CHAPTER 6
CLOSING ENTRIES AND THE POSTCLOSING TRIAL
BALANCE
Chapter Opener: Thinking Critically
Students should recognize that financial statements can be used to evaluate net profit or loss, return on
investments, expense trends, or growth in company net assets. The income statement is used to measure net
income or loss, while the balance sheet can be used to measure growth in assets or liabilities. Executives
and managers would use financial statements to make decisions about expanding business, investing in new
ventures, or hiring new employees.
Fast Facts
• Carnival has 80,000 employees worldwide.
• Of the 3 million passengers Carnival serves annually, approximately 1,000,000 are seniors and
500,000 are children.
• Carnival became a publicly traded company in 1987.
• Carnival Corporation is comprised of distinct brands operating in North and South America,
the United Kingdom, Germany, Italy, France, Spain, and Australia, which account for nearly
90 percent of cruise passengers worldwide.
•
Carnival Corporation operates 84 ships with 21 new vessels scheduled for delivery between now and
2011.
Managerial Implications: Thinking Critically
Answers will vary but could include monthly or quarterly. Students should want financial statements
frequently so that trends can be observed and timely decisions made before the business is negatively
impacted.
Discussion Questions
Note to instructor: These questions are designed to check the students’ understanding of the new terms,
concepts, and procedures presented in the chapter.
1. Worksheet.
2. Balances of revenue and expense accounts are transferred to Income Summary. Next the balance of the
Income Summary account is transferred to the owner’s equity account.
3. Transfer results of operations to the owner’s capital account; Reduce balances of revenue, expense,
and drawing accounts to zero.
4. Adjustments columns of the worksheet.
5. Journalize and post adjusting entries; Journalize and postclosing entries; Prepare a postclosing trial
l
6. bSource
document info to general journal, to general ledger, to worksheet, to financial statements.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  131
7. (1) analyze
(2) journalize
(3) post
(4) prepare worksheet
(5) prepare financial statements
(6) journalize and post adjusting entries
(7) journalize and post-closing entries
(8) prepare post-closing trial balance
(9) interpret financial information
8. Steps to classify, record, and summarize financial data.
9. Asset, liability, and owner’s capital.
10. Avoids errors, proves total debits and credits are equal after the closing process.
132  Chapter 6
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
EXERCISE 6.1
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Closing Entries
POST.
REF.
1
2 2013
3 Dec. 31 Fees Income
4
Income Summary
5
6
31 Income Summary
7
Depreciation Expense
8
Salaries Expense
9
Supplies Expense
10
Telephone Expense
11
Utilities Expense
12
13
31 Income Summary
14
Mesia Davis, Capital
15
16
31 Mesia Davis, Capital
17
Mesia Davis, Drawing
18
DEBIT
4
CREDIT
48 7 5 0 00
48 7 5 0 00
27 0 0 0 00
2
16
2
2
4
2
0
5
1
1
5
0
0
0
5
0
0
0
0
0
00
00
00
00
00
21 7 5 0 00
21 7 5 0 00
25 0 0 0 00
25 0 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
EXERCISE 6.2
1.
2.
3.
4.
5.
6.
7.
8.
9.
Analyze transactions.
Journalize the transactions.
Post the journal entries.
Prepare a worksheet.
Prepare financial statements.
Record adjusting entries.
Record closing entries.
Prepare a post-closing trial balance.
Interpret the financial information.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  133
EXERCISE 6.3
1.
2.
3.
4.
Cash
Accounts Receivable
Supplies
Equipment
5. Accumulated Depreciation
6. Accounts Payable
7. John Martin, Capital
EXERCISE 6.4
1.
2.
3.
4.
5.
B
I
B
B
I
6.
7.
8.
9.
10.
B
E
B
I
B
11.
12.
13.
14.
15.
I, E
B, E
B
I
B
EXERCISE 6.5
1.
2.
3.
4.
Total revenue for the period is $65,000.
Total expenses for the period are $34,900.
Net income for the period is $30,100.
Owner’s withdrawals for the period are $10,000.
134  Chapter 6
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
EXERCISE 6.6
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Closing Entries
1
2 2013
3 Mar. 31 Fees Income
4
Income Summary
5
6
31 Income Summary
7
Depreciation Expense- Equipment
8
Insurance Expense
9
Rent Expense
10
Salaries Expense
11
Supplies Expense
12
Telephone Expense
13
Utilities Expense
14
15
31 Income Summary
16
Gloria Bahamon, Capital
17
18
31 Gloria Bahamon, Capital
19
Gloria Bahamon, Drawing
20
POST.
REF.
DEBIT
401
399
325 0 0 0 00
399
510
511
514
517
518
519
523
237 3 6 0 00
399
301
87 6 4 0 00
301
302
12 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
4
CREDIT
325 0 0 0 00
20
10
32
156
4
5
8
1
4
0
0
6
8
4
6
0
0
0
0
0
0
0
0
0
0
0
0
0
00
00
00
00
00
00
00
87 6 4 0 00
12 0 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Chapter 6  135
EXERCISE 6.6 (continued)
GENERAL LEDGER
ACCOUNT Gloria Bahamon, Capital
DATE
DESCRIPTION
2013
Mar. 31 Balance
31 Closing
31 Closing
POST.
REF.
√
J4
J4
ACCOUNT NO.
DEBIT
CREDIT
DATE
DESCRIPTION
2013
Mar. 31 Balance
31 Closing
POST.
REF.
136  Chapter 6
120 0 0 0 00
207 6 4 0 00
195 6 4 0 00
12 0 0 0 00
ACCOUNT NO.
DEBIT
CREDIT
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
POST.
REF.
J4
J4
J4
302
12 0 0 0 00
12 0 0 0 00
−0−
√
J4
ACCOUNT Income Summary
DATE
DESCRIPTION
2013
Mar. 31 Closing
31 Closing
31 Closing
BALANCE
DEBIT
CREDIT
87 6 4 0 00
ACCOUNT Gloria Bahamon, Drawing
301
DEBIT
CREDIT
325 0 0 0 00
237 3 6 0 00
87 6 4 0 00
399
BALANCE
DEBIT
CREDIT
325 0 0 0 00
87 6 4 0 00
−0−
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
EXERCISE 6.6 (continued)
GENERAL LEDGER
ACCOUNT
DATE
DESCRIPTION
2013
Mar. 31 Balance
31 Closing
ACCOUNT
POST.
REF.
√
J4
DEBIT
CREDIT
POST.
REF.
ACCOUNT NO.
√
J4
CREDIT
20 1 6 0 00
POST.
REF.
DEBIT
√
J4
CREDIT
10 4 0 0 00
ACCOUNT Rent Expense
DATE
DESCRIPTION
2013
Mar. 31 Balance
31 Closing
20 1 6 0 00
−0−
Ö
J4
DEBIT
CREDIT
32 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
511
BALANCE
DEBIT
CREDIT
10 4 0 0 00
−0−
ACCOUNT NO.
POST.
REF.
510
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
Insurance Expense
DATE
DESCRIPTION
2013
Mar. 31 Balance
31 Closing
BALANCE
DEBIT
CREDIT
325 0 0 0 00
DEBIT
401
325 0 0 0 00
−0−
Depreciation Expense—Equipment
DATE
DESCRIPTION
2013
Mar. 31 Balance
31 Closing
ACCOUNT
ACCOUNT NO.
Fees Income
514
BALANCE
DEBIT
CREDIT
32 0 0 0 00
−0−
Chapter 6  137
EXERCISE 6.6 (continued)
GENERAL LEDGER
ACCOUNT Salaries Expense
DATE
DESCRIPTION
2013
Mar. 31 Balance
31 Closing
ACCOUNT NO.
POST.
REF.
DEBIT
√
J4
CREDIT
156 0 0 0 00
ACCOUNT Supplies Expense
DATE
DESCRIPTION
2013
Mar. 31 Balance
31 Closing
DEBIT
√
J4
4 6 0 0 00
4 6 0 0 00
−0−
ACCOUNT NO.
POST.
REF.
DEBIT
√
J4
138  Chapter 6
√
J4
DEBIT
519
CREDIT
BALANCE
DEBIT
CREDIT
5 8 0 0 00
5 8 0 0 00
−0−
ACCOUNT NO.
POST.
REF.
518
BALANCE
DEBIT
CREDIT
ACCOUNT Utilities Expense
DATE
DESCRIPTION
2013
Mar. 31 Balance
31 Closing
156 0 0 0 00
−0−
CREDIT
ACCOUNT Telephone Expense
DATE
DESCRIPTION
2013
Mar. 31 Balance
31 Closing
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
POST.
REF.
517
523
CREDIT
BALANCE
DEBIT
CREDIT
8 4 0 0 00
8 4 0 0 00
−0−
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
EXERCISE 6.7
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Closing Entries
POST.
REF.
1
2 2013
3 Dec. 31 Rosa Escobedo, Capital
4
Income Summary
5
6
31 Rosa Escobedo, Capital
7
Rosa Escobedo, Drawing
8
DEBIT
27 0 0 0 00
3 0 0 0 00
4
CREDIT
1
2
3
27 0 0 0 00 4
5
6
3 0 0 0 00 7
8
The new balance of Rosa Escobedo, Capital is $18,000 ($48,000 – $27,000 – $3,000).
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  139
EXERCISE 6.8
Analyze transactions
Journalize transactions
Post transactions
Prepare a worksheet
Prepare financial statements
Record adjusting entries
Record closing entries
Prepare post-closing trial balance
Interpret financial information
140  Chapter 6
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.1A
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Adjusting Entries
POST.
REF.
1
2 2013
3 Jan. 31 Supplies Expense
4
Supplies
5
6
31 Rent Expense
7
Prepaid Rent
8
9
31 Depreciation Expense—Office Equipment
10
Accumulated Depreciation—Office Equip.
11
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
DEBIT
2 2 4 0 00
12 0 0 0 00
4 4 8 0 00
3
CREDIT
1
2
3
2 2 4 0 00 4
5
6
12 0 0 0 00 7
8
9
4 4 8 0 00 10
11
Chapter 6  141
PROBLEM 6.1A (continued)
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Closing Entries
1
2 2013
3 Jan. 31 Fees Income
4
Income Summary
5
6
31 Income Summary
7
Depreciation Expense—Office Equipment
8
Rent Expense
9
Salaries Expense
10
Supplies Expense
11
Telephone Expense
12
Travel Expense
13
Utilities Expense
14
15
31 Income Summary
16
Paul Harris, Capital
17
18
31 Paul Harris, Capital
19
Paul Harris, Drawing
20
POST.
