Concept explainers
Recording Transactions (Including Adjusting Journal Entries), Preparing Financial Statements and Closing Journal Entries, and Computing Net Profit Margin and
Drs. Glenn Feltham and David Ambrose began operations of their physical therapy clinic, called Northland Physical Therapy, on January 1, 2017. The annual reporting period ends December 31. The
Transactions during 2018 (summarized in thousands of dollars) follow:
- a. Borrowed $22 cash on July 1, 2018, signing a six-month note payable.
- b. Purchased equipment for $25 cash on July 2, 2018.
- c. Issued additional shares of common stock for $5 on July 3.
- d. Purchased software on July 4, $3 cash.
- e. Purchased supplies on July 5 on account for future use, $7.
- f. Recorded revenues on December 6 of $55, including $8 on credit and $47 received in cash.
- g. Recognized salaries and wages expense on December 7 of $30; paid in cash.
- h. Collected accounts receivable on December 8, $9.
- i. Paid accounts payable on December 9, $10.
- j. Received a $3 cash deposit on December 10 from a hospital for a contract to start January 5, 2019.
Data for adjusting journal entries on December 31:
- k. Amortization for 2018, $1.
- l. Supplies of $3 were counted on December 31, 2018.
- m.
Depreciation for 2018, $4. - n. Accrued interest of $1 on notes payable.
- o. Salaries and wages incurred but not yet paid or recorded, $3.
- p. Income tax expense for 2018 was $4 and will be paid in 2019.
Required:
- 1. Set up T-accounts for the accounts on the trial balance and enter beginning balances. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you.
- 2. Record journal entries for transactions (a) through (j).
- 3. Post the journal entries from requirement 2 to T-accounts and prepare an unadjusted trial balance. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you using your answers to requirement 2.
- 4. Record the adjusting journal entries (k) through (p).
- 5. Post the
adjusting entries from requirement 4 and prepare an adjusted trial balance. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you using your previous answers. - 6. Prepare an income statement, statement of
retained earnings , and balance sheet. - 7. Prepare the closing
journal entry . - 8.
Post the closing entry from requirement 7 and prepare a post-closing trial balance. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you using your previous answers. - 9. How much net income did the physical therapy clinic generate during 2018? What was its net profit margin? Is the business financed primarily by liabilities or stockholders’ equity? What is its current ratio?
1, 3, 5 and 8
Prepare the necessary T-account for the given transactions.
Explanation of Solution
T-account:
T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue, and expenditure items are recorded.
This account is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.’ An account consists of the three main components which are as follows:
(a)The title of the account
(b)The left or debit side
(c)The right or credit side
Prepare the T-account:
Cash (A) account | |||
Beginning Balance | $7 | ||
a | 22 | ||
c | 5 | b | $25 |
f | 47 | d | 3 |
h | 9 | g | 30 |
j | 3 | j | 10 |
Ending Balance | $25 |
Accounts Receivable (A) account | |||||||
Beginning Balance | 3 | ||||||
f | 8 | h | 9 | ||||
Ending Balance | 2 | ||||||
Supplies(A) account | |||||||
Beginning Balance | 3 | ||||||
e | 7 | ||||||
10 | |||||||
l | 7 | ||||||
Ending Balance | 3 | ||||||
Equipment (A) account | |||||||
Beginning Balance | 8 | ||||||
b | 25 | ||||||
Ending Balance | 33 |
Accumulated depreciation -Equipment (xA) account | |||
Beginning Balance |
1 | ||
k | 4 | ||
Ending Balance | 5 | ||
Software (A) account | |||
Beginning Balance | 5 | ||
d | 3 | ||
Ending Balance | 8 | ||
Accumulated Amortization (xA) account | |||
Beginning Balance | 1 | ||
k | 1 | ||
Ending Balance | 2 | ||
Accounts payable (L) account | |||
Beginning Balance | 5 | ||
i | 10 | e | 7 |
Ending Balance | 2 | ||
Notes payable (L) account | |||
Beginning Balance | 0 | ||
a | 22 | ||
Ending Balance | 22 | ||
Salaries and wages payable (L) account | |||
Beginning Balance | 0 | ||
o | 3 | ||
Ending Balance | 3 |
Interest payable (L) | |||
Beginning Balance | 0 | ||
n | 1 | ||
Ending Balance | 1 |
Income tax payable (L) account | |||
p | 4 | ||
Ending Balance | 4 |
Deferred revenue (L) account
j | 3 | ||
Ending Balance | 3 | ||
Common Stock (SE) account | |||
Beginning Balance |
15 | ||
c | 5 | ||
Ending Balance | 20 | ||
Retained earnings (SE) account | |||
Beginning Balance | 4 | ||
CE1 | 5 | ||
Ending Balance | 9 |
Service Revenue (R) account | |||
f | 55 | ||
CE1 | 55 | ||
Ending Balance | 0 |
Depreciation expense (E) account | |||
m | 4 | ||
CE1 | 4 | ||
Ending Balance | 0 |
Amortization Expense ( E) account | |||
Beginning Balance | 0 | ||
k | 1 | ||
CE1 | 1 | ||
Ending Balance | 0 | ||
Income Tax Expense ( E) account | |||
p | 4 | ||
CE1 | 4 | ||
Ending Balance | 0 |
Interest Expense ( E) account | |||
n | 1 | ||
CE1 | 1 | ||
Ending Balance | 0 |
Salaries and Wages Expense(E) account | |||
g | 30 | ||
o | 3 | CE1 | 33 |
Ending Balance | 0 |
Supplies Expense ( E) account | |||
l | 7 | ||
CE1 | 7 | ||
Ending Balance | 0 |
2.
