Chapter 4, Problem 4.8AP

(a)

To determine

Journal:

Journal is the systematic method of recording the business transactions in a chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system of accounting.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

• Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
• Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

T-account:

T-account refers to an individual account, which records the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue, and expenditure.

This account is referred to as the T-account, because of the alignment, of the components of the account resembles the capital letter ‘T’. This account consists of the three main components which are as follows:

1. (a) The title of the account
2. (b) The left or debit side
3. (c) The right or credit side

Adjusting entries:

Adjusting entries are the journal entries which are recorded at the end of the accounting period to correct or adjust the revenue and expense accounts, to concede with the accrual principle of accounting.

Closing entries:

Closing entries are those journal entries, which are passed to transfer the final balances of temporary accounts, (all revenues account, all expenses account and dividend) to the income summary account. Closing entries produce a zero balance in each temporary account.

Adjusted trial balance:

Adjusted trial balance is a summary of all the ledger accounts, and it contains the balances of all the accounts after the adjustment entries are journalized, and posted.

Post closing trial balance:

The post closing trial balance is a summary of all ledger accounts, and it shows the debit and the credit balances after the closing entries are journalized and posted.  The post-closing trial balance contains only permanent (balance sheet) accounts, and the debit and the credit balances of permanent accounts should agree.

To journalize: The transaction as given in the book of Company CWW for the month of July.

(b)

To determine

To post: The journal transactions to T-account of Company CWW for the month of July.

(c)

To determine

To prepare: The trial balance of Company CWW on July 31, 2014 before adjustment.

(d)

To determine

To journalize: The adjusting transactions as given in the books of Company CWW.

(e)

To determine

To post: The adjusting entries to T-account of Company CWW for the month of July.

(f)

To determine

To prepare: The trial balance of Company CWW on July 31, 2014 after adjustment.

(g)

To determine

To prepare: The income statement, statement of retained earnings, and classified balance sheet of Company CWW.

(h)

To determine

To prepare: The closing journal entries of Company CWW, and post it to T-accounts.

(i)

To determine

To prepare: The post-closing trial balance of Company CWW on July31, 2014