Concept explainers
Problem 4-5A
Preparing trial balances, closing entries, and financial statements
C3 P2 P3
The adjusted
Required
a. Prepare an income statement and a statement of owner’s equity for the year 2017, and a classified
There are no owner investments in 2017.
b. Enter the adjusted trial balance in the first two columns of a six-column table. Use columns three and four for closing entry information and
the last two columns for a post-closing trial balance. Insert an Income Summary account as the last item in the trial balance.
C. Enter closing entry information in the six- column table and prepare journal entries for it.
Check (1) Ending capital balance. $47.750 Net income. $30.750
(2) P-C trial balance totals. $67.350
Analysis Component
4. Assume for this part only that
a. None of the $8oo insurance expense had expired during the year. Instead, assume it is a prepayment of the next period’s insurance protection.
b. There are no earned and unpaid wages at the end of the year. (Hint: Reverse the $600 wages payable accrual.)
Describe the financial statement changes that would result from these two assumptions.
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Fundamental Accounting Principles
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