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Class 4 - Trial Balance
Financial Accounting (Trường Đại học Ngoại thương)
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P4.1 (LO 1, 2, 4) The trial balance columns of the worksheet for Wang Roofing at March
31, 2020, are as follows (amounts in thousands).
Solution:
Trial Balance
Before Adjustments Adjustments
Cash
Accounts receivable
Supplies
Equipment
Acc. Dep Equipment
Accounts Payable
Unearned Service
Revenue
Share Capital Ordinary
Dr.
4,500
3,200
2,000
11,000
Cr.
Dr.
Cr.
(1) 1,520
1,250
2,500
550
(2) 250
(3) 290
12,900
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Balance after
adjust.
Dr.
Cr.
4,500
3,200
480
11,000
1,500
2,500
260
12,900
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Dividends
Service Revenue
Salaries and wages
expenses
Miscellaneous
Expense
Totals
Supplies Expense
1,100
1,100
6,300
1,300
(3) 290
(4) 700
400
400
23,500
23,500
(1)
1,520
(2) 250
Depreciation
Expense
Salaries and Wages
Payable
Totals
Net Income
Totals
1,520
250
(4) 700
$2,760
$2,760
b.
Revenues
Service Revenue
Total Revenue
Less: Expenses
Supplies Expenses
Depreciation Expenses
Salaries and Wages
Expenses
Miscellaneous Expense
Total Expense
Net Income
6,590
2,000
Warren Roofing
Income Statement
For the Month ended March 31,2019
Amount
Amount
6,590
6,590
1,520
250
2,000
400
(4,170)
2,420
Warren Roofing
Owner’s Equity Statement
For the month Ended March 31,2019
Amount
Amount
Returned Earnings. March 01
0
Net Income
2,420
Less: Dividends
(1,100)
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700
24,450
24,450
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RE, March 31
1,320
Warren Roofing
Balance Sheet
March 31, 2019
Amount
Assets
Cash
Accounts Receivable
Supplies
Equipment
Less: Accumulated
Depreciation Equipment
Amount
4,500
3,200
480
11,000
(1,500)
Total Assets
17,680
Liabilities and Equity
Liabilities
Accounts Payable
Unearned Service
Revenue
Salaries and Wages
Payable
2,500
260
700
Total Liabilities
3,460
Equity
Share Capital
RE, March 31
12,900
1,320
Total Equity
Total Liabilities and Equity
14,220
17,680
d. Closing entry
Day
Closing Entry
Mar 31 Service Revenue
Income Summary
31
Income Summary
Salaries and wages expenses
Miscellaneous Expense
Supplies Expense
Depreciation Expense
31
Retained Earnings
Income Summary
Debit
6,590
Credit
6,590
4,170
2,000
400
1,520
250
2420
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2420
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31
(to close net loss to retained
earnings)
Retained earnings
1,100
Dividends
(to close dividends to retained
earnings)
1,100
P4.4 (LO 1, 2, 4) Rusthe Management Services began business on January 1, 2020, with
a capital investment of $120,000. The company manages condominiums for owners
(Service Revenue) and rents space in its own office building (Rent Revenue). The trial
balance and adjusted trial balance columns of the worksheet at the end of the first year
are as follows (amounts in $)
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Solution:
a.
Cash
Accounts receivable
Prepaid Insurance
Lands
Buildings
Trial Balance
Before
Adjusting
Adjustments
Dr.
Cr.
13,800
28,300
3,600
1,500
67,000
127,000
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Adjusted trial Balance
Dr.
13,800
28,300
2,100
67,000
127,000
Cr.