Record the necessary journal entries for transactions (a) to (j).
Explanation of Solution
Record the necessary journal entries for transactions (a) to (j) as follows:
Date | Account Title and Explanation | Debit ($) | Credit ($) | ||
a) | Cash (+A) | 22 | |||
Notes payable (Short-term) (+L) | 22 | ||||
(To record borrowed cash on note) | |||||
b) | Equipment (+A) | 25 | |||
Cash (-A) | 25 | ||||
(To record purchase of equipment) | |||||
c) | Cash (+A) | 5 | |||
Common Stock (+SE) | 5 | ||||
(To record issued common stock for cash) | |||||
d) | Software (+A) | 3 | |||
Cash (-A) | 3 | ||||
(To record Purchase of additional software) | |||||
e) | Supplies (+A) | 7 | |||
Accounts payable (+L) | 7 | ||||
(To record supplies purchased for future use) | |||||
f) | Cash (+A) | 47 | |||
Accounts Receivable (+A) | 8 | 55 | |||
Service Revenue (+R, +SE) | |||||
(To record service revenue earned during the year 2018) | |||||
g) | Salaries and Wages Expense (+E, -SE) | 30 | |||
Cash (-A) | 30 | ||||
(To record salaries and wages expense incurred during 2018) | |||||
h) | Cash (+A) | 9 | |||
Accounts Receivable (-A) | 9 | ||||
(To record cash collected on customer’s account) | |||||
i) | Accounts payable (-L) | 10 | |||
Cash (-A) | 10 | ||||
(To record cash paid to creditors) | |||||
j) | Cash (+A) | 3 | |||
Deferred Revenue (+L) | 3 | ||||
(To record receiving of customers deposit before doing work) |
Table (1)
3.
Prepare an unadjusted trial balance based on requirement 2.
Explanation of Solution
Prepare an unadjusted trial balance based on requirement 2 as follows:
Incorporation NPT | ||
Unadjusted Trial Balance | ||
At December 31, 2018 | ||
(in thousands) | ||
Account Titles | Debit ($) | Credit ($) |
Cash | 25 | |
Accounts Receivable | 2 | |
Supplies | 10 | |
Equipment | 33 | |
Accumulated Depreciation–Equipment | 1 | |
Software | 8 | |
Accumulated Amortization | 1 | |
Accounts Payable | 2 | |
Notes Payable (short–term) | 22 | |
Salaries and Wages Payable | ||
Interest Payable | ||
Income Tax Payable | ||
Deferred revenue | 3 | |
Common Stock | 20 | |
Retained Earnings | 4 | |
Service Revenue | 55 | |
Salaries and Wages Expense | 30 | |
Supplies Expense | ||
Depreciation Expense | ||
Amortization Expense | ||
Interest Expense | ||
Income Tax Expense | ||
Total | 108 | 108 |
Table (2)
4.
Record the adjusting journal entries from transaction (k) to (p).
