CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
SOLUTION
GENERAL JOURNAL
DATE
1
2
20—
Dec.
DESCRIPTION
POST.
REF.
Closing Entries
31 Commissions Earned
Income from Services
Income Summary
3
4
4
PAGE
DEBIT
CREDIT
1
92,824.00
23,050.00
2
3
115,874.00
5
4
5
31 Income Summary
Salary Expense
Rent Expense
Supplies Expense
Depreciation Expense, Equipment
Miscellaneous Expense
6
7
8
9
10
11
37,194.00
6
21,600.00
11,200.00
1,635.00
2,100.00
659.00
12
7
8
9
10
11
12
13
14
31 Income Summary
L. Thompson, Capital
78,680.00
31 L. Thompson, Capital
L. Thompson, Drawing
80,000.00
13
78,680.00
15
14
15
16
17
16
80,000.00
18
17
18
DISCUSSION QUESTIONS
Suggested Responses
1.
2.
3.
182
a.
3
Prepare a trial balance.
b.
2
Post journal entries to the accounts in the ledger.
c.
7
Journalize and post the adjusting entries from the data on the work sheet.
d.
1
Analyze source documents and record business transactions in the journal.
e.
6
Prepare financial statements from the data on the work sheet.
f.
4
Gather adjustment data and record the adjusting entries on a work sheet.
g.
8
Journalize and post the closing entries
h.
9
Prepare a post-closing trial balance.
i.
5
Complete the work sheet.
The steps in the closing procedure are:
a.
Close the revenue account(s) into Income Summary.
b.
Close the expense accounts into Income Summary.
c.
Close the Income Summary account into the Capital account, transferring the net
income or net loss to the Capital account.
d.
Close the Drawing account into the Capital account.
The purpose of closing entries is to close out the temporary-equity or nominal
accounts (revenue, expense, and Drawing accounts) and to transfer the net income
or net loss to the Capital account, which prepares these accounts for the new fiscal
period. If the closing entries are not made, proper matching of revenues and
expenses in the fiscal period does not occur.
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CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
4.
Since the closing procedure causes zero balances in the temporary owner’s equity
accounts, if you do not print, save, and back up (make a copy of) your financial
records, all accounts will be zero if you try to print your income statement. Similarly,
in your statement of owner’s equity, the net income or net loss and Drawing will be
zero.
5.
Real accounts, also called permanent accounts, are the balance sheet accounts other
than Drawing; they are not closed at the end of the fiscal period. Examples are assets
(Cash, Accounts Receivable, Prepaid Insurance, etc.), liabilities (Accounts Payable,
etc.), and Capital. Nominal accounts, also called temporary accounts, are the income
statement and Drawing accounts; they are closed at the end of the fiscal period.
Examples are revenues (Service Revenue, etc.), expenses (Rent Expense, etc.), and
Drawing.
6.
Income Summary is a place to gather or summarize the revenues and expenses in
order to calculate the net income or net loss to be transferred to the Capital account.
7.
The purpose of the post-closing trial balance is to make sure that the debit balances
equal the credit balances and to check that all nominal accounts have zero balances
before proceeding to the next accounting period. The difference between a trial
balance and a post-closing trial balance is that a post-closing trial balance contains
only the real (permanent) accounts after adjustment, such as the assets, liabilities,
and Capital; whereas a trial balance before closing contains all five classifications of
accounts: assets, liabilities, revenue, expenses, and Capital (including Drawing).
8.
The third closing entry to transfer the net income or net loss to the P. Hernandez,
Capital account for the appropriate period.
a.
With a net income of $3,842.
GENERAL JOURNAL
DATE
1
2
20—
Mar.
3
DESCRIPTION
POST.
REF.
Closing Entries
31 Income Summary
P. Hernandez, Capital
PAGE
DEBIT
CREDIT
1
3,842.00
2
3,842.00
4
4
b.
With a net loss of $1,781.
GENERAL JOURNAL
DATE
1
2
3
3
20—
Jun.
DESCRIPTION
Closing Entries
30 P. Hernandez, Capital
Income Summary
POST.
REF.
PAGE
DEBIT
CREDIT
1
1,781.00
2
1,781.00
4
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3
4
183
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
SOLUTIONS TO EXERCISES
Exercise 5-1
CLOSED
ACCOUNT TITLE
REAL
NOMINAL
YES
NO
INCOME
STATEMENT
BALANCE
SHEET
0.
Example: Building
X
X
X
a.
Prepaid Insurance
X
X
X
b.
Accounts Payable
X
X
X
c.
Wages Payable
X
X
X
d.
Service Revenue
X
X
X
e.
Rent Expense
X
X
X
f.
Supplies Expense
X
X
X
g.
Accumulated Depreciation,
Equipment
X
X
X
Exercise 5-2
GENERAL JOURNAL
DATE
1
2
3
20--
DESCRIPTION
Closing Entries
(1) Professional Fees
Income Summary
PAGE
POST.
REF.
DEBIT
CREDIT
1
3,850.00
2
3,850.00
4
5
6
7
8
9
4
(2) Income Summary
Wages Expense
Insurance Expense
Depreciation Expense, Equipment
Miscellaneous Expense
4,455.00
5
3,110.00
460.00
750.00
135.00
10
11
12
15
16
184
6
7
8
9
10
(3) J. Cortez, Capital
Income Summary
605.00
11
605.00
13
14
3
12
13
(4) J. Cortez, Capital
J. Cortez, Drawing
400.00
14
400.00
15
16
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CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Exercise 5-3
GENERAL JOURNAL
DESCRIPTION
DATE
1
2
20-Dec.
3
PAGE
POST.
REF.
Closing Entries
31 Professional Fees
Income Summary
DEBIT
CREDIT
1
7,075.00
2
7,075.00
4
3
4
5
6
7
8
9
31 Income Summary
Wages Expense
Rent Expense
Depreciation Expense, Equipment
Miscellaneous Expense
3,846.00
31 Income Summary
C. Harris, Capital
3,229.00
5
1,268.00
1,090.00
1,143.00
345.00
10
6
7
8
9
10
11
12
11
3,229.00
13
12
13
31 C. Harris, Capital
C. Harris, Drawing
14
15
1,498.00
14
1,498.00
15
16
16
17
17
18
18
Exercise 5-4
GENERAL JOURNAL
DATE
1
2
3
4
20-June
DESCRIPTION
Closing Entries
30 Service Revenue
Rental Revenue
Income Summary
PAGE
POST.
REF.
DEBIT
CREDIT
1
6,797.00
3,576.00
2
3
10,373.00
5
6
7
8
9
10
5
30 Income Summary
Rent Expense
Wages Expense
Utilities Expense
Miscellaneous Expense
5,178.00
6
2,800.00
1,854.00
465.00
59.00
11
12
13
16
7
8
9
10
11
30 Income Summary
K. Dunn, Capital
5,195.00
30 K. Dunn, Capital
K. Dunn, Drawing
4,000.00
12
5,195.00
14
15
4
13
14
15
4,000.00
16
17
17
18
18
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185
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Exercise 5-5
GENERAL JOURNAL
DATE
1
2
20-Dec.
DESCRIPTION
Closing Entries
31 Service Revenue
Rental Revenue
Income Summary
3
4
PAGE
POST.
REF.
DEBIT
CREDIT
1
41,740.00
22,000.00
2
3
63,740.00
5
4
5
31 Income Summary
Wages Expense
Utilities Expense
Miscellaneous Expense
6
7
8
9
57,850.00
6
48,520.00
7,130.00
2,200.00
10
7
8
9
10
31 Income Summary
S. Cederblom, Capital
11
12
5,890.00
11
5,890.00
13
12
13
31 S. Cederblom, Capital
S. Cederblom, Drawing
14
15
17,000.00
14
17,000.00
15
16
16
17
17
18
18
Exercise 5-6
a.
12
Dec.
13
31 D. Mau, Capital
Income Summary
9,030.00
31 D. Mau, Capital
D. Mau, Drawing
12,000.00
12
9,030.00
14
13
14
15
16
15
12,000.00
16
17
17
18
18
$42,380
b.
186
($63,410 – $9,030 – $12,000)
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CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Exercise 5-7
INCOME
STATEMENT
ITEM
0.
Example: The total liabilities of the business
at the end of the year.
a.
The amount of the owner's Capital
balance at the end of the year.
b.
The amount of depreciation expense
on equipment during the year.
X
c.
The amount of the company's net
income for the year.
X
d.
The book value of the equipment.
e.
Total insurance expired during the
year.
f.
Total accounts receivable at the
end of the year.
g.
Total withdrawals by the owner.
h.
The cost of utilities used during the
year.
i.
The amount of the owner's Capital
balance at the beginning of the year.
STATEMENT OF
OWNER'S EQUITY
BALANCE
SHEET
X
X
X
X
X
X
X
X
X
X
Exercise 5-8
The Lindal Clinic
Statement of Owner's Equity
For Year Ended December 31, 20-P. Lindal, Capital, January 1, 20-Investment on May 12, 20-Net Income for the Year
Subtotal
Less Withdrawals for the Year
Decrease in Capital
P. Lindal, Capital, December 31, 20--
187
$124,000
$ 7,000
20,418
$27,418
31,500
(4,082)
$119,918
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188
Assets
Dr. Cr.
+–
Dr. Cr.
–+
Liabilities
+
(3)
(2)
Bal.
(4)
7,520
2,281
8,251
1,550
2,398
2,281
(1)
4,679
Income Summary
1,550
(4)
B. Lyon, Drawing
(1)
4,679 Bal.
4,679
Commissions Earned
1,550 Bal.
(3)
Bal.
B. Lyon, Capital
Revenue
Dr. Cr.
–+
+
Dr. Cr.
–+
Owner's Equity
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
=
Closing Entries and the Post-Closing Trial Balance
Problem 5-1A
CHAPTER 5
–
995
(2)
Rent Expense
995
575
(2)
575
462
(2)
269
(2)
269
462
Bal.
97
(2)
97
Miscellaneous Expense
Bal.
Utilities Expense
Bal.
Depreciation Expense,
Office Equipment
Bal.
Supplies Expense
Bal.
Dr. Cr.
+–
Expenses
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-1A (concluded)
GENERAL JOURNAL
DATE
1
1.
2
3
20-May
DESCRIPTION
Closing Entries
31 Commissions Earned
Income Summary
PAGE
POST.
REF.
DEBIT
CREDIT
1
4,679.00
2
4,679.00
4
2.
5
6
7
8
9
10
11
4
31 Income Summary
Rent Expense
Supplies Expense
Depreciation Expense, Office
Equipment
Utilities Expense
Miscellaneous Expense
2,398.00
31 Income Summary
B. Lyon, Capital
2,281.00
31 B. Lyon, Capital
B. Lyon, Drawing
1,550.00
5
995.00
575.00
13
14
462.00
269.00
97.00
16
17
7
9
10
11
12
13
2,281.00
15
4.
6
8
12
3.
3
14
15
16
1,550.00
17
18
18
19
19
20
20
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189
190
Assets
Dr. Cr.
+–
Dr. Cr.
–+
Liabilities
+
(2)
(3)
Bal.
(4)
4,302
7,220
9,122
(1)
(4)
2,400
5,840
7,220
(1)
13,060
Income Summary
2,400
G. Ho, Drawing
13,060
Bal.
13,060
Consulting Revenue
2,400 Bal.
(3)
Bal.
G. Ho, Capital
Revenue
Dr. Cr.
–+
+
Dr. Cr.
–+
Owner's Equity
–
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=
Closing Entries and the Post-Closing Trial Balance
Problem 5-2A
CHAPTER 5
(2)
(2)
(2)
325
(2)
Insurance Expense
422
325
422
1,828
2,200
Supplies Expense
1,828
Wages Expense
2,200
Rent Expense
835
(2)
835
Bal.
230
(2)
230
Miscellaneous Expense
Bal.
Depreciation Expense,
Equipment
Bal.
Bal.
Bal.
Bal.
Dr. Cr.
+–
Expenses
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-2A (concluded)
GENERAL JOURNAL
DATE
1
1.
2
3
20-May
DESCRIPTION
Closing Entries
31 Consulting Revenue
Income Summary
PAGE
POST.
REF.
DEBIT
CREDIT
1
13,060.00
2
13,060.00
4
2.
5
6
7
8
9
10
11
4
31 Income Summary
Rent Expense
Wages Expense
Supplies Expense
Insurance Expense
Depreciation Expense, Equipment
Miscellaneous Expense
5,840.00
31 Income Summary
G. Ho, Capital
7,220.00
31 G. Ho, Capital
G. Ho, Drawing
2,400.00
5
2,200.00
1,828.00
422.00
325.00
835.00
230.00
12
3.