REF.
DEBIT
4
CREDIT
90 0 0 0 00
90 0 0 0 00
79 9 1 0 00
4
12
48
2
1
10
1
4
0
5
2
2
2
1
8
0
0
4
5
9
5
0
0
0
0
0
0
0
00
00
00
00
00
00
00
10 0 9 0 00
10 0 9 0 00
10 0 0 0 00
10 0 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Analyze: Debit the Capital account; credit the Drawing account.
142  Chapter 6
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.2A
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Adjusting Entries
1
2 2013
3 Dec. 31 Supplies Expense
4
Supplies
5
6
31 Advertising Expense
7
Prepaid Advertising
8
9
31 Depreciation Expense—Equipment
10
Accumulated Depreciation—Equipment
11
POST.
REF.
DEBIT
517
121
2 4 0 0 00
526
131
3 0 0 0 00
523
142
2 4 0 0 00
CREDIT
1
2
3
2 4 0 0 00 4
5
6
3 0 0 0 00 7
8
9
2 4 0 0 00 10
11
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Closing Entries
1
2 2013
3 Dec. 31 Fees Income
4
Income Summary
5
6
31 Income Summary
7
Supplies Expense
8
Advertising Expense
9
Depreciation Expense—Equipment
10
Salaries Expense
11
Utilities Expense
12
13
31 Income Summary
14
Gayle Warrior, Capital
15
16
31 Gayle Warrior, Capital
17
Gayle Warrior, Drawing
18
3
POST.
REF.
DEBIT
401
309
75 0 0 0 00
309
517
526
523
511
514
24 0 0 0 00
309
301
51 0 0 0 00
301
302
8 4 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
4
CREDIT
75 0 0 0 00
2
3
2
14
1
4
0
4
4
8
0
0
0
0
0
0
0
0
0
0
00
00
00
00
00
51 0 0 0 00
8 4 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Chapter 6  143
PROBLEM 6.2A (continued)
GENERAL LEDGER
ACCOUNT Supplies
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Adjusting
ACCOUNT NO.
POST.
REF.
DEBIT
√
J3
CREDIT
BALANCE
DEBIT
CREDIT
2 4 0 0 00
6 0 0 0 00
3 6 0 0 00
ACCOUNT Prepaid Advertising
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Adjusting
ACCOUNT NO.
POST.
REF.
DEBIT
√
J3
CREDIT
3 0 0 0 00
ACCOUNT Accumulated Depreciation—Equipment
DATE
DESCRIPTION
2013
Dec. 31 Adjusting
POST.
REF.
DEBIT
J3
CREDIT
2 4 0 0 00
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
31 Closing
144  Chapter 6
√
J4
J4
24 0 0 0 00
21 0 0 0 00
CREDIT
51 0 0 0 00
8 4 0 0 00
142
BALANCE
DEBIT
CREDIT
2 4 0 0 00
ACCOUNT NO.
DEBIT
131
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
ACCOUNT Gayle Warrior, Capital
POST.
REF.
121
301
BALANCE
DEBIT
CREDIT
132 0 0 0 00
183 0 0 0 00
174 6 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.2A (continued)
GENERAL LEDGER
ACCOUNT Gayle Warrior, Drawing
DATE
DESCRIPTION
2013
Dec.
31 Balance
31 Closing
POST.
REF.
ACCOUNT NO.
DEBIT
√
J4
CREDIT
BALANCE
DEBIT
CREDIT
8 4 0 0 00
8 4 0 0 00
−0−
ACCOUNT Income Summary
DATE
DESCRIPTION
2013
Dec.
31 Closing
31 Closing
31 Closing
ACCOUNT NO.
POST.
REF.
DEBIT
J4
J4
J4
24 0 0 0 00
51 0 0 0 00
CREDIT
75 0 0 0 00
ACCOUNT Fees Income
DATE
DESCRIPTION
2013
Dec.
31 Balance
31 Closing
√
J4
DEBIT
CREDIT
75 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
399
BALANCE
DEBIT
CREDIT
75 0 0 0 00
51 0 0 0 00
−0−
ACCOUNT NO.
POST.
REF.
302
401
BALANCE
DEBIT
CREDIT
75 0 0 0 00
−0−
Chapter 6  145
PROBLEM 6.2A (continued)
GENERAL LEDGER
ACCOUNT Salaries Expense
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
ACCOUNT NO.
POST.
REF.
DEBIT
Ö
J4
CREDIT
14 4 0 0 00
ACCOUNT Utilities Expense
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
DEBIT
√
J4
1 8 0 0 00
1 8 0 0 00
−0−
ACCOUNT NO.
POST.
REF.
J3
J4
DEBIT
146  Chapter 6
POST.
REF.
J3
J4
517
CREDIT
BALANCE
DEBIT
CREDIT
2 4 0 0 00
2 4 0 0 00
−0−
2 4 0 0 00
DEBIT
514
BALANCE
DEBIT
CREDIT
ACCOUNT Depreciation Expense—Equipment
DATE
DESCRIPTION
2013
Dec. 31 Adjusting
31 Closing
14 4 0 0 00
−0−
CREDIT
ACCOUNT Supplies Expense
DATE
DESCRIPTION
2013
Dec. 31 Adjusting
31 Closing
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
POST.
REF.
511
ACCOUNT NO.
523
CREDIT
BALANCE
DEBIT
CREDIT
2 4 0 0 00
2 4 0 0 00
−0−
2 4 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.2A (continued)
GENERAL LEDGER
ACCOUNT
ACCOUNT NO.
Advertising Expense
DATE
DESCRIPTION
2013
Dec. 31 Adjusting
31 Closing
POST.
REF.
J3
J4
DEBIT
CREDIT
3 0 0 0 00
3 0 0 0 00
526
BALANCE
DEBIT
CREDIT
3 0 0 0 00
−0−
The Warrior Group
Post-closing Trial Balance
December 31, 2013
ACCOUNT NAME
Cash
Accounts Receivable
Supplies
Prepaid Advertising
Equipment
Accumulated Depreciation—Equipment
Accounts Payable
Gayle Warrior, Capital
Totals
DEBIT
92 4 0 0
12 0 0 0
3600
21 0 0 0
60 0 0 0
CREDIT
00
00
00
00
00
2
12
174
189 0 0 0 00 189
4
0
6
0
0
0
0
0
0
0
0
0
00
00
00
00
Analyze: Fifteen accounts are listed in the Adjusted Trial Balance section. Eight accounts are listed
on the post-closing trial balance.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  147
PROBLEM 6.3A
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Closing Entries
1
2 2013
3 Dec. 31 Fees Income
4
Income Summary
5
6
31 Income Summary
7
Advertising Expense
8
Depreciation Expense—Equipment
9
Rent Expense
10
Salaries Expense
11
Utilities Expense
12
13
31 Income Summary
14
Monica Cavazos, Capital
15
16
31 Monica Cavazos, Capital
17
Monica Cavazos, Drawing
18
POST.
REF.
DEBIT
401
399
138 0 0 0 00
399
511
514
517
519
523
44 8 2 0 00
399
301
93 1 8 0 00
301
302
7 2 0 0 00
4
CREDIT
138 0 0 0 00
4 8
9
3 6
28 8
6 7
0
0
0
0
2
0
0
0
0
0
00
00
00
00
00
93 1 8 0 00
7 2 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
GENERAL LEDGER
ACCOUNT
DATE
2013
Dec. 31
31
31
ACCOUNT NO.
Monica Cavazos, Capital
POST.
DESCRIPTION REF.
Balance
Closing
Closing
148  Chapter 6
√
J4
J4
DEBIT
CREDIT
93 1 8 0 00
7 2 0 0 00
301
BALANCE
DEBIT
CREDIT
55 6 2 0 00
148 8 0 0 00
141 6 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.3A (continued)
GENERAL LEDGER
ACCOUNT Monica Cavazos, Drawing
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
POST.
REF.
ACCOUNT NO.
DEBIT
√
J4
CREDIT
7 2 0 0 00
ACCOUNT Income Summary
DATE
DESCRIPTION
2013
Dec. 31 Closing
31 Closing
31 Closing
J4
J4
J4
DEBIT
CREDIT
138 0 0 0 00
44 8 2 0 00
93 1 8 0 00
ACCOUNT Fees Income
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
BALANCE
DEBIT
CREDIT
7 2 0 0 00
−0−
ACCOUNT NO.
POST.
REF.
√
J4
DEBIT
CREDIT
138 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
399
BALANCE
DEBIT
CREDIT
138 0 0 0 00
93 1 8 0 00
−0−
ACCOUNT NO.
POST.
REF.
302
401
BALANCE
DEBIT
CREDIT
138 0 0 0 00
−0−
Chapter 6  149
PROBLEM 6.3A (continued)
GENERAL LEDGER
ACCOUNT Advertising Expense
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
ACCOUNT NO.
POST.
REF.
DEBIT
Ö
J4
CREDIT
BALANCE
DEBIT
CREDIT
4 8 0 0 00
4 8 0 0 00
−0−
ACCOUNT Depreciation Expense—Equipment
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
POST.
REF.
DEBIT
√
J4
ACCOUNT NO.
CREDIT
9 0 0 00
ACCOUNT Rent Expense
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
DEBIT
√
J4
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
150  Chapter 6
9 0 0 00
−0−
CREDIT
3 6 0 0 00
3 6 0 0 00
−0−
ACCOUNT NO.
√
J4
DEBIT
517
BALANCE
DEBIT
CREDIT
ACCOUNT Salaries Expense
POST.
REF.
514
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
POST.
REF.
511
CREDIT
28 8 0 0 00
519
BALANCE
DEBIT
CREDIT
28 8 0 0 00
−0−
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.3A (continued)
GENERAL LEDGER
ACCOUNT Utilities Expense
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
ACCOUNT NO.
POST.
REF.
DEBIT
√
J4
CREDIT
6 7 2 0 00
523
BALANCE
DEBIT
CREDIT
6 7 2 0 00
−0−
Analyze: The balance in the Salaries Expense account is $0.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  151
PROBLEM 6.4A
Nationwide Auto Detailing Service
Worksheet
Month Ended December 31, 2013
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
ACCOUNT NAME
Cash
Accounts Receivable
Supplies
Prepaid Advertising
Equipment
Accumulated Depreciation—Equip.
