Textbook Problem

T accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet

The unadjusted trial balance of La Mesa Laundry at August 31, 20Y5, the end of the fiscal year, follows:

The data needed to determine year-end adjustments are as follows:

1. (a) Wages accrued but not paid at August 31 are $2,200.
2. (b) Depreciation of equipment during the year is $8,150.
3. (c) Laundry supplies on hand at August 31 are $2,000.
4. (d) Insurance premiums expired during the year are $5,300.

Instructions

1. 1. For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as “Aug. 31 Bal.” In addition, add T accounts for Wages Payable, Depreciation Expense, Laundry Supplies Expense, and Insurance Expense.
2. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (1) as needed.
3. 3. Journalize and post the adjusting entries. Identify the adjustments by “Adj.” and the new balances as “Adj. Bal.”
4. 4. Prepare an adjusted trial balance.
5. 5. Prepare an income statement, a statement of stockholders’ equity, and a balance sheet. During the year ended August 31, 20Y5, common stock of $3,000 was issued.
6. 6. Journalize and post the closing entries. Identify the closing entries by “Clos.”
7. 7. Prepare a post-closing trial balance.