13
14
16
17
6
7
8
9
10
11
12
13
7,220.00
15
4.
3
14
15
16
2,400.00
17
18
18
19
19
20
20
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191
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-3A
Valerie Insurance Agency
Work Sheet
For Year Ended December 31, 20—
TRIAL BALANCE
1
2
3
4
5
6
7
8
9
10
11
12
13
ACCOUNT NAME
DEBIT
Cash
Office Equipment
Accumulated Depreciation, Office
Equipment
M. Valerie, Capital
M. Valerie, Drawing
Premiums Earned
Wages Expense
Rent Expense
Office Supplies Expense
Telephone Expense
Advertising Expense
Miscellaneous Expense
7,532.00
2,398.00
14
15
16
17
Depreciation Expense, Office
Equipment
Wages Payable
420.00
18,614.00
CREDIT
(a)
420.00
(b)
428.00
848.00
18,000.00
33,400.00
20,500.00
2,200.00
315.00
736.00
645.00
108.00
52,434.00
(b)
428.00
(a)
420.00
52,434.00
848.00
18
19
ADJUSTMENTS
DEBIT
CREDIT
Net Income
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
192
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CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-3A (continued)
ADJUSTED TRIAL BALANCE
DEBIT
CREDIT
INCOME STATEMENT
DEBIT
CREDIT
7,532.00
2,398.00
BALANCE SHEET
DEBIT
CREDIT
7,532.00
2,398.00
1
2
3
840.00
18,614.00
840.00
18,614.00
18,000.00
18,000.00
33,400.00
20,928.00
2,200.00
315.00
736.00
645.00
108.00
4
5
6
33,400.00
7
20,928.00
2,200.00
315.00
736.00
645.00
108.00
8
9
10
11
12
13
14
15
420.00
53,282.00
420.00
428.00
53,282.00
25,352.00
8,048.00
33,400.00
16
33,400.00
33,400.00
27,930.00
27,930.00
428.00
19,882.00
8,048.00
27,930.00
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
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193
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-3A (continued)
GENERAL JOURNAL
DATE
1
2
20-Dec.
3
4
5
DESCRIPTION
Adjusting Entries
31 Depreciation Expense, Office
Equipment
Accumulated Depreciation, Office
Equipment
PAGE
POST.
REF.
DEBIT
17
CREDIT
1
2
514
420.00
3
4
125
420.00
6
5
6
31 Wages Expense
Wages Payable
7
8
511
222
428.00
7
428.00
9
8
9
Closing Entries
31 Premiums Earned
Income Summary
10
11
12
10
411
313
33,400.00
11
33,400.00
13
12
13
31 Income Summary
Wages Expense
Rent Expense
Office Supplies Expense
Depreciation Expense, Office
Equipment
Telephone Expense
Advertising Expense
Miscellaneous Expense
14
15
16
17
18
19
20
21
22
313
511
512
513
25,352.00
14
20,928.00
2,200.00
315.00
15
16
17
18
514
515
516
519
420.00
736.00
645.00
108.00
23
19
20
21
22
23
31 Income Summary
M. Valerie, Capital
24
25
313
311
8,048.00
24
8,048.00
26
25
26
31 M. Valerie, Capital
M. Valerie, Drawing
27
28
29
311
312
18,000.00
27
18,000.00
28
29
194
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CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-3A (continued)
GENERAL LEDGER
ACCOUNT
Cash
DATE
20-Dec.
ACCOUNT
ITEM
31
Balance
ACCOUNT
ITEM
31
Balance
ACCOUNT
ITEM
31
31
Balance
Adj.
ACCOUNT
ITEM
31
ACCOUNT
31
31
31
Balance
Closing
Closing
ITEM
31
31
Balance
Closing
DEBIT
CREDIT
2,398.00
ACCOUNT NO.
CREDIT
DEBIT
CREDIT
9
17
420.00
840.00
420.00
ACCOUNT NO.
POST.
REF.
CREDIT
DEBIT
CREDIT
428.00
428.00
CREDIT
DEBIT
CREDIT
18,614.00
26,662.00
8,662.00
8,048.00
18,000.00
ACCOUNT NO.
POST.
REF.
312
BALANCE
DEBIT
CREDIT
9
17
311
BALANCE
DEBIT
9
17
17
222
BALANCE
DEBIT
ACCOUNT NO.
POST.
REF.
125
BALANCE
DEBIT
M. Valerie, Drawing
DATE
20-Dec.
CREDIT
9
POST.
REF.
124
BALANCE
DEBIT
17
ITEM
CREDIT
ACCOUNT NO.
M. Valerie, Capital
DATE
20-Dec.
Adj.
DEBIT
7,532.00
Wages Payable
DATE
20-Dec.
CREDIT
9
POST.
REF.
111
BALANCE
DEBIT
Accumulated Depreciation, Office Equipment
DATE
20-Dec.
POST.
REF.
Office Equipment
DATE
20-Dec.
ACCOUNT NO.
18,000.00
DEBIT
18,000.00
—
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CREDIT
—
195
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-3A (continued)
ACCOUNT
Income Summary
DATE
20-Dec.
ACCOUNT
ITEM
31
31
31
ACCOUNT
ITEM
31
31
ACCOUNT
ACCOUNT
31
31
31
196
CREDIT
POST.
REF.
Balance
Adj.
Closing
ITEM
31
31
Balance
Closing
25,352.00
8,048.00
31
31
Balance
Closing
CREDIT
—
33,400.00
8,048.00
—
ACCOUNT NO.
411
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
9
17
33,400.00
POST.
REF.
CREDIT
9
17
17
POST.
REF.
—
33,400.00
—
ACCOUNT NO.
511
BALANCE
DEBIT
428.00
20,928.00
DEBIT
CREDIT
20,500.00
20,928.00
—
—
ACCOUNT NO.
512
BALANCE
DEBIT
CREDIT
9
17
2,200.00
Office Supplies Expense
ITEM
DEBIT
33,400.00
Rent Expense
DATE
20-Dec.
Balance
Closing
ITEM
DATE
20-Dec.
17
17
17
DEBIT
CREDIT
2,200.00
—
ACCOUNT NO.
POST.
REF.
—
513
BALANCE
DEBIT
CREDIT
9
17
313
BALANCE
DEBIT
Wages Expense
DATE
20-Dec.
POST.
REF.
Premiums Earned
DATE
20-Dec.
Closing
Closing
Closing
ACCOUNT NO.
315.00
DEBIT
315.00
—
CREDIT
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-3A (concluded)
ACCOUNT
Depreciation Expense, Office Equipment
DATE
20-Dec.
ACCOUNT
ITEM
31
31
Adj.
Closing
ACCOUNT
ITEM
31
31
Balance
Closing
ACCOUNT
ITEM
31
31
Balance
Closing
420.00
420.00
ITEM
31
31
Balance
Closing
DEBIT
CREDIT
420.00
—
ACCOUNT NO.
POST.
REF.
CREDIT
9
17
736.00
DEBIT
736.00
—
—
516
BALANCE
DEBIT
CREDIT
9
17
645.00
DEBIT
CREDIT
645.00
—
ACCOUNT NO.
POST.
REF.
515
CREDIT
ACCOUNT NO.
POST.
REF.
—
BALANCE
DEBIT
Miscellaneous Expense
DATE
20-Dec.
CREDIT
Advertising Expense
DATE
20-Dec.
17
17
514
BALANCE
DEBIT
Telephone Expense
DATE
20-Dec.
POST.
REF.
ACCOUNT NO.
—
519
BALANCE
DEBIT
CREDIT
9
17
108.00
DEBIT
108.00
—
CREDIT
—
Valerie Insurance Agency
Post-Closing Trial Balance
December 31, 20-ACCOUNT NAME
Cash
Office Equipment
Accumulated Depreciation, Office Equipment
Wages Payable
M. Valerie, Capital
DEBIT
CREDIT
7,532
2,398
9,930
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
840
428
8,662
9,930
197
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-4A
Bryan Company
Work Sheet
For Year Ended June 30, 20-ADJUSTMENTS
TRIAL BALANCE
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
ACCOUNT NAME
DEBIT
Cash
Accounts Receivable
Prepaid Insurance
Equipment
Accumulated Depreciation,
Equipment
Van
Accumulated Depreciation, Van
Accounts Payable
B. Bryan, Capital
B. Bryan, Drawing
Fees Earned
Salary Expense
Advertising Expense
Supplies Expense
Van Operating Expense
Utilities Expense
Miscellaneous Expense
5,491.00
624.00
1,280.00
6,497.00
19
20
21
22
23
24
Insurance Expense
Depreciation Expense,
Equipment
Depreciation Expense, Van
Salaries Payable
CREDIT
(a)
495.00
2,672.00
(b)
670.00
4,368.00
1,036.00
18,583.00
(c)
1,190.00
(d)
540.00
2,895.00
10,989.00
18,000.00
38,417.00
18,600.00
1,887.00
397.00
462.00
685.00
164.00
65,076.00
(d)
540.00
(a)
495.00
(b)
(c)
670.00
1,190.00
65,076.00
2,895.00
25
26
DEBIT
CREDIT
Net Income
27
28
29
30
31
32
33
34
35
36
37
38
198
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-4A (continued)
ADJUSTED TRIAL BALANCE
DEBIT
CREDIT
INCOME STATEMENT
DEBIT
CREDIT
5,491.00
624.00
785.00
6,497.00
BALANCE SHEET
DEBIT
CREDIT
5,491.00
624.00
785.00
6,497.00
1
2
3
4
5
3,342.00
3,342.00
10,989.00
10,989.00
5,558.00
1,036.00
18,583.00
7
5,558.00
1,036.00
18,583.00
18,000.00
18,000.00
38,417.00
19,140.00
1,887.00
397.00
462.00
685.00
164.00
6
8
9
10
11
38,417.00
12
19,140.00
1,887.00
397.00
462.00
685.00
164.00
13
14
15
16
17
18
19
495.00
495.00
20
21
670.00
1,190.00
67,476.00
670.00
1,190.00
540.00
67,476.00
25,090.00
13,327.00
38,417.00
22
23
38,417.00
38,417.00
42,386.00
42,386.00
540.00
29,059.00
13,327.00
42,386.00
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
199
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-4A (continued)
Bryan Company
Income Statement
For Year Ended June 30, 20-Revenue:
Fees Earned
Expenses:
Salary Expense
Advertising Expense
Supplies Expense
Van Operating Expense
Utilities Expense
Insurance Expense
Depreciation Expense, Equipment
Depreciation Expense, Van
Miscellaneous Expense
Total Expenses
Net Income
$38,417
$19,140
1,887
397
462
685
495
670
1,190
164
25,090
$13,327
Bryan Company
Statement of Owner's Equity
For Year Ended June 30, 20-B. Bryan, Capital, July 1, 20-Investment on June 10, 20-Net Income for the Year
Subtotal
Less Withdrawals for the Year
Decrease in Capital
B. Bryan, Capital, June 30, 20--
200
$16,583
$ 2,000
13,327
$15,327
18,000
(2,673)
$13,910
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-4A (continued)
Bryan Company
Balance Sheet
June 30, 20-Assets
Cash
Accounts Receivable
Prepaid Insurance
Equipment
Less Accumulated Depreciation
Van
Less Accumulated Depreciation
Total Assets
$ 5,491
624
785
$ 6,497
3,342
$10,989
5,558
3,155
5,431
$15,486
Liabilities
$ 1,036
540
Accounts Payable
Salaries Payable
Total Liabilities
$ 1,576
Owner's Equity
B. Bryan, Capital
Total Liabilities and Owner's Equity
13,910
$15,486
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
201
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-4A (concluded)
GENERAL JOURNAL
DATE
1
2
20-June
3
DESCRIPTION
Adjusting Entries
30 Insurance Expense
Prepaid Insurance
PAGE
POST.
REF.
DEBIT
CREDIT
1
495.00
2
495.00
4
3
4
30 Depreciation Expense, Equipment
Accumulated Depreciation,
Equipment
5
6
7
670.00
5
6
670.00
8
7
8
30 Depreciation Expense, Van
Accumulated Depreciation, Van
9
10
1,190.00
9
1,190.00
11
10
11
30 Salary Expense
Salaries Payable
12
13
540.00
12
540.00
14
13
14
Closing Entries
30 Fees Earned
Income Summary
15
16
17
15
38,417.00
16
38,417.00
18
17
18
19
20
21
22
23
24
25
26
27
28
30 Income Summary
Salary Expense
Advertising Expense
Supplies Expense
Van Operating Expense
Utilities Expense
Insurance Expense
Depreciation Expense, Equipment
Depreciation Expense, Van
Miscellaneous Expense
25,090.00
30 Income Summary
B. Bryan, Capital
13,327.00
19
19,140.00
1,887.00
397.00
462.00
685.00
495.00
670.00
1,190.00
164.00
29
20
21
22
23
24
25
26
27
28
29
30
31
30
13,327.00
32
31
32
30 B. Bryan, Capital
B. Bryan, Drawing
33
34
18,000.00
33
18,000.00
34
35
35
36
36
202
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Dr. Cr.
