Chapter 4, Problem 4.3BPR

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, 2016, the end of the fiscal year, follows:

La Mesa Laundry Unadjusted Trial Balance August 31,2016
	Debit Balances	Credit Balances
Cash...........................	3,800
Laundry Supplies...............	9,000
Prepaid Insurance...............	6,000
Laundry Equipment.............	180,800
Accumulated Depreciation......		49,200
Accounts Payable...............		7,800
Common Stock.................		15,000
Retained Earnings..............		80,000
Dividends….....................	2,400
Laundry Revenue...............		248,000
Wages Expense.................	135,800
Rent Expense...................	43,200
Utilities Expense................	16,000
Miscellaneous Expense..........	3,000
	400,000	400,000

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

• a. Wages accrued but not paid at August 31 are $2,200.
• b. Depreciation of equipment during the year is $8,150.
• c. Laundry supplies on hand at August 31 are $2,000.
• 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, Insurance Expense, and Income Summary.
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 retained earnings statement, and a balance sheet.
6. 6. Journalize and post the closing entries. Identify the closing entries by “Clos."
7. 7. Prepare a post-closing trial balance.