Accounts Payable
Richard Harris, Capital
Richard Harris, Drawing
Fees Income
Supplies Expense
Advertising Expense
Depreciation Expense—Equipment
Salaries Expense
Utilities Expense
Totals
Net Income
152  Chapter 6
TRIAL BALANCE
DEBIT
CREDIT
31 0 5 0 00
4 9 5 0 00
4 0 0 0 00
3 0 0 0 00
20 0 0 0 00
ADJUSTMENTS
DEBIT
CREDIT
(a) 1 6 0 0 00
(b) 1 4 0 0 00
(c)
4 8 0 00
5 0 0 0 00
35 5 0 0 00
2 0 0 0 00
30 0 0 0 00
(a) 1 6 0 0 00
(b) 1 4 0 0 00
(c) 4 8 0 00
4 8 0 0 00
7 0 0 00
70 5 0 0 00
70 5 0 0 00
3 4 8 0 00
3 4 8 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.4A (continued)
ADJUSTED TRIAL BALANCE
DEBIT
CREDIT
31 0 5 0 00
4 9 5 0 00
2 4 0 0 00
1 6 0 0 00
20 0 0 0 00
4 8 0 00
5 0 0 0 00
35 5 0 0 00
2 0 0 0 00
30 0 0 0 00
1 6 0 0 00
1 4 0 0 00
4 8 0 00
4 8 0 0 00
7 0 0 00
70 9 8 0 00
70 9 8 0 00
INCOME STATEMENT
DEBIT
CREDIT
BALANCE SHEET
DEBIT
CREDIT
31 0 5 0 00
4 9 5 0 00
2 4 0 0 00
1 6 0 0 00
20 0 0 0 00
4 8 0 00
5 0 0 0 00
35 5 0 0 00
2 0 0 0 00
30 0 0 0 00
160
140
48
480
70
898
21 0 2
30 0 0
0
0
0
0
0
0
0
0
00
00
00
00
00
00
00
00
30 0 0 0 00
62 0 0 0 00
30 0 0 0 00
62 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
40 9 8 0 00 16
21 0 2 0 00 17
62 0 0 0 00 18
19
Chapter 6  153
PROBLEM 6.4A (continued)
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Adjusting Entries
1
2 2013
(a)
3 Dec. 31 Supplies Expense
4
Supplies
5
6
(b)
7
31 Advertising Expense
8
Prepaid Advertising
9
10
(c)
11
31 Depreciation Expense—Equipment
12
Accumulated Depreciation—Equipment
13
POST.
REF.
DEBIT
517
121
1 6 0 0 00
526
131
1 4 0 0 00
523
142
4 8 0 00
DESCRIPTION
Closing Entries
1
2 2013
3 Dec. 31 Fees Income
4
Income Summary
5
6
31 Income Summary
7
Salaries Expense
8
Utilities Expense
9
Supplies Expense
10
Depreciation Expense—Equipment
11
Advertising Expense
12
13
31 Income Summary
14
Richard Harris, Capital
15
16
31 Richard Harris, Capital
17
Richard Harris, Drawing
18
154  Chapter 6
CREDIT
1
2
3
1 6 0 0 00 4
5
6
7
1 4 0 0 00 8
9
10
11
4 8 0 00 12
13
PAGE
GENERAL JOURNAL
DATE
3
POST.
REF.
DEBIT
401
399
30 0 0 0 00
399
511
514
517
523
526
8 9 8 0 00
399
301
21 0 2 0 00
301
302
2 0 0 0 00
4
CREDIT
30 0 0 0
48
7
16
4
14
0
0
0
8
0
0
0
0
0
0
21 0 2 0
2000
1
2
3
000 4
5
6
00 7
00 8
00 9
00 10
00 11
12
13
00 14
15
16
00 17
18
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.4A (continued)
GENERAL LEDGER
ACCOUNT Supplies
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Adjusting
ACCOUNT NO.
POST.
REF.
DEBIT
√
J3
CREDIT
1 6 0 0 00
ACCOUNT Prepaid Advertising
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Adjusting
DEBIT
√
J3
CREDIT
1 4 0 0 00
ACCOUNT Accumulated Depreciation—Equipment
DATE
DESCRIPTION
2013
Dec. 31 Adjusting
4 0 0 0 00
2 4 0 0 00
POST.
REF.
DEBIT
J3
CREDIT
4 8 0 00
POST.
REF.
√
J4
J4
3 0 0 0 00
1 6 0 0 00
CREDIT
21 0 2 0 00
2 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
142
BALANCE
DEBIT
CREDIT
4 8 0 00
ACCOUNT NO.
DEBIT
131
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
ACCOUNT Richard Harris, Capital
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
31 Closing
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
POST.
REF.
121
301
BALANCE
DEBIT
CREDIT
35 5 0 0 00
56 5 2 0 00
54 5 2 0 00
Chapter 6  155
PROBLEM 6.4A (continued)
GENERAL LEDGER
ACCOUNT Richard Harris, Drawing
DATE
DESCRIPTION
2013
Dec.
31 Balance
31 Closing
POST.
REF.
ACCOUNT NO.
DEBIT
√
J4
CREDIT
BALANCE
DEBIT
CREDIT
2 0 0 0 00
2 0 0 0 00
−0−
ACCOUNT Income Summary
DATE
DESCRIPTION
2013
Dec.
31 Closing
31 Closing
31 Closing
ACCOUNT NO.
POST.
REF.
DEBIT
J4
J4
J4
8 9 8 0 00
21 0 2 0 00
CREDIT
DESCRIPTION
DATE
2013
Dec.
31 Balance
31 Closing
√
J4
CREDIT
156  Chapter 6
BALANCE
CREDIT
DEBIT
30 0 0 0 00
ACCOUNT NO.
POST.
REF.
√
J4
DEBIT
401
30 0 0 0 00
−0−
ACCOUNT Salaries Expense
DATE
DESCRIPTION
2013
Dec.
31 Balance
31 Closing
30 0 0 0 00
21 0 2 0 00
−0−
ACCOUNT NO.
DEBIT
399
BALANCE
CREDIT
DEBIT
30 0 0 0 00
ACCOUNT Fees Income
POST.
REF.
302
511
CREDIT
BALANCE
CREDIT
DEBIT
4 8 0 0 00
4 8 0 0 00
−0−
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.4A (continued)
GENERAL LEDGER
ACCOUNT Utilities Expense
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
ACCOUNT NO.
POST.
REF.
DEBIT
√
J4
CREDIT
7 0 0 00
ACCOUNT Supplies Expense
DATE
DESCRIPTION
2013
Dec. 31 Adjusting
31 Closing
J3
J4
DEBIT
POST.
REF.
1 6 0 0 00
1 6 0 0 00
−0−
1 6 0 0 00
J3
J4
DEBIT
ACCOUNT NO.
CREDIT
4 8 0 00
4 8 0 00
J3
J4
DEBIT
523
BALANCE
DEBIT
CREDIT
4 8 0 00
−0−
ACCOUNT NO.
POST.
REF.
517
BALANCE
DEBIT
CREDIT
ACCOUNT Advertising Expense
DATE
DESCRIPTION
2013
Dec. 31 Adjusting
31 Closing
7 0 0 00
−0−
CREDIT
ACCOUNT Depreciation Expense—Equipment
DATE
DESCRIPTION
2013
Dec. 31 Adjusting
31 Closing
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
POST.
REF.
514
526
CREDIT
BALANCE
DEBIT
CREDIT
1 4 0 0 00
1 4 0 0 00
−0−
1 4 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  157
PROBLEM 6.4A (continued)
Nationwide Auto Detailing Service
Post-closing Trial Balance
December 31, 2013
ACCOUNT NAME
DEBIT
31 0 5 0
4950
2400
1600
20 0 0 0
Cash
Accounts Receivable
Supplies
Prepaid Advertising
Equipment
Accumulated Depreciation—Equipment
Accounts Payable
Richard Harris, Capital
Totals
CREDIT
00
00
00
00
00
60 0 0 0 00
480
5000
54 5 2 0
60 0 0 0
00
00
00
00
Analyze: Total debits of $62,000 were posted to the general ledger to complete the closing entries
PROBLEM 6.1B
PAGE
GENERAL JOURNAL
DATE
1
2
3
4
5
6
7
8
9
10
11
2013
Jan.
DESCRIPTION
Adjusting Entries
(a)
31 Supplies Expense
Supplies
(b)
31 Insurance Expense
Prepaid Insurance
(c)
31 Depreciation Expense—Machinery
Accumulated Depreciation—Machinery
158  Chapter 6
POST.
REF.
DEBIT
523
121
8 5 8 0 00
514
134
4 4 4 0 00
511
142
3 3 6 0 00
3
CREDIT
1
2
3
8 5 8 0 00 4
5
6
4 4 4 0 00 7
8
9
3 3 6 0 00 10
11
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.1B
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Closing Entries
1
2 2013
3 Jan. 31 Fees Income
4
Income Summary
5
6
31 Income Summary
7
Depreciation Expense—Machinery
8
Insurance Expense
9
Rent Expense
10
Salaries Expense
11
Supplies Expense
12
Telephone Expense
13
Utilities Expense
14
15
31 Income Summary
16
Jay Williams, Capital
17
18
31 Jay Williams, Capital
19
Jay Williams, Drawing
20
POST.
REF.
DEBIT
401
309
98 4 0 0 00
309
511
514
517
520
523
526
529
75 9 3 0 00
309
301
22 4 7 0 00
301
302
7 2 0 0 00
4
CREDIT
98 4 0 0 00
3
4
9
48
8
3
4
0
0
5
6
1 9
6
4
0
0
8
3
2
0
0
0
0
0
0
0
00
00
00
00
00
00
00
22 4 7 0 00
7 2 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Analyze: The adjusting entry for expired insurance created a debit to Insurance Expense, increasing
the Insurance Expense account balance to $4,440.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  159
PROBLEM 6.2B
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Adjusting Entries
1
2 2013
(a)
3 Dec. 31 Supplies Expense
4
Supplies
5
(b)
6
31 Advertising Expense
7
Prepaid Advertising
8
(c)
9
31 Depreciation Expense—Equipment
10
Accumulated Depreciation—Equipment
11
POST.
REF.