+–
Assets
Problem 5-1B
Dr. Cr.
–+
Liabilities
+
(3)
(2)
Bal.
(4)
(4)
1,600
2,284
2,713
(1)
4,997
Income Summary
1,600
M. Wally, Drawing
6,221
2,713
7,334
(1)
4,997 Bal.
4,997
Commissions Earned
1,600 Bal.
(3)
Bal.
M. Wally, Capital
Revenue
Dr. Cr.
–+
+
Dr. Cr.
–+
Owner's Equity
–
(2)
480
(2)
Supplies Expense
990
Rent Expense
480
990
(2)
286
(2)
Utilities Expense
420
286
420
Bal.
108
(2)
203
108
Miscellaneous Expense
Bal.
Bal.
Depreciation Expense,
Office Equipment
Bal.
Bal.
Dr. Cr.
+–
Expenses
Closing Entries and the Post-Closing Trial Balance
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
=
CHAPTER 5
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-1B (concluded)
GENERAL JOURNAL
DATE
1
1.
2
3
20-May
DESCRIPTION
Closing Entries
31 Commissions Earned
Income Summary
PAGE
POST.
REF.
DEBIT
CREDIT
1
4,997.00
2
4,997.00
4
2.
5
6
7
8
9
10
11
4
31 Income Summary
Rent Expense
Supplies Expense
Depreciation Expense, Office
Equipment
Utilities Expense
Miscellaneous Expense
2,284.00
31 Income Summary
M. Wally, Capital
2,713.00
31 M. Wally, Capital
M. Wally, Drawing
1,600.00
5
990.00
480.00
13
14
420.00
286.00
108.00
16
17
7
9
10
11
12
13
2,713.00
15
4.
6
8
12
3.
3
14
15
16
1,600.00
17
18
18
19
19
20
20
204
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Dr. Cr.
+–
Assets
Problem 5-2B
Dr. Cr.
–+
Liabilities
+
(2)
(3)
Bal.
(4)
5,367
4,616
8,283
(1)
(4)
4,930
4,616
(1)
Income Summary
1,700
9,546
1,700
W. Emil, Drawing
9,546 Bal.
9,546
Consulting Revenue
1,700 Bal.
(3)
Bal.
W. Emil, Capital
Revenue
Dr. Cr.
–+
+
Dr. Cr.
–+
Owner's Equity
–
(2)
(2)
(2)
364
(2)
364
365
1,533
1,800
Insurance Expense
365
Supplies Expense
1,533
Wages Expense
1,800
Rent Expense
700
(2)
700
Bal.
168
(2)
205
168
Miscellaneous Expense
Bal.
Depreciation Expense,
Equipment
Bal.
Bal.
Bal.
Bal.
Dr. Cr.
+–
Expenses
Closing Entries and the Post-Closing Trial Balance
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
=
CHAPTER 5
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-2B (concluded)
GENERAL JOURNAL
DATE
1
1.
2
3
20-June
DESCRIPTION
Closing Entries
30 Consulting Revenue
Income Summary
PAGE
POST.
REF.
DEBIT
CREDIT
1
9,546.00
2
9,546.00
4
2.
5
6
7
8
9
10
11
4
30 Income Summary
Rent Expense
Wages Expense
Supplies Expense
Insurance Expense
Depreciation Expense, Equipment
Miscellaneous Expense
4,930.00
30 Income Summary
W. Emil, Capital
4,616.00
30 W. Emil, Capital
W. Emil, Drawing
1,700.00
5
1,800.00
1,533.00
365.00
364.00
700.00
168.00
12
3.
13
14
16
17
6
7
8
9
10
11
12
13
4,616.00
15
4.
3
14
15
16
1,700.00
17
18
18
19
19
20
20
206
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Extra Form
GENERAL JOURNAL
DATE
DESCRIPTION
PAGE
POST.
REF.
DEBIT
CREDIT
1
1
2
2
3
3
4
4
5
5
6
6
7
7
8
8
9
9
10
10
11
11
12
12
13
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28
29
29
30
30
31
31
32
32
33
33
34
34
35
35
36
36
37
37
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
207
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-3B
Oliver Tour Company
Work Sheet
For Year Ended December 31, 20—
TRIAL BALANCE
ACCOUNT NAME
1
2
3
4
5
6
7
8
9
10
11
12
13
Cash
Office Equipment
Accumulated Depreciation, Office
Equipment
S. Oliver, Capital
S. Oliver, Drawing
Tour Revenue
Wages Expense
Rent Expense
Office Supplies Expense
Telephone Expense
Advertising Expense
Miscellaneous Expense
14
15
16
17
Depreciation Expense, Office
Equipment
Wages Payable
ADJUSTMENTS
DEBIT
CREDIT
CREDIT
4,827.00
4,042.00
546.00
26,756.00
(a)
386.00
(b)
528.00
914.00
24,000.00
34,057.00
22,820.00
2,930.00
360.00
941.00
1,237.00
202.00
61,359.00
(b)
528.00
(a)
386.00
61,359.00
914.00
18
19
DEBIT
Net Income
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
208
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-3B (continued)
ADJUSTED TRIAL BALANCE
DEBIT
CREDIT
INCOME STATEMENT
DEBIT
CREDIT
4,827.00
4,042.00
BALANCE SHEET
DEBIT
CREDIT
4,827.00
4,042.00
1
2
3
932.00
26,756.00
932.00
26,756.00
24,000.00
24,000.00
34,057.00
23,348.00
2,930.00
360.00
941.00
1,237.00
202.00
4
5
6
34,057.00
7
23,348.00
2,930.00
360.00
941.00
1,237.00
202.00
8
9
10
11
12
13
14
15
386.00
62,273.00
386.00
528.00
62,273.00
29,404.00
4,653.00
34,057.00
16
34,057.00
34,057.00
32,869.00
32,869.00
528.00
28,216.00
4,653.00
32,869.00
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
209
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-3B (continued)
GENERAL JOURNAL
DATE
1
2
20-Dec.
3
4
5
DESCRIPTION
Adjusting Entries
31 Depreciation Expense, Office
Equipment
Accumulated Depreciation, Office
Equipment
PAGE
POST.
REF.
DEBIT
17
CREDIT
1
2
514
386.00
3
4
125
386.00
6
7
8
6
31 Wages Expense
Wages Payable
511
222
528.00
7
528.00
9
10
11
12
15
16
17
18
19
20
21
22
Closing Entries
31 Tour Revenue
Income Summary
10
411
313
34,057.00
11
34,057.00
25
31 Income Summary
Wages Expense
Rent Expense
Office Supplies Expense
Depreciation Expense, Office
Equipment
Telephone Expense
Advertising Expense
Miscellaneous Expense
313
511
512
513
29,404.00
31 Income Summary
S. Oliver, Capital
313
311
4,653.00
31 S. Oliver, Capital
S. Oliver, Drawing
311
312
24,000.00
14
23,348.00
2,930.00
360.00
28
29
210
15
16
17
18
514
515
516
519
386.00
941.00
1,237.00
202.00
19
20
21
22
23
24
4,653.00
26
27
12
13
23
24
8
9
13
14
5
25
26
27
24,000.00
28
29
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-3B (continued)
GENERAL LEDGER
ACCOUNT
Cash
DATE
20-Dec.
ACCOUNT
ITEM
31
Balance
20-Dec.
ACCOUNT
ITEM
31
Balance
ACCOUNT
ITEM
31
31
Balance
Adj.
ACCOUNT
ITEM
31
ACCOUNT
Adj.
31
31
31
Balance
Closing
Closing
31
31
Balance
Closing
CREDIT
124
ACCOUNT NO.
POST.
REF.
BALANCE
DEBIT
CREDIT
9
POST.
REF.
DEBIT
CREDIT
4,042.00
125
ACCOUNT NO.
BALANCE
DEBIT
9
17
CREDIT
DEBIT
CREDIT
546.00
932.00
386.00
222
ACCOUNT NO.
POST.
REF.
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
528.00
528.00
311
ACCOUNT NO.
POST.
REF.
BALANCE
DEBIT
9
17
17
CREDIT
DEBIT
CREDIT
26,756.00
31,409.00
7,409.00
4,653.00
24,000.00
S. Oliver, Drawing
ITEM
DEBIT
4,827.00
17
ITEM
DATE
20-Dec.
9
S. Oliver, Capital
DATE
20-Dec.
CREDIT
Wages Payable
DATE
20-Dec.
BALANCE
DEBIT
Accumulated Depreciation, Office Equipment
DATE
20-Dec.
POST.
REF.
Office Equipment
DATE
111
ACCOUNT NO.
312
ACCOUNT NO.
POST.
REF.
9
17
BALANCE
DEBIT
CREDIT
24,000.00
DEBIT
CREDIT
24,000.00
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
—
211
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-3B (continued)
ACCOUNT
Income Summary
DATE
20-Dec.
ACCOUNT
ITEM
31
31
31
ACCOUNT
ITEM
31
31
ACCOUNT
ACCOUNT
31
31
31
212
CREDIT
POST.
REF.
9
17
Balance
Adj.
Closing
POST.
REF.
9
17
17
ITEM
31
31
Balance
Closing
POST.
REF.
31
31
Balance
Closing
CREDIT
—
34,057.00
4,653.00
—
ACCOUNT NO.
411
BALANCE
DEBIT
CREDIT
34,057.00
DEBIT
CREDIT
—
34,057.00
—
ACCOUNT NO.
511
BALANCE
DEBIT
CREDIT
528.00
23,348.00
DEBIT
CREDIT
22,820.00
23,348.00
—
—
ACCOUNT NO.
512
BALANCE
DEBIT
9
17
CREDIT
2,930.00
Office Supplies Expense
ITEM
DEBIT
34,057.00
29,404.00
4,653.00
Rent Expense
DATE
20-Dec.
Balance
Closing
ITEM
DATE
20-Dec.
17
17
17
DEBIT
CREDIT
2,930.00
—
ACCOUNT NO.
POST.
REF.
9
17
313
BALANCE
DEBIT
Wages Expense
DATE
20-Dec.
POST.
REF.
Tour Revenue
DATE
20-Dec.
Closing
Closing
Closing
ACCOUNT NO.
—
513
BALANCE
DEBIT
CREDIT
360.00
DEBIT
360.00
—
CREDIT
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-3B (concluded)
ACCOUNT
Depreciation Expense, Office Equipment
DATE
20-Dec.
ACCOUNT
ITEM
31
31
Adj.
Closing
ACCOUNT
ITEM
31
31
Balance
Closing
ACCOUNT
ITEM
31
31
Balance
Closing
386.00
386.00
ITEM
31
31
Balance
Closing
DEBIT
CREDIT
386.00
—
ACCOUNT NO.
POST.
REF.
CREDIT
9
17
941.00
DEBIT
941.00
—
—
516
BALANCE
DEBIT
CREDIT
9
17
1,237.00
DEBIT
CREDIT
1,237.00
—
ACCOUNT NO.
POST.
REF.
515
CREDIT
ACCOUNT NO.
POST.
REF.
—
BALANCE
DEBIT
Miscellaneous Expense
DATE
20-Dec.
CREDIT
Advertising Expense
DATE
20-Dec.
17
17
514
BALANCE
DEBIT
Telephone Expense
DATE
20-Dec.
POST.
REF.
ACCOUNT NO.