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Equipment
Accounts Payable
Unearned Rent Revenue
Mortgage Payable
Share Capital- Ordinary
Retained Earnings
Dividends
Service Revenue
Rent Revenue
Salaries and Wages Expenses
Advertising Expenses
Utilities Expenses
Totals
59,000
59,000
12,500
6,000
120,000
130,000
14,000
12,500
1,000
120,000
130,000
14,000
5,000
22,000
22,000
90,700
29,000
5,000
42,000
20,500
19,000
402,200
90,700
34,000
42,000
20,500
19,000
402,200
Insurance Expense
Depreciation Expense
Accumulated Depreciation –
Buildings
Accumulated Depreciation –
Equipment
Interest Expense
Interest Payable
1,500
6,600
1,500
6,600
3,000
3,000
3,600
3,600
10,000
10,000
10,000
Totals
23,100
23,100
10,000
418,800
b.
Rusthe Management Services
Statement of Financial Postion
For the year ended December 31, 2020
Monetary units:
Assets
Property, Land and Equipment
Land
Buildings
Less: Accumulated Depreciation – Buildings
Equipment
Less: Accumulated Depreciation – Equipment
Current Assets
Prepaid Insurance
Accounts Receivable
67,000
127,000
(3,000)
59,000
(3,600)
2,100
28,300
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418,800
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Cash
13,800
Total Assets
Equity and Liabilities
Equity
Share Capital – Ordinary
Retained Earnings (14,000+ 25,100 – 22,000)
Non- current liabilities
Mortgage payable
Current Liabilities
Accounts Payable
Unearned Rent Revenue
Mortgage Payable (due in 2021)
Interest Payable
Total Equity and Liabilities
130,000
17,100
75,000
12,500
1,000
45,000
10,000
290,600
c. Adjusting Entries
1. Dr Insurance expense
1,500
Cr Prepaid Insurance
2. Dr Unearned Rent revenue
1,500
5,000
Cr Rent Revenue
5,000
3. Dr Depreciation Expense
6,600
Cr Accumulated Depreciation – Buildings
3,000
Cr Accumulated Depreciation – Equipment
3,600
4.
Dr Interest Expense
10,000
Cr Interest Payable
10,000
d. Closing Entries
Dr Service Revenue
90,700
Dr Rent Revenue
34,000
Cr Income Summary
Debit Income Summary
290,600
124,7
99,600
Cr Salaries and Wages Expenses 42,000
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Cr Advertising Expenses
20,500
Cr Utilities Expenses
19,000
Cr Insurance Expense
1,500
Cr Depreciation Expense
6,600
Cr Interest Expense
10,000
Debit Income Summary
25,100
Credit Retained Earnings
Debit Retained Earnings
Credit Dividends
25,100
22,000
22,000
e. Post- closing entries
Rusthe Management Services
Post-closing trial balance
For the year ended December 31, 2020
Monetary units:
Debit
Credit
Cash
13,800
Accounts receivable
28,300
Prepaid Insurance
2,100
Land
67,000
Buildings
127,000
Accumulated Depreciation
3,000
– Buildings
Equipment
59,000
Accumulated Depreciation
3,600
– Equipment
Share Capital – Ordinary
130,000
Retained Earnings
17,100
(14,000+ 25,100 – 22,000)
Accounts Payable
12,500
Unearned Rent Revenue
1,000
Mortgage Payable
120,000
Interest Payable
10,000
297,200
297,200
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Solution:
a. July 1, shareholders invested €20,000 cash in the business in exchange for ordinary
shares.
Dr Share capital – ordinary
20,000
Cr Cash
20,000
July 1, Purchased used truck for €12,000, paying €4,000 cash and the balance on account.
Dr Equipment 12,000
Cr Cash
4,000
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Cr Accounts Payable
8,000
July 3, Purchased cleaning supplies for €2,100 on account.
Dr Supplies 2,100
Cr Accounts Payable
2,100
July 5, Paid €1,800 cash on a 1-year insurance policy effective July 1.
Dr Prepaid Insurance
1,800
Cr Cash
1,800
July 12, Billed customers €4,500 for cleaning services.
Dr Accounts Receivable
4,500
Cr Service Revenue
4,500
July 18, Paid €1,500 cash on amount owed on truck and €1,400 on amount owed on
cleaning supplies.
Dr Accounts Payable 2,900
Cr Cash
2,900
July 20 Paid €2,800 cash for employee salaries.
