal. In addition, add T accounts for Wages Payable, Depreciation Expense, Laundry Supplies Expense, and Insurance Expense. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (1) as needed. 3. Journalize and post the adjusting entries. Identify the adjustments by Adj. and the new balances as Adj. Bal. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of stockholders equity, and a balance sheet. During the year ended August 31, 20Y5, common stock of 3,000 was issued. 6. Journalize and post the closing entries. Identify the closing entries by Clos. 7. Prepare a post-closing trial balance.arrow_forwardEXPENSE METHOD OF ACCOUNTING FOR PREPAID EXPENSES Davidsons Food Mart paid 1,200 in advance to the local newspaper for advertisements that will appear monthly. The following entry was made: At the end of the year, December 31, 20--, Davidson received notification that advertisements costing 800 had been run. Prepare the adjusting entry.arrow_forward
- Adjustment for unearned revenue On June 1, 20Y2, Herbal Co. received 18,900 for the rent of land for 12 months. Journalize the adjusting entry required for unearned rent on December 31, 20Y2.arrow_forwardT accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of Epicenter Laundry at June 30, 20Y6, the end of the fiscal year, follows: The data needed to determine year-end adjustments are as follows: (a) Laundry supplies on hand at June 30 are 8,600. (b) Insurance premiums expired during the year are 5,700. (c) Depreciation of laundry equipment during the year is 6,500. (d) Wages accrued but not paid at June 30 are 1,100. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as June 30 Bal. In addition, add T accounts for Wages Payable, Depreciation Expense, Laundry Supplies Expense, and Insurance Expense. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (1) as needed. 3. Journalize and post the adjusting entries. Identify the adjustments by Adj. and the new balances as Adj. Bal. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of stockholders equity, and a balance sheet. During the year ended June 30, 20Y6, additional common stock of 7,500 was issued. 6. Journalize and post the closing entries. Identify the closing entries by Clos. 7. Prepare a post-closing trial balance.arrow_forwardPrepare journal entries to record the business transaction and related adjusting entry for the following: A. March 1, paid cash for one year premium on insurance contract, $18,000 B. December 31, remaining unexpired balance of insurance, $3,000arrow_forward
- COMPLETION OF A WORK SHEET SHOWING A NET INCOME The trial balance for the Venice Beach Kite Shop, a business owned by Molly Young k shown on page 550. Year-end adjustment information is as follows: (a and b)Merchandise inventory costing 35,000 is on hand as of December .31, 20--. (The periodic inventory system is used.) (c)Supplies remaining at the end of the year, 3,300. (d)Unexpired insurance on December 31, S3,800. (e)Depreciation expense on the building foe 20--, 2,500. (f)Depreciation expense on the store equipment for 20--, 3,500. (g)Unearned rent revenue as of December 31, 4,00. (h)Wages earned but not paid as of December 31, 800. 1. Complete the Adjustments columns, identifying each adjustment with its corresponding letter. 2. Complete the work sheet. 3. Enter the adjustments m a general journal.arrow_forwardThe following accounts appear in the ledger of Sheldon Company on January 31, the end of this fiscal year. The data needed for adjustments on January 31 are as follows: ab.Merchandise inventory, January 31, 55,750. c.Insurance expired for the year, 1,285. d.Depreciation for the year, 5,482. e.Accrued wages on January 31, 1,556. f.Supplies used during the year 1,503. Required 1. Prepare a work sheet for the fiscal year ended January 31. Ignore this step if using QuickBooks or general ledger. 2. Prepare an income statement. 3. Prepare a statement of owners equity. No additional investments were made during the year. Ignore this step if using CLGL. 4. Prepare a balance sheet. 5. Journalize the adjusting entries. 6. Journalize the closing entries. Check Figure Net loss, 1,737arrow_forwardAdjustment process and financial statements Adjustment data for Ms. Ellen’s Laundry Inc. for the year ended December 31, 20Y8. are as follows: a. Wages accrued but not paid at December 31. $2150 h. Depreciation of equipment during the year. $12500 c. Laundry supplies on hand at December 31. $1,500 d. Insurance premiums expired. $4600 Instructions 1. Using the following integrated financial statement framework, record each adjustment to the appropriate accounts, identifying each adjustment by its letter. After all adjustments are recorded, determine the balances.arrow_forward
- The balances of the ledger accounts of Beldren Home Center as of December 31, the end of its fiscal year, are as follows: Data for the adjustments are as follows: ab. Merchandise Inventory at December 31, 102,765. c. Wages accrued at December 31, 1,834. d. Supplies inventory (on hand) at December 31, 645. e. Depreciation of store equipment, 5,782. f. Depreciation of office equipment, 1,791. g. Insurance expired during the year, 845. h. Rent earned, 2,500. Required 1. Complete the work sheet after entering the account names and balances onto the work sheet. Ignore this step if using CLGL. 2. Journalize the adjusting entries. If using manual working papers, record adjusting entries on journal page 16.arrow_forwardPrepare adjusting journal entries, as needed, considering the account balances excerpted from the unadjusted trial balance and the adjustment data. A. supplies actual count at year end, $6,500 B. remaining unexpired insurance, $6,000 C. remaining unearned service revenue, $1,200 D. salaries owed to employees, $2,400 E. depreciation on property plant and equipment, $18,000arrow_forwardThe trial balance of Jillson Company as of December 31, the end of its current fiscal year, is as follows: Here are the data for the adjustments. ab. Merchandise Inventory at December 31, 54,845.00. c. Store supplies inventory (on hand), 488.50. d. Insurance expired, 680. e. Salaries accrued, 692. f. Depreciation of store equipment, 3,760. Required Complete the work sheet after entering the account names and balances onto the work sheet.arrow_forward
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