—
519
BALANCE
DEBIT
CREDIT
9
17
202.00
DEBIT
202.00
—
CREDIT
—
Oliver Tour Company
Post-Closing Trial Balance
December 31, 20-ACCOUNT NAME
Cash
Office Equipment
Accumulated Depreciation, Office Equipment
Wages Payable
S. Oliver, Capital
DEBIT
CREDIT
4,827
4,042
8,869
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
932
528
7,409
8,869
213
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-4B
Miss Beverly's Tutoring Service
Work Sheet
For Year Ended June 30, 20-TRIAL BALANCE
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
ACCOUNT NAME
DEBIT
Cash
Accounts Receivable
Prepaid Insurance
Equipment
Accumulated Depreciation,
Equipment
Van
Accumulated Depreciation, Van
Accounts Payable
B. Morrow, Capital
B. Morrow, Drawing
Fees Earned
Salary Expense
Advertising Expense
Van Operating Expense
Supplies Expense
Utilities Expense
Miscellaneous Expense
6,491.00
624.00
1,280.00
5,497.00
19
20
21
22
23
24
Insurance Expense
Depreciation Expense,
Equipment
Depreciation Expense, Van
Salaries Payable
CREDIT
(a)
470.00
2,472.00
(b)
948.00
4,168.00
1,436.00
14,848.00
(c)
1,490.00
(d)
574.00
3,482.00
13,674.00
18,000.00
43,680.00
16,000.00
2,200.00
705.00
527.00
1,248.00
358.00
66,604.00
(d)
574.00
(a)
470.00
(b)
(c)
948.00
1,490.00
66,604.00
3,482.00
25
26
ADJUSTMENTS
DEBIT
CREDIT
Net Income
27
28
29
30
31
32
33
34
35
36
37
38
214
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-4B (continued)
ADJUSTED TRIAL BALANCE
DEBIT
CREDIT
INCOME STATEMENT
DEBIT
CREDIT
6,491.00
624.00
810.00
5,497.00
BALANCE SHEET
DEBIT
CREDIT
6,491.00
624.00
810.00
5,497.00
1
2
3
4
5
3,420.00
3,420.00
13,674.00
13,674.00
5,658.00
1,436.00
14,848.00
7
5,658.00
1,436.00
14,848.00
18,000.00
18,000.00
43,680.00
16,574.00
2,200.00
705.00
527.00
1,248.00
358.00
6
8
9
10
11
43,680.00
12
16,574.00
2,200.00
705.00
527.00
1,248.00
358.00
13
14
15
16
17
18
19
470.00
470.00
20
21
948.00
1,490.00
69,616.00
948.00
1,490.00
574.00
69,616.00
24,520.00
19,160.00
43,680.00
22
23
43,680.00
43,680.00
45,096.00
45,096.00
574.00
25,936.00
19,160.00
45,096.00
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
215
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-4B (continued)
Miss Beverly's Tutoring Service
Income Statement
For Year Ended June 30, 20-Revenue:
Fees Earned
Expenses:
Salary Expense
Advertising Expense
Van Operating Expense
Supplies Expense
Utilities Expense
Insurance Expense
Depreciation Expense, Equipment
Depreciation Expense, Van
Miscellaneous Expense
Total Expenses
Net Income
$43,680
$16,574
2,200
705
527
1,248
470
948
1,490
358
24,520
$19,160
Miss Beverly's Tutoring Service
Statement of Owner's Equity
For Year Ended June 30, 20-B. Morrow, Capital, July 1, 20-Investment on June 10, 20-Net Income for the Year
Subtotal
Less Withdrawals for the Year
Increase in Capital
B. Morrow, Capital, June 30, 20--
216
$11,848
$ 3,000
19,160
$22,160
18,000
4,160
$16,008
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-4B (continued)
Miss Beverly's Tutoring Service
Balance Sheet
June 30, 20-Assets
Cash
Accounts Receivable
Prepaid Insurance
Equipment
Less Accumulated Depreciation
Van
Less Accumulated Depreciation
Total Assets
$ 6,491
624
810
$ 5,497
3,420
$13,674
5,658
2,077
8,016
$18,018
Liabilities
$ 1,436
574
Accounts Payable
Salaries Payable
Total Liabilities
$ 2,010
Owner's Equity
B. Morrow, Capital
Total Liabilities and Owner's Equity
16,008
$18,018
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
217
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
Problem 5-4B (concluded)
GENERAL JOURNAL
DATE
1
2
20-June
3
DESCRIPTION
Adjusting Entries
30 Insurance Expense
Prepaid Insurance
PAGE
POST.
REF.
DEBIT
CREDIT
1
470.00
2
470.00
4
3
4
30 Depreciation Expense, Equipment
Accumulated Depreciation,
Equipment
5
6
7
948.00
5
6
948.00
8
7
8
30 Depreciation Expense, Van
Accumulated Depreciation, Van
9
10
1,490.00
9
1,490.00
11
10
11
30 Salary Expense
Salaries Payable
12
13
574.00
12
574.00
14
13
14
Closing Entries
30 Fees Earned
Income Summary
15
16
17
15
43,680.00
16
43,680.00
18
17
18
19
20
21
22
23
24
25
26
27
28
30 Income Summary
Salary Expense
Advertising Expense
Van Operating Expense
Supplies Expense
Utilities Expense
Insurance Expense
Depreciation Expense, Equipment
Depreciation Expense, Van
Miscellaneous Expense
24,520.00
30 Income Summary
B. Morrow, Capital
19,160.00
30 B. Morrow, Capital
B. Morrow, Drawing
18,000.00
19
16,574.00
2,200.00
705.00
527.00
1,248.00
470.00
948.00
1,490.00
358.00
29
20
21
22
23
24
25
26
27
28
29
30
31
30
19,160.00
32
31
32
33
34
33
18,000.00
34
35
35
36
36
218
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ACCOUNTING CYCLE REVIEW PROBLEM A—SURF'S UP!
Suggested Audit Questions
1. What was the amount incurred for advertising on July 5?
2. How much of the concessions income was received in cash?
3. What was the amount of the principal paid on the mortgage?
4. How much did Lacy withdraw from the business?
5. What is the amount of accrued wages?
6. How much insurance expired during the month?
7. What is the amount of depreciation of the pool/slide facility?
8. What is the ending balance of Lacy's Capital account?
9. As of the end of the month, what is the amount of the book value of the pool/slide facility?
10. How much cash did Lacy pay as a down payment on the purchase of Surf's Up!?
Answers
1. $1,320
2. $250
3. $1,910
4. $4,700
5. $920
6. $1,020
7. $675
8. $163,691
9. $149,830
10. $120,000
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
219
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
GENERAL JOURNAL
DATE
1
2
20-July
3
4
DESCRIPTION
PAGE
POST.
REF.
DEBIT
1
CREDIT
1
1 Cash
L. Lacy, Capital
Invested cash in business.
111
311
150,000.00
2
150,000.00
4
5
6
7
8
9
10
11
12
5
2 Pool Furniture
Pool/Slide Facility
Building
Land
Cash
Mortgage Payable
Bought Surfs Up!.
126
124
122
121
111
223
2 Prepaid Insurance
Cash
Paid one-year premium for
insurance.
114
111
2 Pool/Slide Facility
Cash
Accounts Payable
Bought inner tubes from Worn Tires.
124
111
221
3 Cash
Concessions Income
Received payment for rental space
for video games and food
concessions.
111
412
5 Advertising Expense
Accounts Payable
Grand opening expenses from
Party Rentals ($620) and
City Star ($700).
513
221
6 Pool Maintenance Expense
Cash
July payment on contract to
All-Around Maintenance.
511
111
3,800.00
148,800.00
96,200.00
292,000.00
6
7
8
9
120,000.00
420,800.00
15
16
17
20
21
22
14
12,240.00
25
26
27
28
17
18
1,225.00
19
500.00
725.00
31
32
33
34
37
38
39
40
220
21
23
250.00
24
250.00
25
26
27
28
29
1,320.00
30
1,320.00
31
32
33
34
35
36
20
22
29
30
15
16
23
24
11
13
12,240.00
18
19
10
12
13
14
3
35
800.00
36
800.00
37
38
39
40
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
GENERAL JOURNAL
DATE
1
2
3
4
20-July
DESCRIPTION
2
PAGE
POST.
REF.
DEBIT
CREDIT
1
6 Miscellaneous Expense
Cash
Paid for employee picnic.
522
111
7 Cash
Income from Services
For services rendered.
111
411
128.00
2
128.00
4
5
6
7
8
5
12,086.00
6
12,086.00
11
12
13
9
9 Pool Maintenance Expense
Accounts Payable
Bought parts on account from
Arlen's Pool Supply.
511
221
646.00
10
646.00
16
17
13
14
14 Cash
Income from Services
For services rendered.
111
411
15 Wages Expense
Cash
For period July 1 through July 14.
512
111
10,445.00
15
10,445.00
20
21
18
8,460.00
19
8,460.00
24
25
26
22
16 Accounts Payable
Cash
Paid Party Rentals and City
Star on account.
221
111
1,150.00
23
1,150.00
29
30
26
27
16 L. Lacy, Drawing
Cash
Withdrawal for personal use.
312
111
2,500.00
28
2,500.00
33
34
35
29
30
31
32
24
25
27
28
20
21
22
23
16
17
18
19
11
12
14
15
7
8
9
10
3
31
17 Pool Furniture
Accounts Payable
Bought pool furniture from Pool
Suppliers.
126
221
2,100.00
32
2,100.00
33
34
35
36
36
37
37
38
38
39
39
40
40
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
221
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
GENERAL JOURNAL
DATE
1
2
20-July
3
4
DESCRIPTION
PAGE
POST.
REF.
DEBIT
3
CREDIT
1
18 Miscellaneous Expense
Cash
Paid for costume alterations.
522
111
248.00
2
248.00
4
5
6
7
8
5
21 Cash
Income from Services
For services rendered.
111
411
21 Accounts Payable
Cash
Partial payment to Worn Tires.
221
111
23 Accounts Payable
Pool Furniture
Received allowance from Pool
Suppliers for damaged chairs.
221
126
25 Utilities Expense
Cash
Received and paid telephone bill.
514
111
10,330.00
6
10,330.00
11
12
9
600.00
10
600.00
15
16
17
13
225.00
14
225.00
20
21
17
18
292.00
19
292.00
24
25
22
29 Wages Expense
Cash
For period July 15 through 28.
512
111
31 Cash
Income from Services
For services rendered.
111
411
31 Accounts Payable
Cash
Paid Arlen's Pool Supply on account.
221
111
31 Utilities Expense
Cash
Received and paid water bill.
514
111
8,227.00
23
8,227.00
28
29
26
11,870.00
27
11,870.00
32
33
30
360.00
31
360.00
36
37
32
33
34
35
28
29
30
31
24
25
26
27
20
21
22
23
15
16
18
19
11
12
13
14
7
8
9
10
3
34
684.00
35
684.00
36
37
38
38
39
39
40
40
222
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
GENERAL JOURNAL
DATE
1
2
3
4
5
20-July
DESCRIPTION
PAGE
POST.
REF.
DEBIT
4
CREDIT
1
31 Mortgage Payable
Interest Expense
Cash
Paid installment on mortgage.
223
515
111
1,910.00
1,980.00
2
3
3,890.00
5
6
7
8
9
6
31 Utilities Expense
Cash
Received and paid electric bill.
514
111
31 Pool/Slide Facility
Cash
Accounts Payable
Bought inner tubes from Worn
Tires.
124
111
221
31 L. Lacy, Drawing
Cash
Withdrawal for personal use.
312
111
31 Accounts Receivable
Concessions Income
Additional revenue from
concessions.
112
412
824.00
7
824.00
12
13
14
15
10
480.00
11
100.00
380.00
18
19
22
23
24
16
2,200.00
17
2,200.00
27
28
20
234.00
21
234.00
31
24
25
Adjusting Entries
31 Insurance Expense
Prepaid Insurance
517
114
1,020.00
31 Depreciation Expense, Building
Accumulated Depreciation, Building
518
123
480.00
26
27
1,020.00
34
35
30
480.00
38
39
31
32
31 Depreciation Expense, Pool/Slide Facility
Accumulated Depreciation, Pool/Slide
Facility
519
675.00
33
34
125
675.00
36
37
28
29
32
33
22
23
29
30
18
19
25
26
13
15
20
21
12
14
16
17
8
9
10
11
4
35
36
31 Depreciation Expense, Pool Furniture
Accumulated Depreciation, Pool
Furniture
520
120.00
37
38
127
120.00
40
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
39
40
223
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
GENERAL JOURNAL
DATE
1
2
20-July
3
4
DESCRIPTION
PAGE
POST.
REF.