Explanation of Solution
Record the adjusting journal entries from transaction (k) to (p) as follows:
Date | Account Title and Explanation | Debit ($) | Credit ($) | ||
k. | Amortization Expense (+E, -SE) | 1 | |||
Accumulated Amortization (+xA, -A) | 1 | ||||
(To record adjusting entry for amortization expenses) | |||||
l. | Supplies expense (+E, -SE) (refer working note 1) | 7 | |||
Supplies(-A) | 7 | ||||
(To record the use of supplies) | |||||
m. | Depreciation expense (+E, -SE) | 4 | |||
Accumulated depreciation –Equipment (+xA, -A) | 4 | ||||
(To record adjusting entry for depreciation expense) | |||||
n. | Interest expense (+E, -SE) | 1 | |||
Interest payable(+L) | 1 | ||||
(To record the adjusting entry for interest expense) | |||||
o. | Salaries and wages expense (+E, -SE) | 3 | |||
Salaries and wages payable (+L) | 3 | ||||
(To record the adjusting entry for salaries and wages expenses) | |||||
p. | Income tax expense(+E, -SE) | 4 | |||
Income tax payable(+L) | 4 | ||||
(To record the adjusting entry for income tax expense) |
Table (3)
Working note 1:
Calculate the value of supplies expenses:
5.
Prepare an adjusted trial balance from requirement 4.
Explanation of Solution
Prepare an adjusted trial balance for Incorporation NPT for December 31, 2018 as follows:
Incorporation NPT | ||
Adjusted Trial Balance | ||
At December 31, 2018 | ||
(in thousands) | ||
Account Titles | Debit ($) | Credit ($) |
Cash | 25 | |
Accounts Receivable | 2 | |
Supplies | 3 | |
Equipment | 33 | |
Accumulated Depreciation–Equipment | 5 | |
Software | 8 | |
Accumulated Amortization | 2 | |
Accounts Payable | 2 | |
Notes Payable (short–term) | 22 | |
Salaries and Wages Payable | 3 | |
Interest Payable | 1 | |
Income Tax Payable | 4 | |
Deferred revenue | 3 | |
Common Stock | 20 | |
Retained Earnings | 4 | |
Service Revenue | 55 | |
Salaries and Wages Expense | 33 | |
Supplies Expense | 7 | |
Depreciation Expense | 4 | |
Amortization Expense | 1 | |
Interest Expense | 1 | |
Income Tax Expense | 4 | |
Total | 121 | 121 |
Table (4)
6.
Prepare an income statement, Statement of retained earnings and balance sheet.
Explanation of Solution
Prepare an income statement for the year ended December 31, 2018 as follows:
Incorporation NPT | ||
Income Statement | ||
For the year ended December 31, 2018 | ||
(in thousands) | ||
Particulars | Amount ($) | Amount ($) |
Revenues: | ||
Service revenue | 55 | |
Total revenues | 55 | |
Less: Expenses | ||
Salaries and wage expense | 33 | |
Supplies expense | 7 | |
Amortization expense | 1 | |
Depreciation expense | 4 | |
Interest expense | 1 | |
Income tax expense | 4 | |
Total expenses | 50 | |
Net income | 5 |
Table (5)
Prepare a statement of retained earnings as follows:
Incorporation NPT | ||
Statement of Retained Earnings | ||
For the year ended December 31, 2018 | ||
(in thousands) | ||
Particulars | Amount ($) | Amount ($) |
Balance, January 1, 2018 | 4 | |
Add: Net income | 5 | |
9 | ||
Less: Dividends | (0) | |
Balance, December 31, 2018 | 9 |
Table (6)
Prepare a balance sheet for the year December 31, 2018 as follows:
Table (7)
7.
Prepare the closing entry for Incorporation NPT on December 31, 2018.
Explanation of Solution
Prepare closing entries for Incorporation NPT on December 31, 2018 as follows:
Date | Account Title and Explanation | Debit ($) | Credit ($) |
December 31, 2018 | Sales revenue(-R) | 55 | |
Salaries and wages expense(-E) | 33 | ||
Depreciation expense(-E) | 4 | ||
Supplies expense(-E) | 7 | ||
Amortization expense (-E) | 1 | ||
Income tax expense(-E) | 4 | ||
Interest expense (-E) | 1 | ||
Retained earnings(+SE) (refer table 5) | 5 | ||
(To record the closing entries for Incorporation NPT) |
Table (8)
For closing of temporary accounts, the balances of revenues, expenses, and dividend accounts are transferred to retained earnings in order to bring zero balance for expenses and revenues accounts.
8.
Prepare a post-closing trial balance from the requirement 7.