DEBIT
517
121
6 0 0 0 00
526
131
2 4 0 0 00
523
142
3 0 0 0 00
160  Chapter 6
CREDIT
1
2
3
6 0 0 0 00 4
5
6
2 4 0 0 00 7
8
9
3 0 0 0 00 10
11
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Closing Entries
1
2 2013
3 Dec. 31 Fees Income
4
Income Summary
5
6
31 Income Summary
7
Salaries Expense
8
Utilities Expense
9
Supplies Expense
10
Depreciation Expense—Equipment
11
Advertising Expense
12
13
31 Income Summary
14
Randy Scott, Capital
15
16
31 Randy Scott, Capital
17
Randy Scott, Drawing
18
3
POST.
REF.
DEBIT
401
399
93 6 0 0 00
399
511
514
517
523
526
43 8 0 0 00
399
301
49 8 0 0 00
301
302
16 8 0 0 00
4
CREDIT
93 6 0 0 00
28
3
6
3
2
8
6
0
0
4
0
0
0
0
0
0
0
0
0
0
00
00
00
00
00
49 8 0 0 00
16 8 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.2B (continued)
GENERAL LEDGER
ACCOUNT Supplies
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Adjusting
ACCOUNT NO.
POST.
REF.
DEBIT
√
J3
CREDIT
6 0 0 0 00
ACCOUNT Prepaid Advertising
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Adjusting
DEBIT
√
J3
CREDIT
2 4 0 0 00
ACCOUNT Accumulated Depreciation—Equipment
DATE
DESCRIPTION
2013
Dec. 31 Adjusting
12 0 0 0 00
6 0 0 0 00
POST.
REF.
DEBIT
J3
CREDIT
18 0 0 0 00
15 6 0 0 00
3 0 0 0 00
√
J4
J4
DEBIT
CREDIT
49 8 0 0 00
16 8 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
142
BALANCE
DEBIT
CREDIT
3 0 0 0 00
ACCOUNT NO.
POST.
REF.
131
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
ACCOUNT Randy Scott, Capital
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
31 Closing
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
POST.
REF.
121
301
BALANCE
DEBIT
CREDIT
164 4 0 0 00
214 2 0 0 00
197 4 0 0 00
Chapter 6  161
PROBLEM 6.2B (continued)
GENERAL LEDGER
ACCOUNT Randy Scott, Drawing
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
ACCOUNT NO.
POST.
REF.
DEBIT
√
J4
CREDIT
16 8 0 0 00
ACCOUNT Income Summary
DATE
DESCRIPTION
2013
Dec. 31 Closing
31 Closing
31 Closing
DEBIT
J4
J4
J4
43 8 0 0 00
49 8 0 0 00
CREDIT
93 6 0 0 00
ACCOUNT Fees Income
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
162  Chapter 6
BALANCE
DEBIT
CREDIT
16 8 0 0 00
−0−
ACCOUNT NO.
POST.
REF.
√
J4
DEBIT
93 6 0 0 00
CREDIT
399
BALANCE
DEBIT
CREDIT
93 6 0 0 00
49 8 0 0 00
−0−
ACCOUNT NO.
POST.
REF.
302
401
BALANCE
DEBIT
CREDIT
93 6 0 0 00
−0−
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.2B (continued)
GENERAL LEDGER
ACCOUNT Salaries Expense
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
ACCOUNT NO.
POST.
REF.
DEBIT
√
J4
CREDIT
28 8 0 0 00
ACCOUNT Utilities Expense
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
DEBIT
√
J4
3 6 0 0 00
3 6 0 0 00
−0−
ACCOUNT NO.
POST.
REF.
J3
J4
DEBIT
POST.
REF.
J3
J4
517
CREDIT
BALANCE
DEBIT
CREDIT
6 0 0 0 00
6 0 0 0 00
−0−
6 0 0 0 00
DEBIT
514
BALANCE
DEBIT
CREDIT
ACCOUNT Depreciation Expense—Equipment
DATE
DESCRIPTION
2013
Dec. 31 Adjusting
31 Closing
28 8 0 0 00
−0−
CREDIT
ACCOUNT Supplies Expense
DATE
DESCRIPTION
2013
Dec. 31 Adjusting
31 Closing
BALANCE
CREDIT
DEBIT
ACCOUNT NO.
POST.
REF.
511
ACCOUNT NO.
523
CREDIT
BALANCE
DEBIT
CREDIT
3 0 0 0 00
3 0 0 0 00
−0−
3 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  163
PROBLEM 6.2B (continued)
GENERAL LEDGER
ACCOUNT
ACCOUNT NO.
Advertising Expense
DATE
DESCRIPTION
2013
Dec. 31 Adjusting
31 Closing
POST.
REF.
J3
J4
DEBIT
CREDIT
2 4 0 0 00
2 4 0 0 00
526
BALANCE
DEBIT
CREDIT
2 4 0 0 00
−0−
Cedar Canyon Nursery and Landscape
Post-closing Trial Balance
December 31, 2013
ACCOUNT NAME
Cash
Accounts Receivable
Supplies
Prepaid Advertising
Equipment
Accumulated Depreciation—Equipment
Accounts Payable
Randy Scott, Capital
Totals
DEBIT
64 8 0 0 00
12 0 0 0 00
6 0 0 0 00
15 6 0 0 00
120 0 0 0 00
CREDIT
3
18
197
218 4 0 0 00 218
0
0
4
4
0
0
0
0
0
0
0
0
00
00
00
00
Analyze: Total credits of $204,000 were posted to the general ledger to complete the closing entries
164  Chapter 6
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.3B
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
1 2013
2 Dec. 31 Fees Income
3
Income Summary
5
6
31 Income Summary
7
Advertising Expense
8
Depreciation Expense—Equipment
9
Rent Expense
10
Salaries Expense
11
Utilities Expense
12
13
31 Income Summary
14
James Taylor, Capital
15
16
31 James Taylor, Capital
17
James Taylor, Drawing
18
POST.
REF.
DEBIT
401
399
324 0 0 0 00
399
511
514
517
519
523
124 2 0 0 00
399
301
199 8 0 0 00
301
302
21 6 0 0 00
4
CREDIT
324 0 0 0 00
19
5
12
64
21
8
4
6
8
6
0
0
0
0
0
0
0
0
0
0
00
00
00
00
00
199 8 0 0 00
21 6 0 0 00
1
2
3
5
6
7
8
9
10
11
12
13
14
15
16
17
18
GENERAL LEDGER
ACCOUNT
ACCOUNT NO.
Supplies
DATE
DESCRIPTION
2013
Dec. 31 Balance
POST.
REF.
DEBIT
CREDIT
√
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
121
BALANCE
CREDIT
DEBIT
18 0 0 0 00
Chapter 6  165
PROBLEM 6.3B (continued)
GENERAL LEDGER
ACCOUNT Prepaid Rent
DATE
DESCRIPTION
2013
Dec. 31 Balance
ACCOUNT NO.
POST.
REF.
DEBIT
CREDIT
ACCOUNT Equipment
DATE
DESCRIPTION
2013
Dec. 31 Balance
ACCOUNT NO.
DEBIT
CREDIT
POST.
REF.
DEBIT
ACCOUNT NO.
CREDIT
166  Chapter 6
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
√
J4
J4
142
5 4 0 0 00
ACCOUNT James Taylor, Capital
DATE
DESCRIPTION
2013
Dec.
1 Balance
31 Closing
31 Closing
BALANCE
DEBIT
CREDIT
√
POST.
REF.
141
216 0 0 0 00
√
ACCOUNT Accumulated Depreciation—Equipment
DATE
DESCRIPTION
2013
Dec. 31 Balance
BALANCE
DEBIT
CREDIT
138 6 0 0 00
√
POST.
REF.
131
DEBIT
CREDIT
199 8 0 0 00
21 6 0 0 00
301
BALANCE
DEBIT
CREDIT
344 7 0 0 00
544 5 0 0 00
522 9 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.3B (continued)
GENERAL LEDGER
ACCOUNT James Taylor, Drawing
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
POST.
REF.
ACCOUNT NO.
DEBIT
√
J4
CREDIT
21 6 0 0 00
ACCOUNT Income Summary
DATE
DESCRIPTION
2013
Dec. 31 Closing
31 Closing
31 Closing
J4
J4
J4
DEBIT
CREDIT
324 0 0 0 00
124 2 0 0 00
199 8 0 0 00
ACCOUNT Fees Income
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
BALANCE
DEBIT
CREDIT
21 6 0 0 00
−0−
ACCOUNT NO.
POST.
REF.
√
J4
DEBIT
CREDIT
324 0 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
399
BALANCE
DEBIT
CREDIT
324 0 0 0 00
199 8 0 0 00
−0−
ACCOUNT NO.
POST.
REF.
302
401
BALANCE
DEBIT
CREDIT
324 0 0 0 00
−0−
Chapter 6  167
PROBLEM 6.3B (continued)
GENERAL LEDGER
ACCOUNT Advertising Expense
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
ACCOUNT NO.
POST.
REF.
DEBIT
√
J4
CREDIT
19 8 0 0 00
ACCOUNT Depreciation Expense—Equipment
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
POST.
REF.
DEBIT
√
J4
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
168  Chapter 6
19 8 0 0 00
−0−
BALANCE
DEBIT
CREDIT
5 4 0 0 00
5 4 0 0 00
−0−
ACCOUNT NO.
DEBIT
√
J4
CREDIT
12 6 0 0 00
√
J4
DEBIT
CREDIT
64 8 0 0 00
517
BALANCE
DEBIT
CREDIT
12 6 0 0 00
−0−
ACCOUNT NO.
POST.
REF.
514
CREDIT
ACCOUNT Salaries Expense
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
BALANCE
CREDIT
DEBIT
ACCOUNT NO.
ACCOUNT Rent Expense
POST.
REF.
511
519
BALANCE
DEBIT
CREDIT
64 8 0 0 00
−0−
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.3B (continued)
GENERAL LEDGER
ACCOUNT
DATE
DESCRIPTION
2013
Dec. 31 Balance
31 Closing
Analyze:
ACCOUNT NO.
Utilities Expense
POST.
REF.
