Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Textbook Question
Chapter 4, Problem 4.8P
Transaction Analysis; Journal
The post-closing trial balance for Heron Consulting Services, Inc. at December 31 of the prior year is presented here.
| Heron Consulting Services, Inc. Post-Closing Trial Balance At December 31 (Prior Year) |
||
| Account | Debit | Credit |
| Cash | $1,000 | |
| 800 | ||
| Supplies | 150 | |
| Prepaid Rent | 300 | |
| Building | 6,500 | |
| Accounts Payable | $ 750 | |
| Unearned Service Revenue | 400 | |
| Common Stock | 5,000 | |
| 2,600 | ||
| Service Revenue | 0 | |
| Wage Expense | 0 | |
| Utilities Expense | 0 | |
| Administrative Expense | 0 | |
| Totals | $8,750 | $8,750 |
The company reported the following transactions during the current year:
- January 2: Heron took out a 5%, 2-year note payable in the amount of $3,000 to pay for operating expenses. Interest is paid annually on January 1.
- February 1: Heron prepaid $600 for a one-year insurance policy. Policy begins February 1.
- March 1: Heron purchased office supplies for cash, $275.
- March 23: Heron paid $300 cash for advertising expenses.
- April 1: The existing balance of prepaid rent expired, so the company prepaid an additional $480 for a one-year lease on a warehouse.
- May 1: Heron signed a contract to perform consulting services and collected $550. Heron will not provide the services until next year.
- June 30: Heron paid wages in the amount of $200 to employees in cash.
- July 1: The company received $2,150 in cash for services rendered that day.
- August 8: Heron paid a utilities bill in the amount of $70 in cash.
- September 1: Heron paid wages in the amount of $80 in cash.
- October 1: Heron collected $250 of the accounts receivable balance.
- November 14: Heron purchased office equipment in the amount of $1,800 with cash Heron will record $50 of depreciation on the equipment this year.
- December 6: Heron received a bill for $100 for deliveries made this year and will pay the bill next year.
Note: At year-end, Heron had $100 of supplies remaining on hand Also, services pertaining to the beginning balance of unearned service revenue were performed during the year Finally, Heron reports $500 of depreciation expense related to the buildings.
Required
- a. Show the
accounting equation effect of each of the original transactions. - b. Prepare the journal entries for the original transactions Omit explanations.
- c. Prepare any necessary year-end adjusting journal entries for these transactions Show the accounting equation effect of each of the adjusting journal entries.
- d. Post all entries to the T-accounts.
- e. Prepare the adjusted trial balance at the end of the year.
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The ledger of Mai Company includes the following accounts with normal balances as of December 31: Common Stock $9,000;
Dividends $800; Services Revenue $13,000; Wages Expense $8,400; and Rent Expense $1,600.
Prepare its December 31 closing entries.
View transaction list
Journal entry worksheet
Record the entry to close revenue accounts.
Note: Enter debits before credits.
General Journal
Debit
Credit
Date
Dec 31
Step 1:
Prepare journal entries to record the December transactions in the General Journal Tab in the excel template file "Accounting Cycle Excel
Template xisx". Use the following accounts as appropriate:
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Land
Accumulated Depreciation
Accounts Payable
Deferred Revenue
Salaries Payable
Notes Payable
Common Stock
Retained Earnings
Dividends
Service Revenue
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Received $1,300 cash in advance from a customer for services to be provided in January
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