Explanation of Solution
Prepare a Post-closing trial balance for Incorporation NPT for December 31, 2018 follows:
Incorporation NPT | ||
Post-closing Trial Balance | ||
At December 31, 2018 | ||
(in thousands) | ||
Account Titles | Debit ($) | Credit ($) |
Cash | 25 | |
Accounts Receivable | 2 | |
Supplies | 3 | |
Equipment | 33 | |
Accumulated Depreciation–Equipment | 5 | |
Software | 8 | |
Accumulated Amortization | 2 | |
Accounts Payable | 2 | |
Notes Payable (short–term) | 22 | |
Salaries and Wages Payable | 3 | |
Interest Payable | 1 | |
Income Taxes Payable | 4 | |
Deferred revenue | 3 | |
Common Stock | 20 | |
Retained Earnings | 9 | |
Service Revenue | 0 | |
Salaries and Wages Expense | 0 | |
Supplies Expense | 0 | |
Depreciation Expense | 0 | |
Amortization expense | 0 | |
Interest Expense | 0 | |
Income Tax Expense | 0 | |
Total | 71 | 71 |
Table (9)
9.
Ascertain the net income of Incorporation NPT that has been generated during 2018 and calculate the net profit margin. Explain whether the company has been financed primarily by liabilities or stockholders’ equity and to find the current ratio.
Explanation of Solution
The net income of Incorporation NPT for 2018:
Incorporation NPT generated net income of $5(thousand) in the year 2018.
Calculate the net profit margin:
The net profit margin of Incorporation NPT is 9.1%.
Whether the Incorporation NPT is financed primarily by liabilities or stockholders’ equity as follows:
The invested amount of assets primarily comes from liabilities of Incorporation NPT, because the liabilities have financed $35 thousand of the Incorporation NPT’s total assets, whereas stockholder’s equity has financed $29 thousand.
Calculate the current ratio:
The current ratio is 0.86:1.
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Chapter 4 Solutions
Fundamentals Of Financial Accounting
- Following is the chart of accounts of Smith Financial Services: Smith completed the following transactions during June (the first month of business): Required 1. Journalize the transactions for June in the general journal. 2. Post the entries to the general ledger accounts. (Skip this step if you are using CLGL.) 3. Prepare a trial balance as of June 30, 20. 4. Prepare an income statement for the month ended June 30, 20. 5. Prepare a statement of owners equity for the month ended June 30, 20. 6. Prepare a balance sheet as of June 30, 20.arrow_forwardSelected accounts and related amounts for Clairemont Co. for the fiscal year ended May 31, 2016, are presented in Problem 6-5A. Instructions 1. Prepare a single-step income statement in the format shown in Exhibit 11. 2. Prepare a statement of owners equity. 3. Prepare an account form of balance sheet, assuming that the current portion of the note payable is 50,000. 4. Prepare closing entries as of May 31, 2016.arrow_forwardThe transactions completed by PS Music during June 2019 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the businesss operations: July 1.Peyton Smith made an additional investment in PS Music by depositing 5,000 in PS Musics checking account. 1.Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music store. Paid rent for July, 1,750. 1.Paid a premium of 2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period. 2.Received 1,000 cash from customers on account. 3.On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of 3,600. Any additional hours beyond 80 will be billed to KXMD at 40 per hour. In accordance with the contract, Peyton received 7,200 from KXMD as an advance payment for the first two months. 3.Paid 250 to creditors on account. 4.Paid an attorney 900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.) 5.Purchased office equipment on account from Office Mart, 7,500. 8.Paid for a newspaper advertisement, 200. 11.Received 1,000 for serving as a disc jockey for a party. 13.Paid 700 to a local audio electronics store for rental of digital recording equipment. 14.Paid wages of 1,200 to receptionist and part-time assistant. Enter the following transactions on Page 2 of the two-column journal: 16.Received 2,000 for serving as a disc jockey for a wedding reception. 18.Purchased supplies on account, 850. July 21. Paid 620 to Upload Music for use of its current music demos in making various music sets. 22.Paid 800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July. 23.Served as disc jockey for a party for 2,500. Received 750, with the remainder due August 4, 2019. 27.Paid electric bill, 915. 28.Paid wages of 1,200 to receptionist and part-time assistant. 29.Paid miscellaneous expenses, 540. 30.Served as a disc jockey for a charity ball for 1,500. Received 500, with the remainder due on August 9, 2019. 31.Received 3,000 for serving as a disc jockey for a party. 31.Paid 1,400 royalties (music expense) to National Music Clearing for use of various artists music during July. 31.Withdrew 1,250 cash from PS Music for personal use. PS Musics chart of accounts and the balance of accounts as of July 1, 2019 (all normal balances), are as follows: Instructions 1. Enter the July 1, 2019, account balances in the appropriate balance column of a four-column account. Write Balance in the Item column and place a check mark () in the Posting Reference column. (Hint: Verify the equality of the debit and credit balances in the ledger before proceeding with the next instruction.) 2. Analyze and journalize each transaction in a two-column journal beginning on Page 1, omitting journal entry explanations. 3. Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance as of July 31, 2019.arrow_forward
