Chandler Company is owned by Roscoe Chandler and provides appraisal services to individuals and companies wishing to purchase and sell fine art. Chandler Company began business on January 1, 2018, and is just completing its first year of business. Roscoe asks for your help in completing the accounting cycle for the company by assisting with the closing process. Chart of Accounts CHART OF ACCOUNTS Chandler Company General Ledger ASSETS 11 Cash 12 Accounts Receivable 16 Prepaid Insurance 18 Equipment 19 Accumulated Depreciation-Equipment LIABILITIES 21 Accounts Payable 22 Salaries Payable 24 Income Taxes Payable EQUITY 31 Roscoe Chandler, Capital 32 Roscoe Chandler, Drawing REVENUE 41 Fees Earned 42 Rent Revenue 43 Interest Revenue EXPENSES 51 Salaries Expense 52 Selling Expense 53 Income Taxes Expense 54 Depreciation Expense-Equipment 55 Insurance Expense 59 Miscellaneous Expense Adjusted Trial Balance Before the closing entries are made, you begin with an adjusted trial balance. The closing entries are essentially the link from the adjusted trial balance to the post-closing trial balance. Chandler Company ADJUSTED TRIAL BALANCE December 31, 2018 ACCOUNT TITLE DEBIT CREDIT 1 Cash 67,000.00 2 Accounts Receivable 29,000.00 3 Prepaid Insurance 16,000.00 4 Equipment 60,000.00 5 Accumulated Depreciation-Equipment 40,000.00 6 Accounts Payable 6,000.00 7 Salaries Payable 8,000.00 8 Income Taxes Payable 4,000.00 9 Roscoe Chandler, Capital 13,000.00 10 Roscoe Chandler, Drawing 5,000.00 11 Fees Earned 185,600.00 12 Rent Revenue 92,000.00 13 Interest Revenue 17,200.00 14 Salaries Expense 71,000.00 15 Selling Expense 37,600.00 16 Income Taxes Expense 15,000.00 17 Depreciation Expense-Equipment 47,200.00 18 Insurance Expense 17,000.00 19 Miscellaneous Expense 1,000.00 20 Totals 365,800.00 365,800.00 The Closing Process The final step of the accounting cycle is the closing process. The main goal of this stage of the cycle is to ensure that the balance of each temporary account is returned to zero and that net income is transferred to the owner's capital account. The first step in successfully undertaking the closing process is to understand the difference between a temporary account and a permanent account. Roscoe has some questions about the process. Answer the following questions (1) - (3). 1. If a temporary account has an ending balance of $67,000, what is its beginning balance for the following accounting period? If there is no amount or an amount is zero, enter “0”. 2. If a permanent account has an ending balance of $67,000, what is its beginning balance for the following accounting period? 3. Roscoe will be preparing his yearly financial statements after completing Chandler Company’s closing process, and is a somewhat confused about the characteristics of the accounts on his Chart of Accounts. He has started by creating the following chart, and asks for your help in completing it. For each account or type of account listed, choose all descriptions that apply. Temporary Account Permanent Account Closed to Owner’s Capital Account Yes No Revenues Asset accounts Expenses Liability accounts Owner’s drawing account Roscoe’s Journal

Chandler Company is owned by Roscoe Chandler and provides appraisal services to individuals and companies wishing to purchase and sell fine art. Chandler Company began business on January 1, 2018, and is just completing its first year of business. Roscoe asks for your help in completing the accounting cycle for the company by assisting with the closing process. Chart of Accounts CHART OF ACCOUNTS Chandler Company General Ledger ASSETS 11 Cash 12 Accounts Receivable 16 Prepaid Insurance 18 Equipment 19 Accumulated Depreciation-Equipment LIABILITIES 21 Accounts Payable 22 Salaries Payable 24 Income Taxes Payable EQUITY 31 Roscoe Chandler, Capital 32 Roscoe Chandler, Drawing REVENUE 41 Fees Earned 42 Rent Revenue 43 Interest Revenue EXPENSES 51 Salaries Expense 52 Selling Expense 53 Income Taxes Expense 54 Depreciation Expense-Equipment 55 Insurance Expense 59 Miscellaneous Expense Adjusted Trial Balance Before the closing entries are made, you begin with an adjusted trial balance. The closing entries are essentially the link from the adjusted trial balance to the post-closing trial balance. Chandler Company ADJUSTED TRIAL BALANCE December 31, 2018 ACCOUNT TITLE DEBIT CREDIT 1 Cash 67,000.00 2 Accounts Receivable 29,000.00 3 Prepaid Insurance 16,000.00 4 Equipment 60,000.00 5 Accumulated Depreciation-Equipment 40,000.00 6 Accounts Payable 6,000.00 7 Salaries Payable 8,000.00 8 Income Taxes Payable 4,000.00 9 Roscoe Chandler, Capital 13,000.00 10 Roscoe Chandler, Drawing 5,000.00 11 Fees Earned 185,600.00 12 Rent Revenue 92,000.00 13 Interest Revenue 17,200.00 14 Salaries Expense 71,000.00 15 Selling Expense 37,600.00 16 Income Taxes Expense 15,000.00 17 Depreciation Expense-Equipment 47,200.00 18 Insurance Expense 17,000.00 19 Miscellaneous Expense 1,000.00 20 Totals 365,800.00 365,800.00 The Closing Process The final step of the accounting cycle is the closing process. The main goal of this stage of the cycle is to ensure that the balance of each temporary account is returned to zero and that net income is transferred to the owner's capital account. The first step in successfully undertaking the closing process is to understand the difference between a temporary account and a permanent account. Roscoe has some questions about the process. Answer the following questions (1) - (3). 1. If a temporary account has an ending balance of $67,000, what is its beginning balance for the following accounting period? If there is no amount or an amount is zero, enter “0”. 2. If a permanent account has an ending balance of $67,000, what is its beginning balance for the following accounting period? 3. Roscoe will be preparing his yearly financial statements after completing Chandler Company’s closing process, and is a somewhat confused about the characteristics of the accounts on his Chart of Accounts. He has started by creating the following chart, and asks for your help in completing it. For each account or type of account listed, choose all descriptions that apply. Temporary Account Permanent Account Closed to Owner’s Capital Account Yes No Revenues Asset accounts Expenses Liability accounts Owner’s drawing account Roscoe’s Journal

