Question

The unadjusted trial balance of Epicenter Laundry at June 30, 2019, the end of the fiscal year, follows:

Epicenter Laundry

UNADJUSTED TRIAL BALANCE

June 30, 2019

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	11,000.00
2	Laundry Supplies	21,500.00
3	Prepaid Insurance	9,600.00
4	Laundry Equipment	232,600.00
5	Accumulated Depreciation		125,400.00
6	Accounts Payable		11,800.00
7	Sophie Perez, Capital		105,600.00
8	Sophie Perez, Drawing	10,000.00
9	Laundry Revenue		232,200.00
10	Wages Expense	125,200.00
11	Rent Expense	40,000.00
12	Utilities Expense	19,700.00
13	Miscellaneous Expense	5,400.00
14	Totals	475,000.00	475,000.00

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

•	Laundry supplies on hand at June 30 are $3,600.
•	Insurance premiums expired during the year are $5,700.
•	Depreciation of laundry equipment during the year is $6,500.
•	Wages accrued but not paid at June 30 are $1,100.

Required:

1.	For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as “Bal.”
2.	(Optional) On your own paper or spreadsheet, enter the unadjusted trial balance on an end-of-period work sheet and complete the work sheet.
3.	a. Journalize the adjusting entries on page 10 of the journal. Adjusting entries are recorded on June 30. b. Post the adjusting entries. In the T accounts, identify the adjustments by “Adj.” and the new balances as “Adj. Bal.” (Be sure to add a posting reference to the journal.)
4.	Prepare an adjusted trial balance.
5.	Prepare an income statement, a statement of owner’s equity, and a balance sheet.*
6.	a. Journalize the closing entries on page 11 of the journal. b. Post the closing entries. In the T accounts, identify the closing entries by “Clos.” (Be sure to add a posting reference to the journal.)
7.	Prepare a post-closing trial balance. *Be sure to read the instructions for each financial statement carefully.

Answer 1

1.

Cash
Bal.	11,000
Laundry Supplies
Bal.	21,500	Adj.	17,900
Adj. bal.	3,600
Prepaid Insurance
Bal	9,600	Adj.	5,700
Adj. bal.	3,900
Laundry Equipment
Bal.	232,600
Accumulated Depreciation
		Bal.	125,400
		Adj.	6,500
		Adj. bal.	131,900
Accounts Payable
		Bal.	11,800
Wages Payable
		Bal.	0
		Adj.	1,100
		Adj. bal.	1,100
Sophie Perez, Capital
Sophie Perez, Drawing	10,000	Bal.	105,600
June 30	126,300	June 30	232,200
June 30	40,000
June 30	17,900	Bal.	106,300
June 30	5,700
June 30	6,500
June 30	19,700
June 30	5,400
Sophie Perez, Drawing
Bal.	10,000	Close	10,000
Laundry Revenue
Close	232,200	Bal.	232,200
Wages Expense
Bal.	125,200
Adj.	1,100
Adj. bal.	126,300	Close	126,300
Rent Expense
Bal.	40,000	Close	40,000
Laundry Supplies Expense
Bal.	0
Adj.	17,900
Adj. bal.	17,900	Close	17,900
Insurance Expense
Bal.	0
Adj.	5,700
Adj. bal.	5,700	Close	5,700
Depreciation Expense
Bal.	0
Adj.	6,500
Adj. bal.	6,500	Close	6,500
Utilities Expense
Bal.	19,700	Close	19,700
Miscellaneous Expense
Bal.	5,400	Close	5,400

3.

Date	General Journal	Debit	Credit
2019		$	$
June 30	Laundry Supplies Expense	17,900
	Laundry Supplies		17,900
June 30	Insurance Expense	5,700
	Prepaid Insurance		5,700
June 30	Depreciation Expense	6,500
	Accumulated Depreciation		6,500
June 30	Wages Expense	1,100
	Wages Payable		1,100

4.

Epicentre Laundry Adjusted Trial Balance June 30, 2019
Account Titles	Debit	Credit
	$	$
Cash	11,000
Laundry Supplies	3,600
Prepaid Insurance	3,900
Laundry Equipment	232,600
Accumulated Depreciation		131,900
Accounts Payable		11,800
Wages Payable		1,100
Sophie Perez, Capital		105,600
Sophie Perez, Drawing	10,000
Laundry Revenue		232,200
Wages Expense	126,300
Laundry Supplies Expense	17,900
Insurance Expense	5,700
Rent Expense	40,000
Depreciation Expense	6,500
Utilities Expense	19,700
Miscellaneous Expense	5,400
Totals	$ 482,600	$ 482,600

5.

Epicenter Laundry Income Statement For the year ended June 30, 2019
Laundry Revenue		$ 232,200
Expenses
Wages Expense	$ 126,300
Laundry Supplies Expense	17,900
Insurance Expense	5,700
Rent Expense	40,000
Depreciation Expense	6,500
Utilities Expense	19,700
Miscellaneous Expense	5,400
Total Expenses		221,500
Net Income		$ 10,700

Epicenter Laundry Statement of Owner's Equity For the year ended June 30, 2019
Sophie Perez, Capital, beginning	$ 105,600
Add: Net income	10,700
Less: Sophie Perez, Drawing	(10,000)
Sophie Perez, Capital, ending	$ 106,300

Epicenter Laundry Balance Sheet June 30, 2019
Assets
Cash	$ 11,000
Laundry Supplies	3,600
Prepaid Insurance	3,900
Laundry Equipment	232,600
Accumulated Depreciation	(131,900)
Total Assets	$ 119,200
Liabilities
Accounts Payable	11,800
Wages Payable	1,100
Total Liabilities	12,900
Owner's Equity
Sophie Perez, Capital	106,300
Total Liabilities and Owner's Equity	$ 119,200

6.

Date	General Journal	Debit	Credit
		$	$
June 30, 2019	Laundry Revenue	232,200
	Sophie Perez, Capital		232,200
	To close revenue account
June 30, 2019	Sophie Perez, Capital	221,500
	Wages Expense		126,300
	Laundry Supplies Expense		17,900
	Insurance Expense		5,700
	Rent Expense		40,000
	Depreciation Expense		6,500
	Utilities Expense		19,700
	Miscellaneous Expense		5,400
	To close expense accounts
June 30, 2019	Sophie Perez, Capital	10,000
	Sophie Perez, Drawing		10,000
	To close drawings account

7.

Epicenter Laundry Post Closing Trial Balance June 30, 2019
Account Titles	Debit	Credit
	$	$
Cash	11,000
Laundry Supplies	3,600
Prepaid Insurance	3,900
Laundry Equipment	232,600
Accumulated Depreciation		131,900
Accounts Payable		11,800
Wages Payable		1,100
Sophie Perez, Capital		106,300
Totals	$ 251,100	$ 251,100