- The transactions completed by PS Music during June 2019 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the business's operations: July 1. Peyton Smith made an additional investment in PS Music by depositing 5,000 in PS Music's checking account. 1. Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music: store. Paid rent for July, 1,750. 1. Paid a premium of 2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period. 2. Received 1,000 cash from customers on account. 3. On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for SO hours per month for a monthly fee of 3,600. Any additional hours beyond SO will be billed to KXMD at 40 per hour. In accordance with the contract, Peyton received 7,200 from KXMD as an advance payment for the first two months. 3. Paid 250 to creditors on account. 4. Paid an attorney 900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.) 5. Purchased office equipment on account from Office Mart, 7,500. 8. Paid for a newspaper advertisement, 200. 11. Received 1,000 for serving as a disc jockey for a party. 13. Paid 700 to a local audio electronics store for rental of digital recording equipment. 11. Paid wages of 1,200 to receptionist and part-time assistant. Enter the following transactions on Page 2 of the two-column journal: 16. Received 2,000 for serving as a disc jockey for a wedding reception. 18. Purchased supplies on account, 850. July 21. Paid 620 to Upload Music for use of its current music demos in making various music sets. 22. Paid 800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July. 23. Served as disc jockey for a party for 2,500. Received 750, with the remainder due August 4, 2019. 27. Paid electric bill, 915. 28. Paid wages of 1,200 to receptionist and part-time assistant. 29. Paid miscellaneous expenses, 540. 30. Served as a disc jockey for a charity ball for 1,500. Received 500, with the remainder due on August 9, 2019. 31. Received 3,000 for serving as a disc jockey for a party. 31. Paid 1,400 royalties (music expense) to National Music Clearing for use of various artists' music during July. 31. Withdrew l,250 cash from PS Music for personal use. PS Music's chart of accounts and the balance of accounts as of July 1, 2019 (all normal balances), are as follows: 11 Cash 3,920 12 Accounts receivable 1,000 14 Supplies 170 15 Prepaid insurance 17 Office Equipment 21 Accounts payable 250 23 Unearned Revenue 31 Peyton smith, Drawing 4,000 32 Fees Earned 500 41 Wages Expense 6,200 50 Office Rent Expense 400 51 Equipment Rent Expense 800 52 Utilities Expense 675 53 Supplies Expense 300 54 music Expense 1,590 55 Advertising Expense 500 56 Supplies Expense 180 59 Miscellaneous Expense 415 Instructions 1.Enter the July 1, 2019, account balances in the appropriate balance column of a four-column account. Write Balance in the Item column and place a check mark () in the Posting Reference column. (Hint: Verify the equality of the debit and credit balances in the ledger before proceeding with the next instruction.) 2.Analyze and journalize each transaction in a two-column journal beginning on Page 1, omitting journal entry explanations. 3.Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting. 4.Prepare an unadjusted trial balance as of July 31, 2019.arrow_forwardFollowing is the chart of accounts of Sanchez Realty Company: Sanchez completed the following transactions during April (the first month of business): Required 1. Journalize the transactions for April in the general journal. 2. Post the entries to the general ledger accounts. (Skip this step if you are using CLGL.) 3. Prepare a trial balance as of April 30, 20. 4. Prepare an income statement for the month ended April 30, 20. 5. Prepare a statement of owners equity for the month ended April 30, 20. 6. Prepare a balance sheet as of April 30, 20. If you we using CLGL, use the year 2020 when preparing all reports.arrow_forwardSelected accounts and related amounts for Kanpur Co. for the fiscal year ended June 30, 2016, are presented in Problem 6-5B. Instructions 1. Prepare a single-step income statement in the format shown in Exhibit 11. 2. Prepare a statement of owners equity. 3. Prepare an account form of balance sheet, assuming that the current portion of the note payable is 7,000. 4. Prepare closing entries as of June 30, 2016.arrow_forward