DEBIT
5
CREDIT
Adjusting Entries (continued)
1
2
31 Wages Expense
Wages Payable
512
222
920.00
3
920.00
5
6
7
8
9
5
Closing Entries
31 Income from Services
Concessions Income
Income Summary
6
411
412
313
44,731.00
484.00
7
8
45,215.00
10
11
12
13
14
15
16
17
18
19
20
21
22
25
31 Income Summary
Pool Maintenance Expense
Wages Expense
Advertising Expense
Utilities Expense
Interest Expense
Insurance Expense
Depreciation Expense, Building
Depreciation Expense, Pool/Slide
Facility
Depreciation Expense, Pool Furniture
Miscellaneous Expense
313
511
512
513
514
515
517
518
26,824.00
31 Income Summary
L. Lacy, Capital
313
311
18,391.00
31 L. Lacy, Capital
L. Lacy, Drawing
311
312
4,700.00
11
1,446.00
17,607.00
1,320.00
1,800.00
1,980.00
1,020.00
480.00
28
12
13
14
15
16
17
18
19
519
520
522
675.00
120.00
376.00
20
21
22
23
24
18,391.00
26
27
9
10
23
24
4
25
26
27
4,700.00
28
29
29
30
30
31
31
32
32
33
33
34
34
35
35
36
36
37
37
38
38
39
39
40
40
224
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
GENERAL LEDGER
ACCOUNT
Cash
DATE
20-July
ACCOUNT
ITEM
1
2
2
2
3
6
6
7
14
15
16
16
18
21
21
25
29
31
31
31
31
31
31
31
20-July
ACCOUNT
BALANCE
DEBIT
CREDIT
150,000.00
120,000.00
12,240.00
500.00
250.00
800.00
128.00
12,086.00
10,445.00
8,460.00
1,150.00
2,500.00
248.00
10,330.00
600.00
292.00
8,227.00
11,870.00
360.00
684.00
3,890.00
824.00
100.00
2,200.00
Accounts Receivable
ITEM
31
POST.
REF.
2
31
Adj.
CREDIT
150,000.00
30,000.00
17,760.00
17,260.00
17,510.00
16,710.00
16,582.00
28,668.00
39,113.00
30,653.00
29,503.00
27,003.00
26,755.00
37,085.00
36,485.00
36,193.00
27,966.00
39,836.00
39,476.00
38,792.00
34,902.00
34,078.00
33,978.00
31,778.00
112
BALANCE
DEBIT
CREDIT
234.00
DEBIT
CREDIT
234.00
Prepaid Insurance
ITEM
DEBIT
ACCOUNT NO.
4
DATE
20-July
POST.
REF.
1
1
1
1
1
1
2
2
2
2
2
2
3
3
3
3
3
3
3
3
4
4
4
4
DATE
111
ACCOUNT NO.
114
ACCOUNT NO.
POST.
REF.
1
4
BALANCE
DEBIT
CREDIT
12,240.00
1,020.00
DEBIT
CREDIT
12,240.00
11,220.00
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
225
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
ACCOUNT
Land
ITEM
DATE
20-July
ACCOUNT
2
ACCOUNT
ACCOUNT
ACCOUNT
ITEM
31
Adj.
226
DEBIT
CREDIT
96,200.00
POST.
REF.
2
2
31
POST.
REF.
96,200.00
4
123
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
480.00
480.00
124
BALANCE
DEBIT
CREDIT
148,800.00
1,225.00
480.00
DEBIT
CREDIT
148,800.00
150,025.00
150,505.00
Accumulated Depreciation, Pool/Slide Facility
POST.
REF.
122
CREDIT
ACCOUNT NO.
1
1
4
ITEM
DEBIT
ACCOUNT NO.
4
ITEM
Adj.
CREDIT
BALANCE
POST.
REF.
Pool/Slide Facility
31
DEBIT
292,000.00
Accumulated Depreciation, Building
DATE
20-July
292,000.00
1
DATE
20-July
CREDIT
ACCOUNT NO.
2
DATE
20-July
DEBIT
Building
ITEM
121
BALANCE
POST.
REF.
1
DATE
20-July
ACCOUNT NO.
ACCOUNT NO.
125
BALANCE
DEBIT
CREDIT
675.00
DEBIT
CREDIT
675.00
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
ACCOUNT
Pool Furniture
DATE
20-July
ACCOUNT
ITEM
2
17
23
20-July
ACCOUNT
ACCOUNT
ITEM
31
Adj.
CREDIT
3,800.00
2,100.00
225.00
POST.
REF.
2
5
9
16
17
21
23
31
31
CREDIT
Adj.
127
DEBIT
CREDIT
120.00
POST.
REF.
120.00
221
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
725.00
1,320.00
646.00
725.00
2,045.00
2,691.00
1,541.00
3,641.00
3,041.00
2,816.00
2,456.00
2,836.00
1,150.00
2,100.00
600.00
225.00
360.00
380.00
Wages Payable
31
3,800.00
5,900.00
5,675.00
ACCOUNT NO.
1
1
2
2
2
3
3
3
4
ITEM
CREDIT
BALANCE
DEBIT
4
ITEM
DEBIT
ACCOUNT NO.
Accounts Payable
DATE
20-July
BALANCE
DEBIT
Accumulated Depreciation, Pool Furniture
DATE
20-July
POST.
REF.
1
2
3
DATE
126
ACCOUNT NO.
222
ACCOUNT NO.
POST.
REF.
5
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
920.00
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
920.00
227
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
ACCOUNT
Mortgage Payable
DATE
20-July
ACCOUNT
ITEM
2
31
20-July
ACCOUNT
ACCOUNT
1
31
31
ACCOUNT
228
Closing
Closing
ITEM
16
31
31
CREDIT
Closing
ITEM
31
31
31
Closing
Closing
Closing
7
14
21
31
31
Closing
CREDIT
420,800.00
418,890.00
1,910.00
311
ACCOUNT NO.
POST.
REF.
1
5
5
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
150,000.00
18,391.00
150,000.00
168,391.00
163,691.00
4,700.00
ACCOUNT NO.
POST.
REF.
2
4
5
CREDIT
2,500.00
2,200.00
4,700.00
DEBIT
CREDIT
2,500.00
4,700.00
—
ACCOUNT NO.
POST.
REF.
5
5
5
POST.
REF.
2
2
3
3
5
312
BALANCE
DEBIT
—
313
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
45,215.00
26,824.00
18,391.00
Income from Services
ITEM
DEBIT
420,800.00
Income Summary
DATE
20-July
BALANCE
DEBIT
L. Lacy, Drawing
DATE
20-July
1
4
ITEM
DATE
20-July
POST.
REF.
L. Lacy, Capital
DATE
223
ACCOUNT NO.
—
45,215.00
18,391.00
—
ACCOUNT NO.
411
BALANCE
DEBIT
CREDIT
DEBIT
12,086.00
10,445.00
10,330.00
11,870.00
44,731.00
—
CREDIT
12,086.00
22,531.00
32,861.00
44,731.00
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
ACCOUNT
Concessions Income
DATE
20-July
ACCOUNT
ITEM
3
31
31
20-July
ACCOUNT
ACCOUNT
6
9
31
BALANCE
DEBIT
CREDIT
Closing
ITEM
15
29
31
31
Adj.
Closing
5
31
Closing
CREDIT
250.00
484.00
—
—
484.00
511
ACCOUNT NO.
POST.
REF.
1
2
5
BALANCE
DEBIT
CREDIT
800.00
646.00
1,446.00
DEBIT
CREDIT
800.00
1,446.00
—
—
512
ACCOUNT NO.
POST.
REF.
2
3
5
5
BALANCE
DEBIT
CREDIT
8,460.00
8,227.00
920.00
17,607.00
Advertising Expense
ITEM
DEBIT
250.00
234.00
Wages Expense
DATE
20-July
1
4
5
Closing
ITEM
DATE
20-July
POST.
REF.
Pool Maintenance Expense
DATE
412
ACCOUNT NO.
POST.
REF.
1
5
DEBIT
CREDIT
8,460.00
16,687.00
17,607.00
—
—
ACCOUNT NO.
513
BALANCE
DEBIT
CREDIT
1,320.00
1,320.00
DEBIT
CREDIT
1,320.00
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
—
229
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
ACCOUNT
Utilities Expense
ITEM
DATE
20-July
ACCOUNT
25
31
31
31
ACCOUNT
ITEM
31
31
ACCOUNT
ACCOUNT
31
31
230
CREDIT
292.00
684.00
824.00
1,800.00
Adj.
Closing
ITEM
31
31
Adj.
Closing
POST.
REF.
31
31
Adj.
Closing
CREDIT
292.00
976.00
1,800.00
—
4
5
CREDIT
1,980.00
1,980.00
DEBIT
4
5
POST.
REF.
4
5
POST.
REF.
4
5
515
CREDIT
1,980.00
—
ACCOUNT NO.
POST.
REF.
—
BALANCE
DEBIT
—
517
BALANCE
DEBIT
CREDIT
1,020.00
1,020.00
DEBIT
CREDIT
1,020.00
—
ACCOUNT NO.
—
518
BALANCE
DEBIT
CREDIT
480.00
480.00
Depreciation Expense, Pool/Slide Facility
ITEM
DEBIT
ACCOUNT NO.
Depreciation Expense, Building
DATE
20-July
Closing
ITEM
DATE
20-July
3
3
4
5
514
BALANCE
DEBIT
Insurance Expense
DATE
20-July
POST.
REF.
Interest Expense
DATE
20-July
Closing
ACCOUNT NO.
DEBIT
CREDIT
480.00
—
ACCOUNT NO.
—
519
BALANCE
DEBIT
CREDIT
675.00
675.00
DEBIT
675.00
—
CREDIT
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
ACCOUNT
Depreciation Expense, Pool Furniture
ITEM
DATE
20-July
ACCOUNT
31
31
4
5
BALANCE
DEBIT
CREDIT
120.00
120.00
Miscellaneous Expense
DATE
20-July
Adj.
Closing
POST.
REF.
ITEM
6
18
31
Closing
520
ACCOUNT NO.
DEBIT
CREDIT
120.00
—
—
522
ACCOUNT NO.
POST.
REF.
2
3
5
BALANCE
DEBIT
CREDIT
128.00
248.00
376.00
DEBIT
CREDIT
128.00
376.00
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
—
231
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
Surf's Up!
Work Sheet
For Month Ended July 31, 20-TRIAL BALANCE
ACCOUNT NAME
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Cash
Accounts Receivable
Prepaid Insurance
Land
Building
Pool/Slide Facility
Pool Furniture
Accounts Payable
Mortgage Payable
L. Lacy, Capital
L. Lacy, Drawing
Income from Services
Concessions Income
Pool Maintenance Expense
Wages Expense
Advertising Expense
Utilities Expense
Interest Expense
Miscellaneous Expense
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
Insurance Expense
Depreciation Expense,
Building
Accumulated Depreciation,
Building
Depreciation Expense,
Pool/Slide Facility
Accumulated Depreciation,
Pool/Slide Facility
Depreciation Expense,
Pool Furniture
Accumulated Depreciation,
Pool Furniture
Wages Payable
ADJUSTMENTS
DEBIT
CREDIT
31,778.00
234.00
12,240.00
292,000.00
96,200.00
150,505.00
5,675.00
CREDIT
(a)
1,020.00
(b)
480.00
(c)
675.00
(d)
(e)
120.00
920.00
3,215.00
2,836.00
418,890.00
150,000.00
4,700.00
44,731.00
484.00
1,446.00
16,687.00
1,320.00
1,800.00
1,980.00
376.00
616,941.00
(e)
920.00
(a)
1,020.00
(b)
480.00
616,941.00
(c)
(d)
675.00
120.00
3,215.00
35
36
DEBIT
Net Income
37
38
39
40
232
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
ADJUSTED TRIAL BALANCE
DEBIT
CREDIT
INCOME STATEMENT
DEBIT
CREDIT
31,778.00
234.00
11,220.00
292,000.00
96,200.00
150,505.00
5,675.00
BALANCE SHEET
DEBIT
CREDIT
31,778.00
234.00
11,220.00
292,000.00
96,200.00
150,505.00
5,675.00
2,836.00
418,890.00
150,000.00
1
2
3
4
5
6
7
2,836.00
418,890.00
150,000.00
4,700.00
4,700.00
44,731.00
484.00
1,446.00
17,607.00
1,320.00
1,800.00
1,980.00
376.00
8
9
10
11
44,731.00
484.00
12
13
1,446.00
17,607.00
1,320.00
1,800.00
1,980.00
376.00
14
15
16
17
18
19
20
1,020.00
1,020.00
21
22
480.00
480.00
23
24
480.00
480.00
25
26
675.00
675.00
27
28
675.00
675.00
29
30
120.00
120.00
31
32
619,136.00
120.00
920.00
619,136.00
26,824.00
18,391.00
45,215.00
45,215.00
592,312.00
45,215.00
592,312.00
120.00
920.00
573,921.00
18,391.00
592,312.00
33
34
35
36
37
38
39
40
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
233
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
Surf's Up!