√
J4
DEBIT
CREDIT
21 6 0 0 00
523
BALANCE
DEBIT
CREDIT
21 6 0 0 00
−0−
Fees Income, Income Summary, James Taylor—Capital, James Taylor—Drawing,
Advertising, Depreciation, Rent, Salaries, and Utilities Expense.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  169
PROBLEM 6.4B
Scott Wilson, CPA
Worksheet
Month Ended June 30, 2013
1
2
3
4
5
6
7
8
9
10
11
12
13
14
ACCOUNT NAME
Cash
Accounts Receivable
Supplies
Computers
Accumulated Depreciation—Computers
Accounts Payable
Scott Wilson, Capital
Scott Wilson, Drawing
Fees Income
Salaries Expense
Supplies Expense
Depreciation Expense—Computers
Travel Expense
Utilities Expense
15 Totals
TRIAL BALANCE
DEBIT
CREDIT
31 9 5 0 00
11 3 4 0 00
15 7 5 0 00
28 8 0 0 00
2 8 8 0 00
12 6 0 0 00
62 2 3 5 00
12 0 0 0 00
67 9 5 0 00
37 7 2 5 00
ADJUSTMENTS
DEBIT
CREDIT
(a) 2 7 0 0 00
(b)
2 4 0 00
(a) 2 7 0 0 00
(b) 2 4 0 00
5 4 0 0 00
2 7 0 0 00
145 6 6 5 00
145 6 6 5 00
2 9 4 0 00
2 9 4 0 00
16 Net Income
17
18
170  Chapter 6
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.4B (continued)
ADJUSTED TRIAL BALANCE
DEBIT
CREDIT
31 9 5 0 00
11 3 4 0 00
13 0 5 0 00
28 8 0 0 00
3 1 2 0 00
12 6 0 0 00
62 2 3 5 00
12 0 0 0 00
67 9 5 0 00
37 7 2 5 00
2 7 0 0 00
2 4 0 00
5 4 0 0 00
2 7 0 0 00
145 9 0 5 00
145 9 0 5 00
INCOME STATEMENT
DEBIT
CREDIT
31
11
13
28
12
BALANCE SHEET
DEBIT
CREDIT
9 5 0 00
3 4 0 00
0 5 0 00
8 0 0 00
3 1 2 0 00
12 6 0 0 00
62 2 3 5 00
0 0 0 00
67 9 5 0 00
37 7 2
2 7 0
2 4
5 4 0
2 7 0
5
0
0
0
0
00
00
00
00
00
48 7 6 5 00
67 9 5 0 00
97 1 4 0 00
19 1 8 5 00
67 9 5 0 00
67 9 5 0 00
97 1 4 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
77 9 5 5 00
15
19 1 8 5 00
16
97 1 4 0 00
17
18
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  171
PROBLEM 6.4B (continued)
PAGE
GENERAL JOURNAL
DATE
1
2 2013
3 Jun.
4
5
6
7
8
9
10
11
12
13
DESCRIPTION
Adjusting Entries
POST.
REF.
DEBIT
30 Supplies Expense
Supplies
517
121
2 7 0 0 00
30 Depreciation Expense—Computers
Accumulated Depreciation—Computers
523
142
2 4 0 00
DATE
1
2 2013
3 Jun.
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
DESCRIPTION
Closing Entries
1
2
3
4
5
6
7
8
9
10
11
12
13
2 4 0 00
PAGE
DEBIT
30 Fees Income
Income Summary
401
309
67 9 5 0 00
30 Income Summary
Salaries Expense
Supplies Expense
Depreciation Expense—Computers
Travel Expense
Utilities Expense
309
511
517
523
519
514
48 7 6 5 00
30 Income Summary
Scott Wilson, Capital
309
301
19 1 8 5 00
30 Scott Wilson, Capital
Scott Wilson, Drawing
301
302
12 0 0 0 00
172  Chapter 6
CREDIT
2 7 0 0 00
GENERAL JOURNAL
POST.
REF.
3
4
CREDIT
1
2
3
67 9 5 0 000 4
5
6
37 7 2 5 00
7
2 7 0 0 00
8
2 4 0 00
9
5 4 0 0 00 10
2 7 0 0 00 11
12
13
19 1 8 5 00 14
15
16
12 0 0 0 00 17
18
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.4B (continued)
GENERAL LEDGER
ACCOUNT
DATE
DESCRIPTION
2013
Jun.
30 Balance
30 Adjusting
ACCOUNT
POST.
REF.
DEBIT
CREDIT
DEBIT
CREDIT
POST.
DESCRIPTION REF.
√
J3
131
BALANCE
DEBIT
CREDIT
28 8 0 0 00
√
ACCOUNT NO.
Accumulated Depreciation—Computers
DATE
2013
Jun.
30 Balance
30 Adjusting
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
POST.
REF.
121
15 7 5 0 00
2 7 0 0 00 13 0 5 0 00
√
J3
Computers
DATE
DESCRIPTION
2013
Jun.
30 Balance
ACCOUNT
ACCOUNT NO.
Supplies
DEBIT
CREDIT
2 4 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
142
BALANCE
DEBIT
CREDIT
2 8 8 0 00
3 1 2 0 00
Chapter 6  173
PROBLEM 6.4B (continued)
ACCOUNT
ACCOUNT NO.
Scott Wilson, Capital
DATE
DESCRIPTION
2010
Jun. 30 Balance
30 Closing
30 Closing
POST.
REF.
√
J4
J4
DEBIT
CREDIT
301
BALANCE
DEBIT
CREDIT
62 2 3 5 00
81 4 2 0 00
69 4 2 0 00
19 1 8 5 00
12 0 0 0 00
GENERAL LEDGER
ACCOUNT
DATE
DESCRIPTION
2013
Jun. 30 Balance
30 Closing
ACCOUNT
ACCOUNT NO.
Scott Wilson, Drawing
POST.
REF.
DEBIT
√
J4
CREDIT
12 0 0 0 00
DATE
DESCRIPTION
2013
Jun. 30 Closing
30 Closing
30 Closing
174  Chapter 6
BALANCE
DEBIT
CREDIT
12 0 0 0 00
−0−
ACCOUNT NO.
Income Summary
POST.
REF.
J4
J4
J4
DEBIT
CREDIT
67 9 5 0 00
48 7 6 5 00
19 1 8 5 00
302
309
BALANCE
DEBIT
CREDIT
67 9 5 0 00
19 1 8 5 00
−0−
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.4B (continued)
ACCOUNT Fees Income
DESCRIPTION
DATE
2013
Jun.
30 Balance
30 Closing
ACCOUNT NO.
POST.
REF.
√
J4
DEBIT
CREDIT
BALANCE
DEBIT
CREDIT
67 9 5 0 00
−0−
67 9 5 0 00
ACCOUNT Salaries Expense
DATE
DESCRIPTION
2013
Jun.
30 Balance
30 Closing
ACCOUNT NO.
POST.
REF.
DEBIT
√
J4
401
CREDIT
37 7 2 5 00
511
BALANCE
DEBIT
CREDIT
37 7 2 5 00
−0−
GENERAL LEDGER
ACCOUNT Utilities Expense
DATE
DESCRIPTION
2013
Jun.
30 Balance
30 Closing
ACCOUNT NO.
POST.
REF.
√
J4
DEBIT
514
CREDIT
BALANCE
CREDIT
DEBIT
2 7 0 0 00
2 7 0 0 00
−0−
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  175
PROBLEM 6.4B (continued)
ACCOUNT Supplies Expense
DATE
2013
Jun.
DESCRIPTION
30 Adjusting
30 Closing
ACCOUNT NO.
POST.
REF.
J3
J4
DEBIT
CREDIT
BALANCE
DEBIT
CREDIT
2 7 0 0 00
2 7 0 0 00
−0−
2 7 0 0 00
ACCOUNT Travel Expense
DATE
2013
Jun.
DESCRIPTION
30 Balance
30 Closing
ACCOUNT NO.
POST.
REF.
DEBIT
√
J4
DATE
2013
Jun.
DESCRIPTION
30 Adjusting
30 Closing
176  Chapter 6
J3
J4
DEBIT
519
CREDIT
BALANCE
DEBIT
CREDIT
5 4 0 0 00
5 4 0 0 00
−0−
ACCOUNT Depreciation Expense—Computers
POST.
REF.
517
ACCOUNT NO.