- For the past several years, Jeff Horton has operated a part-time consulting business from his home. As of April 1, 2016, Jeff decided to move to rented quarters and to operate the business, which was to be known as Rosebud Consulting, on a full-time basis. Rosebud Consulting entered into the following transactions during April: Instructions 1.Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) 2.Post the journal to a ledger of four-column accounts. 3.Prepare an unadjusted trial balance. 4.At the end of April, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during April is 350. b. Supplies on hand on April 30 are 1,225. c. Depreciation of office equipment for April is 400. d. Accrued receptionist salary on April 30 is 275. e. Rent expired during April is 2,000. f. Unearned fees on April 30 are 2,350. 5.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6.Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal. 7.Prepare an adjusted trial balance. 8.Prepare an income statement, a statement of owners equity, and a balance sheet. 9.Prepare and post the closing entries. Record the closing entries on Page 4 of the journal. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10.Prepare a post-closing trial balance.arrow_forwardKelly Pitney began her consulting business, Kelly Consulting, on April 1, 2019. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: Instructions 1. The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closingtrial balance as of April 30, 2019, is shown in Exhibit 17. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 2019, and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a twocolumn journal starting on Page 5 of the journal and using Kelly Consultings chart of accounts. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during May is 275. b. Supplies on hand on May 31 are 715. c. Depreciation of office equipment for May is 330. d. Accrued receptionist salary on May 31 is 325. e. Rent expired during May is 1,600. f. Unearned fees on May 31 are 3,210. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owners equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.arrow_forwardToms Catering Services prepared the following work sheet for the year ended December 31, 20--. Required 1. Complete the work sheet. (Skip this step if using QuickBooks or general ledger.) 2. Prepare an income statement. 3. Prepare a statement of owners equity; assume that there was an additional investment of 2,500 on December 1. (Skip this step if using QuickBooks. The additional investment assumption has already been completed in the data file.) 4. Prepare a balance sheet. 5. Journalize the closing entries with the four steps in the correct sequence. 6. Prepare a post-closing trial balance. (For QuickBooks, select the trial balance report, then modify the report name to Post-Closing Trial Balance.) Check Figure Net income, 19,567arrow_forward
- Camrim Inc., experienced the following events in 2018, its first year of operation: Performed counseling services for $41,700 cash. On March 1, 2018, paid $9,310 cash to rent office space for the next 12 months.. Adjusted the accounts to reflect the amount of rent used during the year. Based on these three events, net income is $arrow_forwardBelow is the trial balance which was extracted from the books of the business on June 30, the end of the company’s financial year. As a group, you are required to collaborate and analyze the problem at hand then apply the accrual basis of accounting in the preparation of the company’s financial statements. Ready Hospital Supplies Trial Balance as at June 30, 2020 Dr $ Cr $ Cash 127,000 Accounts Receivable 151,000 Allowance for Bad-Debts 12,500 Merchandise Inventory 187,500 Store Supplies 58,000 Prepaid Insurance 72,000 Prepaid Rent 56,000 Furniture & Fixtures 800,000 Accumulated Depreciation: Furniture & Fixtures 256,000 Computer Equipment 450,000 Accumulated Depreciation: Computer Equipment Accounts Payable 133,500 Salaries Payable Interest Payable 27,000 Unearned Sales Revenue 82,000 Long-Term Loan…arrow_forwardThe company Computadoras Caribe, after making the adjustments in the month of March, has the following balances in the books, which are found in the following trial balance: Prepares the multi-step income statement (multi-step income statement).Prepare the statement of owner's equity.Prepare the statement of owner's equity (balance sheet). Caribbean ComputersAdjusted Trial BalancePeriod ending March 31, 2020 Account title Ref. Debit Credit Cash $17,560 Account Receivable 18,065 Supplies 60,500 Building 180,000 Acc. Depreciation-Building $22,000 Equipment 45,600 Acc. Depreciation-Equipment 5,800 Account Payable 29,200 Salary Payable 3,500 Interest Payable 1,000 Unearned Sales Revenue 7,000 Note Payable, Long Term 85,000 J. Ayala, Capital 180,000 J. Ayala, Withdrawals 5,000 Sales Revenue 150,000 Sales Discounts 6,200 Sales Return and Allowances 7,600 Cost of Goods Sold…arrow_forward
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