Income Statement
For Month Ended July 31, 20-Revenue:
Income from Services
Concessions Income
Total Revenue
Expenses:
Pool Maintenance Expense
Wages Expense
Advertising Expense
Utilities Expense
Interest Expense
Insurance Expense
Depreciation Expense, Building
Depreciation Expense, Pool/Slide Facility
Depreciation Expense, Pool Furniture
Miscellaneous Expense
Total Expenses
Net Income
$44,731
484
$45,215
$ 1,446
17,607
1,320
1,800
1,980
1,020
480
675
120
376
26,824
$18,391
Surf's Up!
Statement of Owner's Equity
For Month Ended July 31, 20-L. Lacy, Capital, July 1, 20-Investment on July 1, 20-Net Income for July
Subtotal
Less Withdrawals for July
Increase in Capital
L. Lacy, Capital, July 31, 20--
234
$
0
$150,000
18,391
$168,391
4,700
163,691
$163,691
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (continued)
Surf's Up!
Balance Sheet
July 31, 20-Assets
Cash
Accounts Receivable
Prepaid Insurance
Land
Building
Less Accumulated Depreciation
Pool/Slide Facility
Less Accumulated Depreciation
Pool Furniture
Less Accumulated Depreciation
Total Assets
$ 31,778
234
11,220
292,000
$ 96,200
480
$150,505
675
$ 5,675
120
95,720
149,830
5,555
$586,337
Liabilities
Accounts Payable
Wages Payable
Mortgage Payable
Total Liabilities
Owner's Equity
L. Lacy, Capital
Total Liabilities and Owner's Equity
$
2,836
920
418,890
$422,646
163,691
$586,337
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
235
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM A (concluded)
Surf's Up!
Post-Closing Trial Balance
July 31, 20-ACCOUNT NAME
DEBIT
Cash
Accounts Receivable
Prepaid Insurance
Land
Building
Accumulated Depreciation, Building
Pool/Slide Facility
Accumulated Depreciation, Pool/Slide Facility
Pool Furniture
Accumulated Depreciation, Pool Furniture
Accounts Payable
Wages Payable
Mortgage Payable
L. Lacy, Capital
31,778
234
11,220
292,000
96,200
480
150,505
675
5,675
587,612
236
CREDIT
120
2,836
920
418,890
163,691
587,612
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
ACCOUNTING CYCLE REVIEW PROBLEM B—WIND SAILORS
Suggested Audit Questions
1. What was the amount of cash paid for advertising on June 3?
2. How much of the concession income was received in cash?
3. What was the amount of the principal paid on the mortgage?
4. How much did Arden withdraw from the business?
5. What is the amount of accrued wages?
6. How much insurance expired during the month?
7. What is the amount of depreciation of the fan system in June?
8. What is the ending balance of Arden’s Capital account?
9. As of the end of the month, what is the amount of the book value of the pool structure?
10. How much cash did Arden pay as a down payment on the purchase of Wind Sailors?
Answers
1. $350
2. $150
3. $497
4. $2,700
5. $790
6. $1,000
7. $260
8. $87,591
9. $139,285
10. $60,000
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
237
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
GENERAL JOURNAL
DATE
1
2
20-June
3
4
DESCRIPTION
PAGE
POST.
REF.
DEBIT
1
CREDIT
1
1 Cash
R. Arden, Capital
Invested cash in business.
111
311
2 Sailboats
Fan System
Pool Structure
Land
Cash
Mortgage Payable
Bought Wind Sailors.
129
127
125
121
111
223
85,000.00
2
85,000.00
4
5
6
7
8
9
10
11
12
5
25,800.00
13,300.00
140,000.00
37,000.00
6
7
8
9
60,000.00
156,100.00
15
16
17
20
21
22
3 Advertising Expense
Cash
Paid bill for newspaper
advertising.
513
111
3 Prepaid Insurance
Cash
Paid one-year premium for
insurance.
114
111
3 Sailboats
Cash
Accounts Payable
Bought additional boats from
Larkin Manufacturing Co.
129
111
221
3 Cash
Concessions Income
Received payment for rental
space for vending machines.
111
412
350.00
14
350.00
25
26
27
28
17
18
12,000.00
19
12,000.00
31
32
33
22
23
7,200.00
24
3,200.00
4,000.00
36
37
38
25
26
27
28
29
150.00
30
150.00
31
32
33
34
35
20
21
29
30
15
16
23
24
11
13
18
19
10
12
13
14
3
34
3 Advertising Expense
Accounts Payable
Promotional handouts from
Quick Printing.
513
221
460.00
35
460.00
36
37
38
39
39
40
40
238
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
GENERAL JOURNAL
DATE
1
2
3
4
5
20-June
DESCRIPTION
PAGE
POST.
REF.
DEBIT
2
CREDIT
1
3 Sailboat Rental Expense
Cash
Leased sailboats from K. Erdmon
Boat Co.
511
111
700.00
2
700.00
4
5
6
7
8
9
6
5 Miscellaneous Expense
Cash
Paid miscellaneous expenses.
522
111
8 Cash
Income from Services
For services rendered.
111
411
9 Fan System
Accounts Payable
Bought an addition to fan system
on account from Stark Pool Supply.
127
221
15 Wages Expense
Cash
For period June 1 through June 14.
512
111
16 Accounts Payable
Cash
Paid Quick Printing on account.
221
111
96.00
7
96.00
12
13
10
2,855.00
11
2,855.00
16
17
18
14
745.00
15
745.00
21
22
18
19
3,900.00
20
3,900.00
25
26
23
460.00
24
460.00
29
30
27
16 R. Arden, Drawing
Cash
Withdrawal for personal use.
312
111
1,200.00
28
1,200.00
33
34
35
31
16 Sailboats
Accounts Payable
Bought sails on account from
Canvas Products, Inc.
129
221
16 Cash
Income from Services
For services rendered.
111
411
850.00
32
850.00
38
39
33
34
35
36
37
29
30
31
32
25
26
27
28
21
22
23
24
16
17
19
20
12
13
14
15
8
9
10
11
3
36
4,850.00
37
4,850.00
39
40
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
38
40
239
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
GENERAL JOURNAL
DATE
1
2
20-June
3
4
DESCRIPTION
PAGE
POST.
REF.
DEBIT
3
CREDIT
1
19 Miscellaneous Expense
Cash
Paid miscellaneous expenses.
522
111
20 Accounts Payable
Cash
Partial payment to Larkin
Manufacturing Co.
221
111
22 Cash
Income from Services
For services rendered.
111
411
23 Accounts Payable
Sailboats
Received allowance from Larkin
Manufacturing Co. for damaged
boat.
221
129
24 Utilities Expense
Cash
Received and paid telephone bill.
514
111
29 Wages Expense
Cash
For period June 15 through June 28.
512
111
30 Accounts Payable
Cash
Paid Stark Pool Supply on account.
221
111
40.00
2
40.00
4
5
6
7
8
9
5
1,300.00
6
1,300.00
12
13
9
10
8,260.00
11
8,260.00
16
17
18
19
14
380.00
15
380.00
22
23
18
19
20
284.00
21
284.00
26
27
24
4,973.00
25
4,973.00
30
31
28
475.00
29
475.00
34
35
32
30 Utilities Expense
Cash
Received and paid electric bill.
514
111
30 Mortgage Payable
Interest Expense
Cash
Paid installment on mortgage.
223
515
111
345.00
33
345.00
38
39
40
41
240
34
35
36
37
30
31
32
33
26
27
28
29
22
23
24
25
16
17
20
21
12
13
14
15
7
8
10
11
3
36
497.00
1,351.00
37
38
1,848.00
39
40
41
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
GENERAL JOURNAL
DATE
1
2
3
4
20-June
DESCRIPTION
4
PAGE
POST.
REF.
DEBIT
CREDIT
1
30 Utilities Expense
Cash
Received and paid water bill.
514
111
30 Sailboats
Cash
Accounts Payable
Bought additional boats from
Ranger and Son.
129
111
221
590.00
2
590.00
4
5
6
7
8
9
10
5
5,320.00
6
1,550.00
3,770.00
13
14
17
18
11
30 R. Arden, Drawing
Cash
Withdrawal for personal use.
312
111
1,500.00
12
1,500.00
21
22
23
15
30 Cash
Income from Services
For services rendered.
111
411
5,902.00
16
5,902.00
26
27
19
30 Accounts Receivable
Concessions Income
Additional revenue from
concessions.
112
412
28.00
20
28.00
30
31
23
24
Adjusting Entries
30 Insurance Expense
Prepaid Insurance
25
516
114
1,000.00
517
715.00
26
1,000.00
34
29
30
126
715.00
37
30 Depreciation Expense, Fan System
Accumulated Depreciation, Fan System
518
128
260.00
30 Depreciation Expense, Sailboats
Accumulated Depreciation, Sailboats
519
130
900.00
30 Wages Expense
Wages Payable
512
222
790.00
33
260.00
40
34
35
36
900.00
38
39
31
32
35
36
27
28
30 Depreciation Expense, Pool Structure
Accumulated Depreciation, Pool
Structure
32
33
21
22
28
29
17
18
24
25
13
14
19
20
8
10
15
16
7
9
11
12
3
37
38
39
790.00
40
41
41
42
42
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
241
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
GENERAL JOURNAL
DATE
1
2
20-June
3
4
DESCRIPTION
PAGE
POST.
REF.
DEBIT
Closing Entries
30 Income from Services
Concessions Income
Income Summary
411
412
313
21,867.00
178.00
30 Income Summary
Sailboat Rental Expense
Wages Expense
Advertising Expense
Utilities Expense
Interest Expense
Insurance Expense
Depreciation Expense, Pool Structure
Depreciation Expense, Fan System
Depreciation Expense, Sailboats
Miscellaneous Expense
313
511
512
513
514
515
516
517
518
519
522
16,754.00
5
CREDIT
1
2
3
22,045.00
5
6
7
8
9
10
11
12
13
14
15
16
5
6
700.00
9,663.00
810.00
1,219.00
1,351.00
1,000.00
715.00
260.00
900.00
136.00
17
18
19
22
7
8
9
10
11
12
13
14
15
16
17
30 Income Summary
R. Arden, Capital
313
311
5,291.00
30 R. Arden, Capital
R. Arden, Drawing
311
312
2,700.00
18
5,291.00
20
21
4
19
20
21
2,700.00
22
23
23
24
24
25
25
26
26
27
27
28
28
29
29
30
30
31
31
32
32
33
33
34
34
35
35
36
36
37
37
38
38
39
39
40
40
41
41
242
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
GENERAL LEDGER
ACCOUNT
Cash
ITEM
DATE
20-June
ACCOUNT
1
2
3
3
3
3
3
5
8
15
16
16
16
19
20
22
24
29
30
30
30
30
30
30
30
20-June
ACCOUNT
BALANCE
DEBIT
CREDIT
85,000.00
60,000.00
350.00
12,000.00
3,200.00
150.00
700.00
96.00
2,855.00
3,900.00
460.00
1,200.00
4,850.00
40.00
1,300.00
8,260.00
284.00
4,973.00
475.00
345.00
1,848.00
590.00
1,550.00
1,500.00
5,902.00
Accounts Receivable
ITEM
30
POST.
REF.
2
30
Adj.
CREDIT
85,000.00
25,000.00
24,650.00
12,650.00
9,450.00
9,600.00
8,900.00
8,804.00
11,659.00
7,759.00
7,299.00
6,099.00
10,949.00
10,909.00
9,609.00
17,869.00
17,585.00
12,612.00
12,137.00
11,792.00
9,944.00
9,354.00
7,804.00
6,304.00
12,206.00
112
BALANCE
DEBIT
CREDIT
28.00
DEBIT
CREDIT
28.00
Prepaid Insurance
ITEM
DEBIT
ACCOUNT NO.
4
DATE
20-June
POST.
REF.
1
1
1
1
1
1
2
2
2
2
2
2
2
3
3
3
3
3
3
3
3
4
4
4
4
DATE
111
ACCOUNT NO.
114
ACCOUNT NO.
POST.
REF.
1
4
BALANCE
DEBIT
CREDIT
12,000.00
1,000.00
DEBIT
CREDIT
12,000.00
11,000.00
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
243
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
ACCOUNT
Land
DATE
20-June
ACCOUNT
ITEM
2
ACCOUNT
ITEM
ACCOUNT
2
1
ACCOUNT
ITEM
30
Adj.
2
9
244
POST.
REF.
CREDIT
140,000.00
POST.
REF.
Adj.
POST.
REF.
4
125
CREDIT
140,000.00
ACCOUNT NO.