Dr Salary and Wages Expense
2,800
Cr Cash
2,800
July 21 Collected €3,400 cash from customers billed on July 12.
Dr Cash
3,400
Cr Accounts Receivable
3,400
July 25 Billed customers €6,000 for cleaning services.
Dr Accounts Receivable
6,000
Cr Service Revenue
6,000
July 31 Paid €350 for the monthly gasoline bill for the truck.
Dr Gasoline Expense
Cr Cash
350
350
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July 31 Declared and paid a €5,600 cash dividend.
Dr Dividend
5,600
Cr Cash
5,600
b.
Anya Cleaning Service
Trial Balance
For the month ended July 31, 2020
Monetary unit:
Accounts
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accounts Payable
Share Capital – Ordinary
Service Revenue
Gasoline Expense
Salaries and Wages Expense
Dividend
Dr
5,950
7,100
2,100
1,800
12,000
Cr
7,200
20,000
10,500
350
2,800
5,600
37,700
37,700
c. Adjusting entries
1. Unbilled and uncollected revenue for services performed at July 31 were €2,700.
Dr Accounts Receivable
2,700
Cr Service Revenue
2,700
2. Depreciation on equipment for the month was €500.
Dr Depreciation Expense 500
Cr Accumulated Depreciation – Equipment
500
3. One-twelfth of the insurance expired.
Dr Insurance Expense
1,800/12= 150
Cr Prepaid Insurance
150
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4. An inventory count shows €600 of cleaning supplies on hand at July 31.
Dr Supplies Expense
1,500
Cr Supplies
1,500
5. Accrued but unpaid employee salaries were €1,000.
Dr Salaries and Wages Expense
1,000
Cr Salaries and Wages Payable
1,000
d.
ANYA’S CLEANING
SERVICE
Income Statement
For the month ended July 31,
2020
Monetary unit
Revenue
Service Revenue
Less: Expenses
Salaries and Wages Expense
Supplies Expense
Gasoline Expense
Depreciation Expense
Insurance Expense
Net Income
13,200
3,800
1,500
350
500
150
6,900
ANYA’S CLEANING SERVICE
Retained Earnings Statement
For the month ended July 31, 2020
Retained Earnings, July 1
Net Income
Less: Dividends
Retained Earnings, July 31
Monetary unit:
0
6,900
5,600
1,300
ANYA’S CLEANING SERVICE
Retained Earnings Statement
For the month ended July 31, 2020
Monetary unit:
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Monetary unit
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Assets
Property, Land and Equipment
Equipment
Less: Accumulated Depreciation - Equipment
Current Assets
Prepaid Insurance
Supplies
Accounts Receivable
Cash
Total Assets
Equity and Liabilities
Equity
Share Capital – ordinary
Retained Earnings
Current Liabilities
Accounts Payable
Salaries and Wages Payable
Total Equity and Liabilities
12,000
(500)
1,650
600
9,800
5,950
29,500
20,000
1,300
7,200
1,000
e. Closing Entries
Dr Service Revenue
13,200
Cr Income Summary
Dr Income Summary
13,200
6,300
Cr Salaries and Wages Expense
3,800
Cr Supplies Expense
1,500
Cr Gasoline Expense
350
Cr Depreciation Expense
500
Cr Insurance Expense
150
Dr Income Summary
6,900
Cr Retained Earnings
Dr Retained Earnings
Cr Dividends
6,900
5,600
5,600
f.
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21,300
8,200
29,500
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ANYA’S CLEANING SERVICE
Post-Closing Trial Balance
For the month ended July 31, 2020
Equipment
Accumulated Depreciation - Equipment
Prepaid Insurance
Supplies
Accounts Receivable
Cash
Share Capital – ordinary
Retained Earnings
Accounts Payable
Salaries and Wages Payable
Monetary unit:
12,000
500
1,650
600
9,800
5,950
30,000
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20,000
1,300
7,200
1,000
30,000