CREDIT
2 4 0 00
2 4 0 00
523
BALANCE
DEBIT
CREDIT
2 4 0 00
−0−
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
PROBLEM 6.4B (continued)
Scott Wilson, CPA
Post-closing Trial Balance
June 30, 2013
ACCOUNT NAME
Cash
Accounts Receivable
Supplies
Computers
Accumulated Depreciation—Computers
Accounts Payable
Scott Wilson, Capital
Totals
Analyze:
DEBIT
31 9 5 0 00
11 3 4 0 00
13 0 5 0 00
28 8 0 0 00
85 1 4 0 00
CREDIT
3
12
69
85
1
6
4
1
2
0
2
4
0
0
0
0
00
00
00
00
Net Income for Scott Wilson, CPA for the month of June 2013 was $19,185.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  177
CRITICAL THINKING PROBLEM 6.1
Contemporary Fashions
Worksheet
Month Ended December 31, 2013
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
ACCOUNT NAME
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Machinery
Accumulated Depreciation—Machinery
Accounts Payable
Jada McBride, Capital
Jada McBride, Drawing
Fees Income
Supplies Expense
Insurance Expense
Salaries Expense
Depreciation Expense—Machinery
Utilities Expense
16 Totals
TRIAL BALANCE
DEBIT
CREDIT
163 2 0 0 00
36 0 0 0 00
28 8 0 0 00
43 2 0 0 00
336 0 0 0 00
ADJUSTMENTS
DEBIT
CREDIT
(a) 14 4 0 0 00
(b) 9 6 0 0 00
(c) 4 8 0 0 00
54 0 0 0 00
298 3 2 0 00
24 0 0 0 00
330 0 0 0 00
(a) 14 4 0 0 00
(b) 9 6 0 0 00
44 4 0 0 00
(c) 4 8 0 0 00
6 7 2 0 00
682 3 2 0 00
682 3 2 0 00
28 8 0 0 00
28 8 0 0 00
17 Net Income
18
19
178  Chapter 6
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
CRITICAL THINKING PROBLEM 6.1 (continued)
ADJUSTED TRIAL BALANCE
DEBIT
CREDIT
163 2 0 0 00
36 0 0 0 00
14 4 0 0 00
33 6 0 0 00
336 0 0 0 00
4 8 0 0 00
54 0 0 0 00
298 3 2 0 00
24 0 0 0 00
330 0 0 0 00
14 4 0 0 00
9 6 0 0 00
44 4 0 0 00
4 8 0 0 00
6 7 2 0 00
687 1 2 0 00
687 1 2 0 00
INCOME STATEMENT
DEBIT
CREDIT
BALANCE SHEET
DEBIT
CREDIT
163 2 0 0 00
36 0 0 0 00
14 4 0 0 00
33 6 0 0 00
336 0 0 0 00
4 8 0 0 00
54 0 0 0 00
298 3 2 0 00
24 0 0 0 00
330 0 0 0 00
14
9
44
4
6
4
6
4
8
7
0
0
0
0
2
0
0
0
0
0
00
00
00
00
00
79 9 2 0 00
330 0 0 0 00
607 2 0 0 00
250 0 8 0 00
330 0 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
357 1 2 0 00 16
250 0 8 0 00 17
330 0 0 0 00
607 2 0 0 00
607 2 0 0 00 18
19
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  179
CRITICAL THINKING PROBLEM 6.1 (continued)
Contemporary Fashions
Income Statement
Month Ended December 31, 2013
Revenue
Fees Income
Expenses
Supplies Expense
Insurance Expense
Salaries Expense
Depreciation Expense—Machinery
Utilities Expense
Total Expenses
Net Income
330 0 0 0 00
14
9
44
4
6
4
6
4
8
7
0
0
0
0
2
0
0
0
0
0
00
00
00
00
00
79 9 2 0 00
250 0 8 0 00
Contemporary Fashions
Statement of Owner's Equity
Month Ended December 31, 2013
Jada McBride, Capital, December 1, 2013
Net income for December
Less Withdrawals for December
Increase in Capital
Jada McBride, Capital, December 31, 2013
180  Chapter 6
298 3 2 0 00
250 0 8 0 00
24 0 0 0 00
226 0 8 0 00
524 4 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
CRITICAL THINKING PROBLEM 6.1 (continued)
Contemporary Fashions
Balance Sheet
December 31, 2013
Assets
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Machinery
Accumulated Depreciation—Machinery
Total Assets
163
36
14
33
336 0
4 8
Liabilities and Owner's Equity
Liabilities
Accounts Payable
Owner's Equity
Jada McBride, Capital
Total Liabilities and Owner's Equity
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
2
0
4
6
0
0
0
0
0
0
0
0
00
00
00
00
0 0 00
0 0 00 331 2 0 0 00
578 4 0 0 00
54 0 0 0 00
524 4 0 0 00
578 4 0 0 00
Chapter 6  181
CRITICAL THINKING PROBLEM 6.1 (continued)
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Adjusting Entries
POST.
REF.
1
2 2013
3 Dec. 31 Supplies Expense
4
Supplies
5
6
31 Insurance Expense
7
Prepaid Insurance
8
9
31 Depreciation Expense—Machinery
10
Accumulated Depreciation—Machinery
11
DEBIT
14 4 0 0 00
9 6 0 0 00
4 8 0 0 00
182  Chapter 6
CREDIT
1
2
3
14 4 0 0 00 4
5
6
9 6 0 0 00 7
8
9
4 8 0 0 00 10
11
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
1
Closing Entries
2 2013
3 Dec. 31 Fees Income
4
Income Summary
5
6
31 Income Summary
7
Supplies Expense
8
Insurance Expense
9
Salaries Expense
10
Depreciation Expense—Machinery
11
Utilities Expense
12
13
31 Income Summary
14
Jada McBride, Capital
15
16
31 Jada McBride, Capital
17
Jada McBride, Drawing
18
3
POST.
REF.
DEBIT
4
CREDIT
330 0 0 0 00
330 0 0 0 000
79 9 2 0 00
14
9
44
4
6
4
6
4
8
7
0
0
0
0
2
0
0
0
0
0
00
00
00
00
00
250 0 8 0 00
250 0 8 0 00
24 0 0 0 00
24 0 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
CRITICAL THINKING PROBLEM 6.1 (continued)
Contemporary Fashions
Post-closing Trial Balance
December 31, 2013
ACCOUNT NAME
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Machinery
Accumulated Depreciation—Machinery
Accounts Payable
Jada McBride, Capital
DEBIT
163 2 0 0
36 0 0 0
14 4 0 0
33 6 0 0
336 0 0 0
Totals
583 2 0 0 00 583 2 0 0 00
Analyze:
CREDIT
00
00
00
00
00
4 8 0 0 00
54 0 0 0 00
524 4 0 0 00
The net income would be $269,280.
CRITICAL THINKING PROBLEM 6.2
1. Reed made the following errors preparing the closing entries:
Accumulated Depreciation and Accounts Payable are permanent accounts that continue from accounting
a.
period to accounting period and, consequently, are not closed.
b.
The Drawing account is not an expense account to be closed to Income Summary but is a reduction of
equity and is closed directly to the Capital account.
Wilson Reed closed accounts based on what kind of balance they had (debit/credit) rather than looking at the type of
account (permanent/temporary) they were. Only temporary, or nominal, accounts are closed.
2.
1
2
3
4
5
6
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
2013
Dec.
31 James Walker, Capital
Accumulated Depreciation
Accounts Payable
To correct errors made in closing entries
POST.
REF.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
DEBIT
20 7 5 0 00
CREDIT
1
2
4 2 5 0 00 3
16 5 0 0 00 4
5
6
Chapter 6  183
CRITICAL THINKING PROBLEM 6.2 (continued)
3. The proof of this entry is:
Fees Income
Expenses:
Salaries Expense
Supplies Expense
Depreciation Expense
Net Income
Withdrawals
Increase in Capital
Capital, Beginning
Capital, Ending
Corrected balance per Reed’s entries
Less debit from correcting entry
Corrected ending Capital balance
49,000
39,000
2,500
1,200
42,700
6,300
(3,500)
2,800
25,000
27,800
48,550
(20,750)
27,800
Note: It is not necessary to make an entry to correct the closing of the Drawing account to the Income
Summary account. Closing the Drawing account to the Income Summary account, which in turn was
closed to the Capital account, results in reducing the Capital account by the amount of the withdrawals.
So, while incorrect, Reed’s entry with regard to Drawing achieves the correct end result.
The balance of the Capital account after closing entries have been posted must agree with the ending
Capital balance as shown. Posting the entry closing the Income Summary account increases the Capital
account by the amount of the net income (or decreases it by the amount of a net loss), while posting the
entry closing the Drawing account decreases the Capital account. These postings reflect the same changes
to Capital that are shown on the statement of owner’s equity and on the balance sheet, and therefore, the
ending Capital amount must be the same for both.
Note that the errors Reed made in preparing the closing entries would not be revealed by the post-closing
trial balance. Since each entry Reed made had equal debits and credits, the post-closing trial balance
would be in balance. The errors would not become evident until the next year when postings were made
to the Accumulated Depreciation and Accounts Payable accounts or when the ledger account balances
were compared to the balance sheet amounts.
184  Chapter 6
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
SOLUTIONS TO BUSINESS CONNECTIONS
Managerial Focus:
1. No. A thorough analysis of the components of the income statement would reveal how costs directly
impact net income. The balance sheet helps determine the amount of the firm’s assets and its
liquidity, liabilities, and equity.
2. Current assets compared with current liabilities.
3. Timely preparation of financial statements support future planning, prompt payment of debts,
developing effective credit policies.
4. The income statement might help determine the adequacy of profit, how to improve revenue and hold
down expenses, how to reduce expenses without decreasing revenue, and how to even out the
business operating cycle. Balance sheet data might influence decisions concerning growth of equity,
the return on investment, adequacy of the firm’s assets, whether collections on accounts receivable
should be accelerated, and whether more capital is needed.
Ethical Dilemma:
You should wait to verify the invoice is an actual invoice. At the end of the year, Miscellaneous Expense
will be closed and the $1,000 expense will be in the previous year and not given the verification it so
badly needs.
Financial Statement Analysis:
1. Dr. Inc. Summ., $6,756,000; Cr. Labor and Fringe, $2,629,000,000; Cr. Materials, Supplies, and
Other $1,715,000,000; Cr. Inland Trans., $264,000,000; Cr. Depreciation, $908,000,000; Cr. Fuel,
$849,000,000; Cr. Equipment & Other Rents, $391,000,000
2. Dr. Intermodal, $1,204,000,000; Dr. Rail, $7,837,000,000; Cr. Inc. Summ., $9,041,000,000
Analyze Online:
Answers will vary depending on the year.
Teamwork:
1) Analyze transactions, 2) journalize the data about transactions, 3) post the data about transactions,
4) prepare a worksheet, 5) prepare financial statements, 6) record adjusting entries, 7) record closing
entries, 8) prepare a post-closing trial balance, and 9) interpret the financial information.
Internet Connection:
1. Requirements Experience: At least 2 years full-time experience or the part-time or freelance
equivalent.
2. Examination: Candidates must pass a 4-part national examination, including 2 parts given at any
Prometric Test Center (there are over 300 nationwide).
3. Code of Ethics: Applicants must sign a Code of Ethics.
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  185
SOLUTIONS TO PRACTICE TEST
Part A True-False
1. TRUE
2. FALSE
3. FALSE
4. TRUE
5. FALSE
6. TRUE
7. FALSE
8. TRUE
9. FALSE
10. FALSE
Part B Matching
1. a
2. b
3. c
4. e
5. d
186  Chapter 6
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
MINI-PRACTICE SET 1
SERVICE BUSINESS ACCOUNTING CYCLE
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
1 2014
2 Jan.
2 Supplies
3
Cash
4
Bought supplies for cash, Check 1015
5
6
2 Prepaid Insurance
7
Cash
8
Purchased one year of insurance, Check 1016
9
10
7 Cash
11
Accounts Receivable
12
Fees Income
13
Performed services for cash and on account
14
15
12 Cash
16
Accounts Receivable
17
Received cash on account
18
19
12 Advertising Expense
20
Cash
21
Paid for advertising on radio, Check 1017
22
23
13 Cash
24
Accounts Receivable
25
Received cash on account
26
27
14 Cash
28
Supplies
29
Returned damaged supplies for cash refund
30
31
15 Cash
32
Accounts Receivable
33
Fees Income
34
Performed services for cash and on account
35
POST.
REF.