126
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
715.00
715.00
127
BALANCE
DEBIT
CREDIT
13,300.00
745.00
DEBIT
CREDIT
13,300.00
14,045.00
Accumulated Depreciation, Fan System
30
DEBIT
ACCOUNT NO.
1
2
ITEM
CREDIT
BALANCE
DEBIT
4
ITEM
DEBIT
37,000.00
Fan System
DATE
20-June
37,000.00
Accumulated Depreciation, Pool Structure
DATE
20-June
CREDIT
ACCOUNT NO.
POST.
REF.
121
BALANCE
DEBIT
Pool Structure
DATE
20-June
POST.
REF.
1
DATE
20-June
ACCOUNT NO.
ACCOUNT NO.
128
BALANCE
DEBIT
CREDIT
260.00
DEBIT
CREDIT
260.00
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
ACCOUNT
Sailboats
DATE
20-June
ACCOUNT
ITEM
2
3
16
23
30
20-June
ACCOUNT
ACCOUNT
ITEM
30
Adj.
CREDIT
25,800.00
7,200.00
850.00
380.00
5,320.00
POST.
REF.
3
3
9
16
16
20
23
30
30
CREDIT
Adj.
130
DEBIT
CREDIT
900.00
POST.
REF.
900.00
221
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
4,000.00
460.00
745.00
4,000.00
4,460.00
5,205.00
4,745.00
5,595.00
4,295.00
3,915.00
3,440.00
7,210.00
460.00
850.00
1,300.00
380.00
475.00
3,770.00
Wages Payable
30
25,800.00
33,000.00
33,850.00
33,470.00
38,790.00
ACCOUNT NO.
1
1
2
2
2
3
3
3
4
ITEM
CREDIT
BALANCE
DEBIT
4
ITEM
DEBIT
ACCOUNT NO.
Accounts Payable
DATE
20-June
DEBIT
Accumulated Depreciation, Sailboats
DATE
20-June
BALANCE
POST.
REF.
1
1
2
3
4
DATE
129
ACCOUNT NO.
222
ACCOUNT NO.
POST.
REF.
4
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
790.00
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
790.00
245
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
ACCOUNT
Mortgage Payable
DATE
20-June
ACCOUNT
ITEM
2
30
20-June
ACCOUNT
ACCOUNT
1
30
30
ACCOUNT
246
Closing
Closing
ITEM
16
30
30
CREDIT
Closing
ITEM
30
30
30
Closing
Closing
Closing
8
16
22
30
30
Closing
CREDIT
156,100.00
155,603.00
497.00
ACCOUNT NO.
POST.
REF.
1
5
5
CREDIT
DEBIT
CREDIT
85,000.00
5,291.00
85,000.00
90,291.00
87,591.00
2,700.00
ACCOUNT NO.
POST.
REF.
2
4
5
5
5
5
POST.
REF.
2
2
3
4
5
312
BALANCE
DEBIT
CREDIT
1,200.00
1,500.00
2,700.00
DEBIT
CREDIT
1,200.00
2,700.00
—
ACCOUNT NO.
POST.
REF.
311
BALANCE
DEBIT
—
313
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
22,045.00
16,754.00
5,291.00
Income from Services
ITEM
DEBIT
156,100.00
Income Summary
DATE
20-June
BALANCE
DEBIT
R. Arden, Drawing
DATE
20-June
1
3
ITEM
DATE
20-June
POST.
REF.
R. Arden, Capital
DATE
223
ACCOUNT NO.
—
22,045.00
5,291.00
—
ACCOUNT NO.
411
BALANCE
DEBIT
CREDIT
DEBIT
2,855.00
4,850.00
8,260.00
5,902.00
21,867.00
—
CREDIT
2,855.00
7,705.00
15,965.00
21,867.00
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
ACCOUNT
Concessions Income
DATE
20-June
ACCOUNT
ITEM
3
30
30
ACCOUNT
ITEM
3
30
ACCOUNT
Closing
ITEM
15
29
30
30
CREDIT
Adj.
Closing
ITEM
3
3
30
Closing
DEBIT
CREDIT
150.00
28.00
150.00
178.00
—
—
178.00
511
ACCOUNT NO.
POST.
REF.
2
5
BALANCE
DEBIT
CREDIT
700.00
700.00
DEBIT
CREDIT
700.00
—
—
512
ACCOUNT NO.
POST.
REF.
2
3
4
5
BALANCE
DEBIT
CREDIT
3,900.00
4,973.00
790.00
9,663.00
Advertising Expense
DATE
20-June
1
4
5
BALANCE
DEBIT
Wages Expense
DATE
20-June
POST.
REF.
Sailboat Rental Expense
DATE
20-June
Closing
412
ACCOUNT NO.
DEBIT
CREDIT
3,900.00
8,873.00
9,663.00
—
—
513
ACCOUNT NO.
POST.
REF.
1
1
5
BALANCE
DEBIT
CREDIT
350.00
460.00
810.00
DEBIT
CREDIT
350.00
810.00
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
—
247
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
ACCOUNT
Utilities Expense
DATE
20-June
ACCOUNT
ITEM
24
30
30
30
ACCOUNT
ITEM
30
30
ACCOUNT
ACCOUNT
30
30
248
CREDIT
284.00
345.00
590.00
1,219.00
Adj.
Closing
ITEM
30
30
Adj.
Closing
POST.
REF.
30
30
Adj.
Closing
CREDIT
284.00
629.00
1,219.00
—
3
5
CREDIT
1,351.00
1,351.00
DEBIT
4
5
POST.
REF.
4
5
POST.
REF.
4
5
515
CREDIT
1,351.00
—
ACCOUNT NO.
POST.
REF.
—
BALANCE
DEBIT
—
516
BALANCE
DEBIT
CREDIT
1,000.00
1,000.00
DEBIT
CREDIT
1,000.00
—
ACCOUNT NO.
—
517
BALANCE
DEBIT
CREDIT
715.00
715.00
Depreciation Expense, Fan System
ITEM
DEBIT
ACCOUNT NO.
Depreciation Expense, Pool Structure
DATE
20-June
Closing
ITEM
DATE
20-June
3
3
4
5
514
BALANCE
DEBIT
Insurance Expense
DATE
20-June
POST.
REF.
Interest Expense
DATE
20-June
Closing
ACCOUNT NO.
DEBIT
CREDIT
715.00
—
ACCOUNT NO.
—
518
BALANCE
DEBIT
CREDIT
260.00
260.00
DEBIT
260.00
—
CREDIT
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
ACCOUNT
Depreciation Expense, Sailboats
DATE
20-June
ACCOUNT
ITEM
30
30
4
5
BALANCE
DEBIT
CREDIT
900.00
900.00
Miscellaneous Expense
DATE
20-June
Adj.
Closing
POST.
REF.
ITEM
5
19
30
Closing
519
ACCOUNT NO.
DEBIT
CREDIT
900.00
—
—
522
ACCOUNT NO.
POST.
REF.
2
3
5
BALANCE
DEBIT
CREDIT
96.00
40.00
136.00
DEBIT
CREDIT
96.00
136.00
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
—
249
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
Wind Sailors
Work Sheet
For Month Ended June 30, 20-TRIAL BALANCE
ACCOUNT NAME
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Cash
Accounts Receivable
Prepaid Insurance
Land
Pool Structure
Fan System
Sailboats
Accounts Payable
Mortgage Payable
R. Arden, Capital
R. Arden, Drawing
Income from Services
Concessions Income
Sailboat Rental Expense
Wages Expense
Advertising Expense
Utilities Expense
Interest Expense
Miscellaneous Expense
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
Insurance Expense
Depreciation Expense,
Pool Structure
Depreciation Expense,
Fan System
Depreciation Expense,
Sailboats
Accumulated Depreciation,
Pool Structure
Accumulated Depreciation,
Fan System
Accumulated Depreciation,
Sailboats
Wages Payable
ADJUSTMENTS
DEBIT
CREDIT
12,206.00
28.00
12,000.00
37,000.00
140,000.00
14,045.00
38,790.00
CREDIT
(a)
1,000.00
(b)
715.00
(c)
260.00
(d)
(e)
900.00
790.00
3,665.00
7,210.00
155,603.00
85,000.00
2,700.00
21,867.00
178.00
700.00
8,873.00
810.00
1,219.00
1,351.00
136.00
269,858.00
(e)
790.00
(a)
1,000.00
(b)
715.00
(c)
260.00
(d)
900.00
269,858.00
3,665.00
35
36
DEBIT
Net Income
37
38
39
40
250
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
ADJUSTED TRIAL BALANCE
DEBIT
CREDIT
INCOME STATEMENT
DEBIT
CREDIT
12,206.00
28.00
11,000.00
37,000.00
140,000.00
14,045.00
38,790.00
BALANCE SHEET
DEBIT
CREDIT
12,206.00
28.00
11,000.00
37,000.00
140,000.00
14,045.00
38,790.00
7,210.00
155,603.00
85,000.00
1
2
3
4
5
6
7
7,210.00
155,603.00
85,000.00
2,700.00
2,700.00
21,867.00
178.00
700.00
9,663.00
810.00
1,219.00
1,351.00
136.00
1,000.00
1,000.00
9
10
11
21,867.00
178.00
700.00
9,663.00
810.00
1,219.00
1,351.00
136.00
8
12
13
14
15
16
17
18
19
20
21
22
715.00
715.00
260.00
260.00
900.00
900.00
23
24
25
26
27
28
715.00
715.00
29
30
260.00
260.00
900.00
790.00
272,523.00
900.00
790.00
250,478.00
5,291.00
255,769.00
31
32
272,523.00
16,754.00
5,291.00
22,045.00
22,045.00
22,045.00
255,769.00
255,769.00
33
34
35
36
37
38
39
40
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
251
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
Wind Sailors
Income Statement
For Month Ended June 30, 20-Revenue:
Income from Services
Concessions Income
Total Revenue
Expenses:
Sailboat Rental Expense
Wages Expense
Advertising Expense
Utilities Expense
Interest Expense
Insurance Expense
Depreciation Expense, Pool Structure
Depreciation Expense, Fan System
Depreciation Expense, Sailboats
Miscellaneous Expense
Total Expenses
Net Income
$21,867
178
$22,045
$
700
9,663
810
1,219
1,351
1,000
715
260
900
136
16,754
$ 5,291
Wind Sailors
Statement of Owner's Equity
For Month Ended June 30, 20-R. Arden, Capital, June 1, 20-Investment on June 1, 20-Net Income for June
Subtotal
Less Withdrawals for June
Increase in Capital
R. Arden, Capital, June 30, 20--
252
$
0
$85,000
5,291
$90,291
2,700
87,591
$87,591
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (continued)
Wind Sailors
Balance Sheet
June 30, 20-Assets
Cash
Accounts Receivable
Prepaid Insurance
Land
Pool Structure
Less Accumulated Depreciation
Fan System
Less Accumulated Depreciation
Sailboats
Less Accumulated Depreciation
Total Assets
$ 12,206
28
11,000
37,000
$140,000
715
$ 14,045
260
$ 38,790
900
139,285
13,785
37,890
$251,194
Liabilities
$
Accounts Payable
Wages Payable
Mortgage Payable
Total Liabilities
7,210
790
155,603
$163,603
Owner's Equity
R. Arden, Capital
Total Liabilities and Owner's Equity
87,591
$251,194
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253
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ACCOUNTING CYCLE REVIEW PROBLEM B (concluded)
Wind Sailors
Post-Closing Trial Balance
June 30, 20-ACCOUNT NAME
DEBIT
Cash
Accounts Receivable
Prepaid Insurance
Land
Pool Structure
Accumulated Depreciation, Pool Structure
Fan System
Accumulated Depreciation, Fan System
Sailboats
Accumulated Depreciation, Sailboats
Accounts Payable
Wages Payable
Mortgage Payable
R. Arden, Capital
12,206
28
11,000
37,000
140,000
715
14,045
260
38,790
253,069
254
CREDIT
900
7,210
790
155,603
87,591
253,069
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
SOLUTIONS TO ACTIVITIES
CONSIDER AND COMMUNICATE
Suggested Response
Closing entries are necessary to comply with the matching principle. Closing entries
make it possible to have zero balances in temporary-equity accounts (revenue, expenses,
and Drawing). The closing entries are necessary to separate the revenue and expenses of
one period from those of another period. The closing entries allow the transfer of the
revenue and expenses through the Income Summary account to the Capital account as net
income or net loss, thus updating the owner’s Capital account. Since the closing entries
give the temporary-equity accounts zero balances, these accounts are ready to receive
revenue and expense amounts for the new fiscal period.
CRITICAL THINKING
Suggested Response
a.