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Description: Chandler Company is owned by Roscoe Chandler and provides appraisal services to individuals and companies wishing to purchase and sell fine art. Chandler Company began business on January 1, 2018, and is just completing its first year of business. Ro

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter2: Analyzing Transactions

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Chart of Accounts

CHART OF ACCOUNTS

Chandler Company

General Ledger

	ASSETS
11	Cash
12	Accounts Receivable
16	Prepaid Insurance
18	Equipment
19	Accumulated Depreciation-Equipment

	LIABILITIES
21	Accounts Payable
22	Salaries Payable
24	Income Taxes Payable

	EQUITY
31	Roscoe Chandler, Capital
32	Roscoe Chandler, Drawing

	REVENUE
41	Fees Earned
42	Rent Revenue
43	Interest Revenue

	EXPENSES
51	Salaries Expense
52	Selling Expense
53	Income Taxes Expense
54	Depreciation Expense-Equipment
55	Insurance Expense
59	Miscellaneous Expense

Adjusted Trial Balance

Before the closing entries are made, you begin with an adjusted trial balance. The closing entries are essentially the link from the adjusted trial balance to the post-closing trial balance.

Chandler Company

ADJUSTED TRIAL BALANCE

December 31, 2018

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	67,000.00
2	Accounts Receivable	29,000.00
3	Prepaid Insurance	16,000.00
4	Equipment	60,000.00
5	Accumulated Depreciation-Equipment		40,000.00
6	Accounts Payable		6,000.00
7	Salaries Payable		8,000.00
8	Income Taxes Payable		4,000.00
9	Roscoe Chandler, Capital		13,000.00
10	Roscoe Chandler, Drawing	5,000.00
11	Fees Earned		185,600.00
12	Rent Revenue		92,000.00
13	Interest Revenue		17,200.00
14	Salaries Expense	71,000.00
15	Selling Expense	37,600.00
16	Income Taxes Expense	15,000.00
17	Depreciation Expense-Equipment	47,200.00
18	Insurance Expense	17,000.00
19	Miscellaneous Expense	1,000.00
20	Totals	365,800.00	365,800.00

The Closing Process

The final step of the accounting cycle is the closing process. The main goal of this stage of the cycle is to ensure that the balance of each temporary account is returned to zero and that net income is transferred to the owner's capital account. The first step in successfully undertaking the closing process is to understand the difference between a temporary account and a permanent account. Roscoe has some questions about the process.

Answer the following questions (1) - (3).

1. If a temporary account has an ending balance of $67,000, what is its beginning balance for the following accounting period? If there is no amount or an amount is zero, enter “0”.

2. If a permanent account has an ending balance of $67,000, what is its beginning balance for the following accounting period?

3. Roscoe will be preparing his yearly financial statements after completing Chandler Company’s closing process, and is a somewhat confused about the characteristics of the accounts on his Chart of Accounts. He has started by creating the following chart, and asks for your help in completing it. For each account or type of account listed, choose all descriptions that apply.

	Temporary Account	Permanent Account	Closed to Owner’s Capital Account
Yes	No
Revenues
Asset accounts
Expenses
Liability accounts
Owner’s drawing account

Roscoe’s Journal

Roscoe has attempted to prepare the closing entries for Chandler Company on this panel. He’s not sure if he’s entered the journal entries correctly, and asks you to review them. You find that one entry is correct, but the other is incorrect.

Determine which entry is incorrect, and journalize both closing entries for Chandler Company as of Dec. 31 on the Journal panel.

PAGE 25

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	DEBIT	CREDIT	EQUITY
1		Closing Entries
2	Dec. 31	Roscoe Chandler, Capital	483,600.00		↓
3		Fees Earned		185,600.00	↑
4		Rent Revenue		92,000.00	↑
5		Interest Revenue		17,200.00	↑
6		Salaries Expense		71,000.00	↑
7		Selling Expense		37,600.00	↑
8		Income Taxes Expense		15,000.00	↑
9		Depreciation Expense-Equipment		47,200.00	↑
10		Insurance Expense		17,000.00	↑
11		Miscellaneous Expense		1,000.00	↑
12	31	Roscoe Chandler, Capital	5,000.00		↓
13		Roscoe Chandler, Drawing		5,000.00	↑

Post-Closing Trial Balance

The post-closing trial balance shows all the permanent accounts with their updated values after the temporary accounts have been reduced to zero balance for the next accounting cycle. Also, the post-closing trial balance is meant to ensure that debits equal credits post-close.

Roscoe is very happy with your work on the closing entries for Chandler Company, and asks if you would prepare a post-closing trial balance for the company.

Chandler Company

POST-CLOSING TRIAL BALANCE

December 31, 2018

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash
2	Accounts Receivable
3	Prepaid Insurance
4	Equipment
5	Accumulated Depreciation-Equipment
6	Accounts Payable
7	Salaries Payable
8	Income Taxes Payable
9	Roscoe Chandler, Capital
10	Totals

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