Question

PART 1

Required information [The following information applies to the questions displayed below.) Starbooks Corporation provides an online bookstore for electronic books. The following is a simplified list of accounts and amounts reported in its accounting records. The accounts have normal debit or credit balances. Assume the year ended on September 30, 2018. 604 304 904 Accounts Payable Accounts Receivable Accumulated Depreciation Cash Common Stock Deferred Revenue Depreciation Expense Equipment Income Tax Expense Interest Revenue Notes Payable (long-term) Notes Payable (short-term) Prepaid Rent Rent Expense Retained Earnings Salaries and Wages Expense Service Revenue Supplies Supplies Expense Travel Expense 304 204 204 304 3, 204 304 104 204 504 104 404 1,504 2, 204 6,212 504 204 2,604 Required: 1-a. Prepare an adjusted trial balance at September 30, 2018.

PART 2

PART 3

Answer 1

Solution:

1-a) Adjusted Trial Balance

STARBOOKS CORPORATION
Adjusted Trial Balance
At September 30, 2018
Account titles	Debit	Credit
Cash	$                       304	$                         -
Accounts Receivable	$                       304	$                         -
Supplies	$                       504	$                         -
Prepaid Rent	$                       104	$                         -
Equipment	$                   3,204	$                         -
Accumulated Depreciation	$                          -	$                     904
Accounts Payable	$                          -	$                     604
Deferred Revenue	$                          -	$                     204
Notes Payable (short term)	$                          -	$                     504
Notes Payable (long term)	$                          -	$                     204
Common Stock	$                          -	$                     204
Retained Earnings	$                          -	$                  1,504
Service Revenue	$                          -	$                  6,212
Interest Revenue	$                          -	$                     104
Travel Expense	$                   2,604	$                         -
Salaries and wages expense	$                   2,204	$                         -
Rent Expense	$                       404	$                         -
Depreciation Expense	$                       304	$                         -
Supplies Expense	$                       204	$                         -
Income Tax expense	$                       304	$                         -
Total	$                 10,444	$               10,444

1-b) The answer is NO

Explanation:

The ending balance of retained earnings is $ 1,796

Retained Earnings
Dividends	$           -	Beg Balance	$    1,504
		Net Income	$        292
		End Balance	$    1,796

Notes:

1) Net income of $ 292 is nothing but differences between Revenues and Expenses given in the question.

Part 2: Closing Entry at September 30, 2018.

Date	General Journal	Debit	Credit
Sep 30,2018	Service Revenue	$                6,212
	Interest Revenue	$                    104
	Retained Earnings( Net Income)		$                      292
	Travel Expense		$                   2,604
	Salaries and wages expense		$                   2,204
	Rent Expense		$                      404
	Depreciation Expense		$                      304
	Supplies Expense		$                      204
	Income Tax expense		$                      304
	( Being net income balance transferred to retained earnings)

Part 3: Post Closing Trial Balance at September 30, 2018

STARBOOKS CORPORATION
Post Closing Trial Balance
At September 30, 2018
Account titles	Debit	Credit
Cash	$                     304	$                     -
Accounts Receivable	$                     304	$                     -
Supplies	$                     504	$                     -
Prepaid Rent	$                     104	$                     -
Equipment	$                  3,204	$                     -
Accumulated Depreciation	$                         -	$                 904
Accounts Payable	$                         -	$                 604
Deferred Revenue	$                         -	$                 204
Notes Payable (short term)	$                         -	$                 504
Notes Payable (long term)	$                         -	$                 204
Common Stock	$                         -	$                 204
Retained Earnings	$                         -	$              1,796
Service Revenue	$                         -	$                     -
Interest Revenue	$                         -	$                     -
Travel Expense	$                         -	$                     -
Salaries and wages expense	$                         -	$                     -
Rent Expense	$                         -	$                     -
Depreciation Expense	$                         -	$                     -
Supplies Expense	$                         -	$                     -
Income Tax expense	$                         -	$                     -
Total	$                  4,420	$              4,420