DEBIT
121
101
4 0 0 0 00
134
101
6 0 0 0 00
101
111
401
18 0 0 0 00
2 0 0 0 00
101
111
3 0 0 0 00
526
101
2 8 0 0 00
101
111
2 5 0 0 00
101
121
5 5 0 00
101
111
401
19 5 0 0 00
2 5 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
3
CREDIT
4 0 0 0 00
6 0 0 0 00
20 0 0 0 00
3 0 0 0 00
2 8 0 0 00
2 5 0 0 00
5 5 0 00
22 0 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
Chapter 6  187
MINI-PRACTICE SET 1 (continued)
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
1 2014
2 Jan. 20 Supplies
3
Accounts Payable
4
Bought supplies on account
5
6
20 Cash
7
Accounts Receivable
8
Fees Income
9
Performed services for cash and on account
10
11
20 Cash
12
Accounts Receivable
13
Performed services for cash and on account
14
15
21 Maintenance Expense
16
Cash
17
Paid for maintenance on equipment
18
Check 1018
19
20
22 Advertising Expense
21
Cash
22
Paid cash for newspaper ads, Check 1019
23
24
23 Telephone Expense
25
Cash
26
Paid monthly telephone bill, Check 1020
27
28
26 Cash
29
Accounts Receivable
30
Received cash on account
31
32
27 Accounts Payable
33
Cash
34
Made payment to creditor, Check 1021
35
36
37
188  Chapter 6
POST.
REF.
DEBIT
121
202
3 6 0 0 00
101
111
401
10 5 0 0 00
2 2 5 0 00
101
111
3 2 0 0 00
529
101
5 0 2 5 00
526
101
2 8 0 0 00
532
101
8 7 5 00
101
111
2 8 0 0 00
202
101
3 0 0 0 00
4
CREDIT
3 6 0 0 00
12 7 5 0 00
3 2 0 0 00
5 0 2 5 00
2 8 0 0 00
8 7 5 00
2 8 0 0 00
3 0 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
MINI-PRACTICE SET 1 (continued)
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
1 2014 28 Utilities Expense
2 Jan.
Cash
3
Paid monthly utility bill, Check 1022
4
5
29 Cash
6
Accounts Receivable
7
Fees Income
8
Performed services for cash and on account
9
10
31 Salaries Expense
11
Cash
12
Paid monthly salaries, Checks 1023–1027
13
14
31 Carolyn Wells, Drawing
15
Cash
16
Owner withdrew cash for personal use,
17
Check 1028
18
19
31 Maintenance Expense
20
Cash
21
Paid for monthly maintenance services,
22
Check 1029
23
24
31 Equipment
25
Cash
26
Accounts Payable
27
Bought equipment for cash and on account,
28
Check 1030
29
30
31 Cash
31
Accounts Receivable
32
Fees Income
33
Performed services for cash and on account
34
35
36
37
POST.
REF.
514
101
DEBIT
2 1 7 5 00
CREDIT
2 1 7 5 00
101
111
401
16 5 0 0 00
3 5 0 0 00
511
101
20 5 0 0 00
302
101
12 0 0 0 00
529
101
3 0 5 0 00
141
101
202
12 8 0 0 00
101
111
401
4 2 5 0 00
1 4 5 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
5
20 0 0 0 00
20 5 0 0 00
12 0 0 0 00
3 0 5 0 00
10 0 0 0 00
2 8 0 0 00
5 7 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
Chapter 6  189
MINI-PRACTICE SET 1 (continued)
PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
Adjusting Entries
1
2 2014
3 Jan. 31 Supplies Expense
4
Supplies
5
6
31 Rent Expense
7
Prepaid Rent
8
9
31 Insurance Expense
10
Prepaid Insurance
11
12
31 Depreciation Expense—Equipment
13
Accumulated Depreciation—Equipment
14
Closing Entries
15
16
17
31 Fees Income
18
Income Summary
19
20
31 Income Summary
21
Salaries Expense
22
Utilities Expense
23
Supplies Expense
24
Rent Expense
25
Depreciation Expense—Equipment
26
Advertising Expense
27
Maintenance Expense
28
Telephone Expense
29
Insurance Expense
30
31
31 Income Summary
32
Carolyn Wells, Capital
33
34
31 Carolyn Wells, Capital
35
Carolyn Wells, Drawing
36
190  Chapter 6
POST.
REF.
DEBIT
517
121
5 0 0 0 00
520
137
4 0 0 0 00
535
134
5 0 0 00
523
142
1 8 3 00
401
309
80 4 5 0 00
309
511
514
517
520
523
526
529
532
535
46 9 0 8 00
309
301
33 5 4 2 00
301
302
12 0 0 0 00
6
CREDIT
5 0 0 0 00
4 0 0 0 00
5 0 0 00
1 8 3 00
80 4 5 0 00
20
2
5
4
5
1
0
0
1
5 6
8 0
8
5
0
7
0
0
8
0
7
7
0
0
5
0
0
3
0
5
5
0
00
00
00
00
00
00
00
00
00
33 5 4 2 00
12 0 0 0 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
MINI−PRACTICE SET 1 (continued)
GENERAL LEDGER
ACCOUNT
ACCOUNT NO.
Cash
DATE
DESCRIPTION
2014
Jan.
1 Balance
2
2
7
12
12
13
14
15
20
20
21
22
23
26
27
28
29
31
31
31
31
31
POST.
REF.
✔
J3
J3
J3
J3
J3
J3
J3
J4
J4
J4
J4
J4
J4
J4
J5
J5
J5
J5
J5
J5
J5
J5
DEBIT
CREDIT
4 0 0 0 00
6 0 0 0 00
18 0 0 0 00
3 0 0 0 00
2 8 0 0 00
2 5
5
19 5
10 5
3 2
0
5
0
0
0
0
0
0
0
0
00
00
00
00
00
5 0 2 5 00
2 8 0 0 00
8 7 5 00
2 8 0 0 00
3 0 0 0 00
2 1 7 5 00
16 5 0 0 00
20
12
3
10
5
0
0
0
0
0
5
0
0
0
0
0
00
00
00
00
4 2 5 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
101
BALANCE
DEBIT
CREDIT
111
107
101
119
122
119
122
122
142
152
155
150
147
147
149
146
144
161
140
128
125
115
119
3
3
3
3
3
5
0
6
1
6
8
7
9
1
9
9
7
2
7
7
6
6
9
5
5
5
5
5
5
5
0
0
0
0
7
7
0
0
0
2
2
2
2
7
7
2
0
0
0
0
0
0
0
0
0
0
0
5
5
0
0
0
5
5
5
5
5
5
5
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
00
Chapter 6  191
MINI−PRACTICE SET 1 (continued)
GENERAL LEDGER
ACCOUNT
DATE
DESCRIPTION
2014
Jan.
1 Balance
7
12
13
15
20
20
26
29
31
ACCOUNT
ACCOUNT NO.
Accounts Receivable
POST.
REF.
✔
J3
J3
J3
J4
J4
J4
J4
J5
J5
DEBIT
BALANCE
DEBIT
CREDIT
CREDIT
2 0 0 0 00
3 0 0 0 00
2 5 0 0 00
2 5 0 0 00
2 2 5 0 00
3 2 0 0 00
2 8 0 0 00
3 5 0 0 00
1 4 5 0 00
5
7
4
1
4
6
3
0
0
0
5
0
2
0
2
3 7
5 2
DATE
2014
Jan.
1 Balance
2
14
20
31 Adjusting
192  Chapter 6
0
0
0
0
0
5
5
5
5
0
0
0
0
0
0
0
0
0
0
0
00
00
00
00
00
00
00
00
00
00
ACCOUNT NO.
Supplies
POST.
DESCRIPTION REF.
✔
J3
J3
J4
J6
DEBIT
5 5 0 00
3 6 0 0 00
5 0 0 0 00
121
BALANCE
DEBIT
CREDIT
CREDIT
4 0 0 0 00
111
1
5
4
8
3
0
0
4
0
0
0
0
5
5
5
0
0
0
0
0
00
00
00
00
00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
MINI−PRACTICE SET 1 (continued)
GENERAL LEDGER
ACCOUNT
DATE DESCRIPTION
2014
Jan.
2
31 Adjusting
ACCOUNT
POST.
REF.
J3
J6
CREDIT
6 0 0 0 00
5 0 0 00
POST.
REF.
DEBIT
✔
J6
CREDIT
4 0 0 0 00
DATE
2014
Jan.
1 Balance
31
✔
J5
DEBIT
CREDIT
POST.
DESCRIPTION REF.
✔
J6
DEBIT
137
BALANCE
DEBIT
CREDIT
4 0 0 0 00
− 0−
141
BALANCE
DEBIT
CREDIT
11 0 0 0 00
23 8 0 0 00
12 8 0 0 00
ACCOUNT NO.
Accumulated Depreciation—Equipment
DATE
2014
Jan.
1 Balance
31 Adjusting
6 0 0 0 00
5 5 0 0 00
ACCOUNT NO.
Equipment
134
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
POST.
DESCRIPTION REF.
ACCOUNT
DEBIT
Prepaid Rent
DATE DESCRIPTION
2014
Jan.
1 Balance
31 Adjusting
ACCOUNT
ACCOUNT NO.
Prepaid Insurance
CREDIT
1 8 3 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
142
BALANCE
DEBIT
CREDIT
1 8 3 00
3 6 6 00
Chapter 6  193
MINI−PRACTICE SET 1 (continued)
GENERAL LEDGER
ACCOUNT
ACCOUNT NO.
Accounts Payable
POST.
DATE DESCRIPTION REF.
2014
Jan.
1 Balance
✔
20
J4
27
J5
31
J5
ACCOUNT
CREDIT
DATE
2014
Jan.
1 Balance
31 Closing
31 Closing
✔
J6
J6
3
7
4
6
3 0 0 0 00
2 8 0 0 00
ACCOUNT NO.
DEBIT
CREDIT
33 5 4 2 00
12 0 0 0 00
Carolyn Wells, Drawing
BALANCE
DEBIT
CREDIT
3 6 0 0 00
Carolyn Wells, Capital
POST.
DESCRIPTION REF.
ACCOUNT
DEBIT
202
5
1
1
9
0
0
0
0
0
0
0
0
00
00
00
00
301
BALANCE
DEBIT
CREDIT
128 6 6 7 00
162 2 0 9 00
150 2 0 9 00
ACCOUNT NO.
302
BALANCE
POST.
DEBIT
CREDIT
DATE DESCRIPTION REF.