First, when the columns are added, it is clear that the balance of the Accounts Payable
account is missing. Subtracting the total of the Consulting Fees and the Capital account
from the total of the debit column, the Accounts Payable balance is $1,627 [$41,048 –
($13,818 + $25,603) = $1,627]. Perhaps you should ask the bookkeeper to add each
column and write the total, rather than copying the total from the first column to the
other. Second, a more serious problem is that the post-closing trial balance still lists the
temporary owner’s equity accounts, which should have been closed and should therefore
be zero.
GENERAL JOURNAL
DESCRIPTION
1
2
3
b.
PAGE
POST.
REF.
DEBIT
CREDIT
Closing Entries
1
Consulting Fees
Income Summary
25,603.00
Income Summary
Wages Expense
Rent Expense
Advertising Expense
Supplies Expense
Insurance Expense
Miscellaneous Expense
27,436.00
2
25,603.00
4
5
6
7
8
9
10
11
4
5
11,994.00
9,600.00
2,582.00
914.00
1,610.00
736.00
12
13
14
17
6
7
8
9
10
11
12
C. Tafoya, Capital
Income Summary
1,833.00
C. Tafoya, Capital
C. Tafoya, Drawing
6,360.00
13
1,833.00
15
16
3
14
15
16
6,360.00
18
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
17
18
255
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
c.
The net loss is $1,833 ($27,436 – $25,603).
d.
Decrease (a net loss plus withdrawals)
e.
Ending Capital is $5,625.
Beginning Capital
Less: Net Loss
Withdrawals
Decrease in Capital
$13,818
$1,833
6,360
8,193
$ 5,625
Ending Capital
f.
The new balance of the post-closing trial balance is $7,252.
Debit
Cash
Accounts Receivable
Prepaid Insurance
Accounts Payable
C. Tafoya, Capital
Credit
3,412
1,693
2,147
—
1,627
5,625
7,252
7,252
A QUESTION OF ETHICS
Suggested Response
Regardless of what you are paid or how tired you are, altering numbers just to make things
balance is at least unethical. You may have to debit (or credit) a miscellaneous account
temporarily. Later you should be able to solve the mystery with the help of your supervisor
or a knowledgeable colleague.
WHAT’S WRONG WITH THIS PICTURE?
Suggested Response
Since the bookkeeper failed to journalize and post the adjusting entries from the work sheet
and made only the closing entries, the accounts requiring adjustment have not been finetuned. This failure will produce unadjusted and, therefore, less accurate financial statements.
It will also send incorrect amounts forward into the next fiscal period.
256
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CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ALL ABOUT YOU SPA: Closing Entries
GENERAL JOURNAL
DATE
1
2
3
20-June
DESCRIPTION
5
PAGE
POST.
REF.
DEBIT
Closing Entries
30 Income from Services
Income Summary
411
313
18,347.00
30 Income Summary
Wages Expense
Rent Expense
Office Supplies Expense
Spa Supplies Expense
Laundry Expense
Advertising Expense
Utilities Expense
Insurance Expense
Depreciation Expense, Spa Equipment
Depreciation Expense, Office Equipment
Miscellaneous Expense
313
511
512
513
514
515
516
517
518
519
520
530
11,570.38
30 Income Summary
A. Valli, Capital
313
311
6,776.62
30 A. Valli, Capital
A. Valli, Drawing
311
312
1,850.00
CREDIT
1
2
18,347.00
4
5
6
7
8
9
10
11
12
13
14
15
16
4
5
7,759.50
1,650.00
368.00
492.00
84.00
397.00
473.00
160.00
64.88
10.00
112.00
17
18
19
22
6
7
8
9
10
11
12
13
14
15
16
17
18
6,776.62
20
21
3
19
20
21
1,850.00
22
23
23
24
24
25
25
26
26
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257
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ALL ABOUT YOU SPA (continued)
GENERAL LEDGER
ACCOUNT
Cash
DATE
20—
June
ACCOUNT
ITEM
1
3
3
3
5
5
7
7
11
14
14
18
21
21
25
28
28
30
30
30
30
ACCOUNT
ITEM
258
CREDIT
15,000.00
960.00
2,000.00
1,650.00
248.00
112.00
1,847.50
2,630.00
873.00
3,703.00
1,847.50
1,200.00
4,758.00
1,847.50
73.00
1,847.50
84.00
5,992.00
1,850.00
225.00
248.00
7
14
21
30
2
2
3
3
3
30
Adj.
CREDIT
15,000.00
14,040.00
12,040.00
10,390.00
10,142.00
10,030.00
8,182.50
10,812.50
9,939.50
13,642.50
11,795.00
10,595.00
15,353.00
13,505.50
13,432.50
11,585.00
11,501.00
17,493.00
15,643.00
15,418.00
15,170.00
CREDIT
325.00
486.00
344.00
109.00
DEBIT
CREDIT
325.00
811.00
1,155.00
1,264.00
ACCOUNT NO.
POST.
REF.
1
4
113
BALANCE
DEBIT
Prepaid Insurance
ITEM
DEBIT
ACCOUNT NO.
POST.
REF.
111
BALANCE
DEBIT
Accounts Receivable
DATE
20—
June
POST.
REF.
1
1
1
1
1
1
2
2
2
2
2
2
3
3
3
3
3
3
3
3
3
DATE
20—
June
ACCOUNT NO.
117
BALANCE
DEBIT
CREDIT
960.00
160.00
DEBIT
CREDIT
960.00
800.00
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ALL ABOUT YOU SPA (continued)
ACCOUNT
Spa Equipment
DATE
20—
June
ACCOUNT
ITEM
1
3
20—
June
ACCOUNT
ACCOUNT
ITEM
30
Adj.
ACCOUNT
3,158.00
4,235.00
POST.
REF.
5
5
3,158.00
7,393.00
Adj.
CREDIT
POST.
REF.
CREDIT
64.88
128
BALANCE
DEBIT
CREDIT
318.00
832.00
POST.
REF.
DEBIT
CREDIT
318.00
1,150.00
129
ACCOUNT NO.
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
10.00
Accounts Payable
3
3
5
5
5
5
11
18
25
DEBIT
64.88
4
ITEM
125
ACCOUNT NO.
Accumulated Depreciation, Office Equipment
30
CREDIT
ACCOUNT NO.
1
2
ITEM
DEBIT
BALANCE
DEBIT
4
ITEM
DATE
20—
June
CREDIT
Office Equipment
DATE
20—
June
BALANCE
DEBIT
Accumulated Depreciation, Spa Equipment
DATE
20—
June
POST.
REF.
1
1
DATE
124
ACCOUNT NO.
10.00
211
ACCOUNT NO.
POST.
REF.
1
1
1
1
2
2
2
2
3
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
2,235.00
492.00
318.00
397.00
832.00
120.00
873.00
1,200.00
73.00
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
2,235.00
2,727.00
3,045.00
3,442.00
4,274.00
4,394.00
3,521.00
2,321.00
2,248.00
259
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ALL ABOUT YOU SPA (continued)
ACCOUNT
Wages Payable
DATE
20—
June
ACCOUNT
ITEM
30
ACCOUNT
ACCOUNT
1
1
30
30
ACCOUNT
ITEM
30
30
260
Closing
ITEM
30
30
30
Closing
Closing
Closing
1
1
5
5
CREDIT
7
7
14
14
21
21
30
30
30
Closing
369.50
DEBIT
15,000.00
18,158.00
24,934.62
23,084.62
1,850.00
ACCOUNT NO.
POST.
REF.
3
5
5
5
5
CREDIT
1,850.00
1,850.00
DEBIT
CREDIT
1,850.00
—
2
2
2
2
2
3
3
3
5
—
313
BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
18,347.00
11,570.38
6,776.62
18,347.00
6,776.62
—
—
ACCOUNT NO.
POST.
REF.
312
BALANCE
DEBIT
ACCOUNT NO.
POST.
REF.
311
CREDIT
15,000.00
3,158.00
6,776.62
Income from Services
ITEM
CREDIT
BALANCE
DEBIT
Income Summary
DATE
20—
June
Closing
Closing
DEBIT
369.50
A. Valli, Drawing
DATE
20—
June
CREDIT
ACCOUNT NO.
POST.
REF.
212
BALANCE
DEBIT
4
ITEM
DATE
20—
June
POST.
REF.
A. Valli, Capital
DATE
20—
June
Adj.
ACCOUNT NO.
411
BALANCE
DEBIT
CREDIT
DEBIT
2,630.00
325.00
3,703.00
486.00
4,758.00
344.00
5,992.00
109.00
18,347.00
—
CREDIT
2,630.00
2,955.00
6,658.00
7,144.00
11,902.00
12,246.00
18,238.00
18,347.00
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ALL ABOUT YOU SPA (continued)
ACCOUNT
Wages Expense
DATE
20—
June
ACCOUNT
ITEM
7
14
21
28
30
30
20—
June
ACCOUNT
ACCOUNT
30
30
ACCOUNT
CREDIT
1,847.50
1,847.50
1,847.50
1,847.50
369.50
7,759.50
5
5
30
Closing
POST.
REF.
3
30
Closing
1
5
CREDIT
1,650.00
1,650.00
28
30
Closing
1,847.50
3,695.00
5,542.50
7,390.00
7,759.50
—
—
512
DEBIT
CREDIT
1,650.00
—
—
513
ACCOUNT NO.
POST.
REF.
1
2
5
BALANCE
DEBIT
CREDIT
248.00
120.00
368.00
DEBIT
CREDIT
248.00
368.00
—
—
514
ACCOUNT NO.
POST.
REF.
1
5
BALANCE
DEBIT
CREDIT
492.00
492.00
Laundry Expense
ITEM
CREDIT
BALANCE
DEBIT
Spa Supplies Expense
ITEM
DEBIT
ACCOUNT NO.
Closing
ITEM
DATE
20—
June
BALANCE
DEBIT
Office Supplies Expense
DATE
20—
June
2
2
3
3
4
5
Adj.
Closing
ITEM
DATE
20—
June
POST.
REF.
Rent Expense
DATE
511
ACCOUNT NO.
DEBIT
CREDIT
492.00
—
—
515
ACCOUNT NO.
POST.
REF.
3
5
BALANCE
DEBIT
CREDIT
84.00
84.00
DEBIT
CREDIT
84.00
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
—
261
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ALL ABOUT YOU SPA (continued)
ACCOUNT
Advertising Expense
DATE
20—
June
ACCOUNT
ITEM
5
30
ACCOUNT
ACCOUNT
30
30
30
ACCOUNT
ACCOUNT
30
30
262
397.00
397.00
30
30
POST.
REF.
4
5
POST.
REF.
Adj.
Closing
CREDIT
225.00
248.00
473.00
30
30
4
5
POST.
REF.
Adj.
Closing
CREDIT
160.00
160.00
5
30
Closing
DEBIT
4
5
225.00
473.00
—
DEBIT
1
5
517
—
518
CREDIT
160.00
—
—
519
BALANCE
DEBIT
CREDIT
64.88
64.88
DEBIT
CREDIT
64.88
—
ACCOUNT NO.
—
520
BALANCE
DEBIT
CREDIT
10.00
10.00
DEBIT
CREDIT
10.00
—
ACCOUNT NO.
POST.
REF.
—
CREDIT
ACCOUNT NO.
Miscellaneous Expense
ITEM
397.00
—
BALANCE
DEBIT
Depreciation Expense, Office Equipment
ITEM
CREDIT
ACCOUNT NO.
Adj.
Closing
ITEM
DEBIT
BALANCE
DEBIT
Depreciation Expense, Spa Equipment
DATE
20—
June
3
3
5
Closing
ITEM
DATE
20—
June
CREDIT
ACCOUNT NO.
POST.
REF.
516
BALANCE
DEBIT
Insurance Expense
DATE
20—
June
1
5
Closing
ITEM
DATE
20—
June
POST.
REF.
Utilities Expense
DATE
20—
June
ACCOUNT NO.
—
530
BALANCE
DEBIT
CREDIT
112.00
112.00
DEBIT
112.00
—
CREDIT
—
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5
Closing Entries and the Post-Closing Trial Balance
ALL ABOUT YOU SPA (concluded)
All About You Spa
Post-Closing Trial Balance
June 30, 20-ACCOUNT NAME
Cash
Accounts Receivable
Prepaid Insurance
Spa Equipment
Accumulated Depreciation, Spa Equipment
Office Equipment
Accumulated Depreciation, Office Equipment
Accounts Payable
Wages Payable
A. Valli, Capital
DEBIT
CREDIT
15,170
1,264
800
7,393
65
1,150
25,777
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
10
2,248
370
23,085
25,777
263