Concept explainers
2.
Prepare the worksheet of the Company HPGS.
2.
Explanation of Solution
Worksheet of the Company HPGS is as follows:
Table (1)
3.
Journalize the
3.
Explanation of Solution
Journalizing:
Journalizing refers to that process in which the transactions of an organization are recorded in a sequence. Based on the recorded entries, the accounts are posted to the relevant ledger accounts.
Adjusting entries of Company HPGS are as follows:
Record supplies expense:
General Journal | Page 3 | |||
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
December 31, 2019 | Supplies expense | 4,200 | ||
Supplies | 4,200 | |||
(To record supplies used) |
Table (2)
- Supplies expense in an expense account and it is increased by $4,200. Therefore, debit supplies expense account with $4,200.
- Supplies are asset account and it is decreased by $4,200. Therefore, credit supplies account with $4,200.
Record advertising expense:
General Journal | Page 3 | |||
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
December 31, 2019 | Advertising expense | 3,800 | ||
Prepaid Advertising | 3,800 | |||
(To record supplies used) |
Table (3)
- Advertising expense is an expense account and it is increased by $3,800. Therefore, debit Advertising expense account with $3,800.
- Prepaid Advertising is asset account and it is decreased by $3,800. Therefore, credit Prepaid Advertising account with $3,800.
Record
General Journal | Page 3 | |||
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
December 31, 2019 | Depreciation expense | 1,160 | ||
| 1,160 | |||
(To record depreciation expense) |
Table (4)
- Depreciation expense in an expense account and it is increased by $1,160. Therefore, debit depreciation expense account with $1,160.
- Accumulated depreciation-equipment is an asset account and it is decreased by $1,160. Therefore, credit accumulated depreciation-equipment with $1,160.
4.
Journalize the closing entries.
4.
Explanation of Solution
General Journal | Page 4 | |||
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
December 31, 2019 | Fees income | 53,200 | ||
Income summary | 53,200 | |||
(To transfer fees income amount) |
Table (5)
- The account of fees income account gets closed by $53,200. Therefore, debit fees income account with $53,200.
- The amount of fees income transferred to income summary, the account of income summary increases by $53,200. Therefore, credit income summary account with $53,200.
General Journal | Page 4 | |||
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
December 31, 2019 | Income summary | 22,360 | ||
Depreciation expense | 1,160 | |||
Salaries expense | 11,600 | |||
Advertising expense | 3,800 | |||
Utilities expense | 1,600 | |||
Supplies expense | 4,200 | |||
(To transfer the amount of income summary) |
Table (6)
- The amount of income summary is decreases by $22,360. Therefore, debit the account of income summary with $22,360.
- Depreciation expense is an expense account and it is decreased by $1,160. Therefore, credit depreciation expense with $1,160.
- Salaries expense is an expense account and it is decreased by $11,600. Therefore, credit salaries expense with $11,600.
- Advertising expense is an expense account and it is decreased by $3,800. Therefore, credit advertising expense with $3,800.
- Utilities expense is an expense account and it is decreased by $1,600. Therefore, credit utilities expense account with $1,600.
- Supplies expense is an expense account and it is decreased by $4,200. Therefore, credit the supplies expense account with $4,200.
General Journal | Page 4 | |||
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
December 31, 2019 | Income summary | 30,840 | ||
SJ Capital | 30,840 | |||
(To transfer the amount of income summary) |
Table (7)
- The amount of income summary is decreases by $30,840. Therefore, debit the account of income summary with $30,840.
- The capital account increases by $30,840. Therefore, credit the SJ capital with $30,840.
General Journal | Page 4 | |||
Date | Account Title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
December 31, 2019 | SJ Capital | 6,000 | ||
SJ Drawings | 6,000 | |||
(To transfer the amount of capital account) |
Table (8)
- The amount of drawings adjusted from the capital account, the amount of capital account decreases by $6,000. Therefore, debit the account of SJ Capitalwith $6,000.
- The account of drawings increases by $6,000. Therefore, credit the account ofSJ Drawings with $6,000.
1, 3 and 4.