DEBIT
CREDIT
2014
Jan. 31
J5
12 0 0 0 00
12 0 0 0 00
31 Closing
J6
12 0 0 0 00
− 0 −
194  Chapter 6
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
MINI−PRACTICE SET 1 (continued)
GENERAL LEDGER
ACCOUNT
DATE
2014
Jan. 31
31
31
ACCOUNT
ACCOUNT NO.
Income Summary
POST.
DESCRIPTION REF.
Closing
Closing
Closing
J6
J6
J6
CREDIT
DATE
2014
Jan.
7
15
20
29
31
31 Closing
80 4 5 0 00
80 4 5 0 00
33 5 4 2 00
− 0 −
ACCOUNT NO.
J3
J4
J4
J5
J5
J6
DEBIT
CREDIT
20
22
12
20
5
0
0
7
0
7
0
0
5
0
0
0
0
0
0
0
20
42
54
74
80
80 4 5 0 00
ACCOUNT NO.
POST.
DESCRIPTION REF.
J5
J6
DEBIT
20 5 0 0 00
CREDIT
401
BALANCE
DEBIT
CREDIT
00
00
00
00
00
Salaries Expense
DATE
2014
Jan. 31
31 Closing
BALANCE
DEBIT
CREDIT
46 9 0 8 00
33 5 4 2 00
Fees Income
POST.
DESCRIPTION REF.
ACCOUNT
DEBIT
309
0
0
7
7
4
−
0
0
5
5
5
0
0
0
0
0
0
−
00
00
00
00
00
511
BALANCE
DEBIT
CREDIT
20 5 0 0 00
20 5 0 0 00
− 0 −
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  195
MINI−PRACTICE SET 1 (continued)
GENERAL LEDGER
ACCOUNT
DATE
DESCRIPTION
2014
Jan. 28
31 Closing
ACCOUNT
POST.
REF.
J5
J6
CREDIT
2 1 7 5 00
2 1 7 5 00
POST.
REF.
J6
J6
DEBIT
CREDIT
5 0 0 0 00
5 0 0 0 00
DATE
2014
Jan. 31 Adjusting
31 Closing
J6
J6
DEBIT
CREDIT
4 0 0 0 00
4 0 0 0 00
POST.
DESCRIPTION REF.
196  Chapter 6
J6
J6
DEBIT
CREDIT
1 8 3 00
1 8 3 00
517
BALANCE
DEBIT
CREDIT
5 0 0 0 00
− 0 −
520
BALANCE
DEBIT
CREDIT
4 0 0 0 00
− 0 −
ACCOUNT NO.
Depreciation Expense—Equipment
DATE
2014
Jan. 31 Adjusting
31 Closing
2 1 7 5 00
− 0 −
ACCOUNT NO.
Rent Expense
514
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
POST.
DESCRIPTION REF.
ACCOUNT
DEBIT
Supplies Expense
DATE
DESCRIPTION
2014
Jan. 31 Adjusting
31 Closing
ACCOUNT
ACCOUNT NO.
Utilities Expense
523
BALANCE
DEBIT
CREDIT
1 8 3 00
− 0 −
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
MINI−PRACTICE SET 1 (continued)
GENERAL LEDGER
ACCOUNT
DATE
DESCRIPTION
2014
Jan.
12
22
31 Closing
ACCOUNT
J3
J4
J6
DEBIT
2 8 0 0 00
2 8 0 0 00
CREDIT
POST.
REF.
J4
J5
J6
5 0 2 5 00
3 0 5 0 00
CREDIT
BALANCE
CREDIT
DEBIT
ACCOUNT NO.
POST.
REF.
J4
J6
DEBIT
CREDIT
8 7 5 00
8 7 5 00
J6
J6
DEBIT
CREDIT
5 0 0 00
5 0 0 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
532
BALANCE
DEBIT
CREDIT
8 7 5 00
− 0 −
ACCOUNT NO.
POST.
DESCRIPTION REF.
529
5 0 2 5 00
8 0 7 5 00
8 0 7 5 00
− 0 −
Insurance Expense
DATE
2014
Jan.
31 Adjusting
31 Closing
BALANCE
DEBIT
CREDIT
ACCOUNT NO.
DEBIT
526
2 8 0 0 00
5 6 0 0 00
5 6 0 0 00
− 0 −
Telephone Expense
DATE
DESCRIPTION
2014
Jan.
23
31 Closing
ACCOUNT
POST.
REF.
Maintenance Expense
DATE
DESCRIPTION
2014
Jan.
21
31
31 Closing
ACCOUNT
ACCOUNT NO.
Advertising Expense
535
BALANCE
DEBIT
CREDIT
5 0 0 00
− 0 −
Chapter 6  197
MINI-PRACTICE SET 1 (continued)
Wells’ Consulting Services
Worksheet
Month Ended January 31, 2014
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
ACCOUNT NAME
Cash
Accounts Receivable
Supplies
Prepaid Rent
Prepaid Insurance
Equipment
Accumulated
Depreciation—Equipment
Accounts Payable
Carolyn Wells, Capital
Carolyn Wells, Drawing
Income Summary
Fees Income
Salaries Expense
Utilities Expense
Supplies Expense
Rent Expense
Depreciation Expense—Equipment
Insurance Expense
Advertising Expense
Telephone Expense
Maintenance Expense
22 Totals
TRIAL BALANCE
DEBIT
CREDIT
119 9 2 5 00
5 2 0 0 00
8 0 5 0 00
4 0 0 0 00
6 0 0 0 00
23 8 0 0 00
1 8 3 00
ADJUSTMENTS
DEBIT
CREDIT
(a) 5 0 0 0 00
(b) 4 0 0 0 00
(c)
5 0 0 00
(d)
1 8 3 00
6 9 0 0 00
128 6 6 7 00
12 0 0 0 00
80 4 5 0 00
20 5 0 0 00
2 1 7 5 00
(a) 5 0 0 0
(b) 4 0 0 0
(c)
5 0 0
(d)
1 8 3
00
00
00
00
5 6 0 0 00
8 7 5 00
8 0 7 5 00
216 2 0 0 00
216 2 0 0 00
9 6 8 3 00
9 6 8 3 00
23 Net Income
24
25
198  Chapter 6
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
MINI-PRACTICE SET 1 (continued)
ADJUSTED TRIAL BALANCE
DEBIT
CREDIT
119 9 2 5 00
5 2 0 0 00
3 0 5 0 00
− 0 −
5 5 0 0 00
23 8 0 0 00
3 6 6 00
INCOME STATEMENT
DEBIT
CREDIT
BALANCE SHEET
DEBIT
CREDIT
119 9 2 5 00
5 2 0 0 00
3 0 5 0 00
− 0 −
5 5 0 0 00
23 8 0 0 00
3 6 6 00
6 9 0 0 00
128 6 6 7 00
6 9 0 0 00
128 6 6 7 00
12 0 0 0 00
12 0 0 0 00
80 4 5 0 00
20
2
5
4
5
1
0
0
1
5
5 6
8
8 0
0
7
0
0
8
0
0
7
7
0
5
0
0
3
0
0
5
5
00
00
00
00
00
00
00
00
00
216 3 8 3 00
80 4 5 0 00
20
2
5
4
5
1
0
0
1
5
5 6
8
8 0
216 3 8 3 00
0
7
0
0
8
0
0
7
7
0
5
0
0
3
0
0
5
5
00
00
00
00
00
00
00
00
00
46 9 0 8 00
80 4 5 0 00
169 4 7 5 00
33 5 4 2 00
80 4 5 0 00
80 4 5 0 00
169 4 7 5 00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
135 9 3 3 00
22
33 5 4 2 00
23
169 4 7 5 00
24
25
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6  199
MINI-PRACTICE SET 1 (continued)
Wells’ Consulting Services
Income Statement
Month Ended January 31, 2014
Revenue
Fees Income
Expenses
Salaries Expense
Utilities Expense
Supplies Expense
Rent Expense
Insurance Expense
Depreciation Expense—Equipment
Advertising Expense
Telephone Expense
Maintenance Expense
Total Expenses
Net Income
80 4 5 0 00
20
2
5
4
5
1
0
0
5
1
5 6
8
8 0
0
7
0
0
0
8
0
7
7
0
5
0
0
0
3
0
5
5
00
00
00
00
00
00
00
00
00
46 9 0 8 00
33 5 4 2 00
Wells’ Consulting Services
Statement of Owner's Equity
Month Ended January 31, 2014
Carolyn Wells, Capital, January 1, 2014
Net Income for January
Less Withdrawals for January
Increase in Capital for January
Carolyn Wells, Capital, January 31, 2014
200  Chapter 6
128 6 6 7 00
33 5 4 2 00
12 0 0 0 00
21 5 4 2 00
150 2 0 9 00
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
MINI-PRACTICE SET 1 (continued)
Wells’ Consulting Services
Balance Sheet
January 31, 2014
Assets
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Less Accumulated Depreciation—Equipment
Total Assets
119
5
3
5
23 8 0 0 00
3 6 6 00
9
2
0
5
2
0
5
0
5
0
0
0
00
00
00
00
23 4 3 4 00
157 1 0 9 00
Liabilities and Owner's Equity
Liabilities
Accounts Payable
Owner's Equity
Carolyn Wells, Capital
Total Liabilities and Owner's Equity
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
6 9 0 0 00
150 2 0 9 00
157 1 0 9 00
Chapter 6  201
MINI-PRACTICE SET 1 (continued)
Wells’ Consulting Services
Post-closing Trial Balance
January 31, 2014
ACCOUNT NAME
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accumulated Depreciation—Equipment
Accounts Payable
Carolyn Wells, Capital
Totals
Analyze:
DEBIT
119 9 2 5
5 2 0 0
3 0 5 0
5 5 0 0
23 8 0 0
CREDIT
00
00
00
00
00
3 6 6
6 9 0 0
150 2 0 9
157 4 7 5 00 157 4 7 5
00
00
00
00
a. Total assets increased by $24,942 ($157,109 – $132,167).
Total liabilities increased by $3,400 ($6,900 – $3,500).
Owner’s capital increased by $21,542 ($150,209 – 128,667).
b. The balance of Cash increased by $8,575 ($119,925 – $111,350).
The balance of Accounts Receivable increased by $200 ($5,200 – $5,000).
c. Yes. The firm’s financial position improved through the increases in capital
of $21,542 ($150,209 – $128,667).
202  Chapter 6
Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.