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Ledger accounts, adjusting entries, financial statements, and closing entries; optional spreadsheet The unadjusted trial balance of Lakota Freight Co. at March 31, 20Y4, the end of the year, follows: The data needed to determine year-end adjustments are as follows: (a) Supplies on hand at March 31 are $7,500. (b) Insurance premiums expired during year are $1,800. (c) Depreciation of equipment during year is $8,350. (d) Depreciation of trucks during year is $6,200. (e) Wages accrued but not paid at March 31 are $600. Instructions 1. For each account listed in the trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark (✓) in the Posting Reference column. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (3) as needed. 3. Journalize and post the adjusting entries, inserting balances in the accounts affected. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Lakota Freight Co.’s chart of accounts should be used: Wages Payable, 22; Supplies Expense, 52; Depreciation Expense—Equipment, 55; Depreciation Expense—Trucks, 56; Insurance Expense, 57. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of stockholders’ equity, and a balance sheet. During the year ended March 31, 20Y4, additional common stock of $6,000 was issued. 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 4, Problem 4PA
Textbook Problem
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Ledger accounts, adjusting entries, financial statements, and closing entries; optional spreadsheet

The unadjusted trial balance of Lakota Freight Co. at March 31, 20Y4, the end of the year, follows:

Chapter 4, Problem 4PA, Ledger accounts, adjusting entries, financial statements, and closing entries; optional spreadsheet

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

  1. (a) Supplies on hand at March 31 are $7,500.
  2. (b) Insurance premiums expired during year are $1,800.
  3. (c) Depreciation of equipment during year is $8,350.
  4. (d) Depreciation of trucks during year is $6,200.
  5. (e) Wages accrued but not paid at March 31 are $600.

Instructions

  1. 1. For each account listed in the trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark (✓) in the Posting Reference column.
  2. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (3) as needed.
  3. 3. Journalize and post the adjusting entries, inserting balances in the accounts affected. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Lakota Freight Co.’s chart of accounts should be used: Wages Payable, 22; Supplies Expense, 52; Depreciation Expense—Equipment, 55; Depreciation Expense—Trucks, 56; Insurance Expense, 57.
  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 March 31, 20Y4, additional common stock of $6,000 was issued.
  6. 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry.
  7. 7. Prepare a post-closing trial balance.

1, 3 and 6.

To determine

Prepare the T-accounts.

Explanation of Solution

T-account:

T-account is the form of the ledger account, where the journal entries are posted to this account. It is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.

The components of the T-account are as follows:

a) The title of the account

b) The left or debit side

c) The right or credit side

Prepare the T-accounts:

Account:         Cash                                                              Account no. 11
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y4      
March31Balance ✓    12,000 
Account:   Supplies                                                            Account no. 13
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y4      
March31Balance ✓    30,000 
 31Adjusting26 22,5007,500 
Account:    Prepaid Insurance                                                  Account no. 14
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y4      
March31Balance ✓    3,600 
 31Adjusting26 1,8001,800 
Account:    Equipment                                                             Account no. 16
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y4      
March31Balance ✓    110,000 
Account:  Accumulated Depreciation-Office equipment        Account no. 17
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y4      
March31Balance ✓     25,000
 31Adjusting26 8,350 33,350
Account:    Trucks                                                                    Account no. 18
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y4      
March31Balance ✓    60,000 
Account:  Accumulated Depreciation- Truck                      Account no. 19
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y4      
March31Balance ✓     15,000
 31Adjusting26 6,200 21,200
Account:     Accounts Payable                                                      Account no. 21
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y4      
March31Balance ✓     4,000
Account:     Wages Payable                                                        Account no. 22
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y4      
March31Adjusting26 600 600
Account:          Common Stock                                                         Account no. 31
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y4      
March31Balance
  • ✓ 1
 26,000 26,000
Account:         Retained Earnings                                                       Account no. 32
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y4      
March31Balance ✓     70,000
 31Closing27 51,150 121,150
 31Closing2715,000  106,150
Account:          Dividends                                                         Account no. 33
DateItemPost. Ref

Debit

 ($)

Credit ($)Balance
Debit ($)Credit ($)
20Y4      
March31Balance
  • ✓ 1
  15,000 
 31Closing27 15,000  
Account:         Income Summary                                                       Account no...

2.

To determine

Enter the unadjusted trial balance on an end of period spreadsheet and complete the spread sheet.

3.

To determine

Prepare the adjusting entries and post it into the T-accounts.

4.

To determine

Prepare an adjusted trial balance as of March 31, 20Y4.

5.

To determine

Prepare an income statement, a statement of stockholders, equity and a balance sheet for the year ended March 31, 20Y4.

6.

To determine

Prepare the closing entries.

7.

To determine

Prepare a post-closing trial balance as of March 31, 20Y4.

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Chapter 4 Solutions

Financial And Managerial Accounting
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