Prepare the ledger accounts to record the balances as of December 31, 2019 and post adjusting and closing entries.
1, 3 and 4.
Explanation of Solution
Prepare the ledger accounts to record the balances as of December 31, 2019 and post adjusting and closing entries.
Supplies account:
Supplies Account | ||||
Date | Particular |
Debit ($) |
Credit ($) |
Balance ($) |
December 31, 2019 | Balance | 12,000 | 12,000 (debit) | |
Adjusting | 4,200 | 7,800(debit) |
Table (9)
Prepaid Advertising Account:
Prepaid Advertising Account | ||||
Date | Particular |
Debit ($) |
Credit ($) |
Balance ($) |
December 31, 2019 | Balance | 8,000 | 8,000 (debit) | |
Adjusting | 3,800 | 4,200 (debit) |
Table (10)
Accumulated depreciation account:
Accumulated Depreciation Account | ||||
Date | Particular |
Debit ($) |
Credit ($) |
Balance ($) |
December 31, 2019 | Adjusting | 1,160 | 1,160 (credit) |
Table (11)
SJ Capital account:
SJ Capital Account | ||||
Date | Particular |
Debit ($) |
Credit ($) |
Balance ($) |
December 31, 2019 | Balance | 91,000 (credit) | ||
Closing | 30,840 | 121,840 (credit) | ||
Closing | 6,000 | 115,840 (credit) |
Table (12)
SJ Drawings account:
SJ Drawings Account | ||||
Date | Particular |
Debit ($) |
Credit ($) |
Balance ($) |
December 31, 2019 | Balance | 6,000 (debit) | ||
Closing | 6,000 | - |
Table (13)
Income Summary Account:
Income Summary Account | ||||
Date | Particular |
Debit ($) |
Credit ($) |
Balance ($) |
December 31, 2019 | Closing | 53,200 (credit) | ||
Closing | 22,360 | 30,840 (credit) | ||
Closing | 30,840 | - |
Table (14)
Fees Income Account:
Fees Income Account | ||||
Date | Particular |
Debit ($) |
Credit ($) |
Balance ($) |
December 31, 2019 | Balance | 53,200 (credit) | ||
closing | 53,200 | - |
Table (15)
Salaries Expense Account:
Salaries Expense Account | ||||
Date | Particular |
Debit ($) |
Credit ($) |
Balance ($) |
December 31,2019 | Balance | 11,600 (debit) | ||
Closing | 11,600 | - |
Table (16)
Utilities Expense Account:
Utilities Expense Account | ||||
Date | Particular |
Debit ($) |
Credit ($) |
Balance ($) |
December 31,2019 | Balance | 1,600 (debit) | ||
Closing | 1,600 | - |
Table (17)
Supplies expense:
Supplies expense | ||||
Date | Particular |
Debit ($) |
Credit ($) |
Balance ($) |
December 31,2019 | Adjusting | 4,200 | 4,200 (debit) | |
closing | 4,200 | - |
Table (18)
Depreciation Expense Account:
Depreciation Expense Account | ||||
Date | Particular |
Debit ($) |
Credit ($) |
Balance ($) |
December 31,2019 | Adjusting | 1,160 | 1,160 (debit) | |
Closing | 1,160 | - |
Table (19)
Advertising Expense Account:
Depreciation Expense Account | ||||
Date | Particular |
Debit ($) |
Credit ($) |
Balance ($) |
December 31,2019 | Adjusting | 3,800 | 3,800 (debit) | |
Closing | 3,800 | - |
Table (20)
5.
Prepare a post-closing
5.
Explanation of Solution
Trial balance of Company HPGS is given below:
Company HPGS Post- closing Trial Balance December 31, 2019 | ||
Account Title |
Debit ($) |
Credit ($) |
Cash | 64,100 | |
Accounts Receivable | 10,900 | |
Supplies | 7,800 | |
Prepaid Advertisement | 4,200 | |
Equipment | 42,000 | |
Accumulated Depreciation | 1,160 | |
Accounts Payable | 12,000 | |
SJ, Capital | 115,480 | |
Total | 129,000 | 129,000 |
Table (21)
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