Question

The Account Balances of Bryan company as of June 30, the end of the current fiscal year, are as follows

	A	B		C
5	Trial Balance
6	Account Ballance		Debit		Credit
7	Cash		5,491.00
8	Accounts receivable		624.00
9	Supplies		397.00
10	Prepaid		1,280.00
11	Equipment		6,497.00
12	Accumulated Depreciation, equipment				2,672.00
13	Van		10,989.00
14	Accumulated depreciation, Van				4,368.00
15	Accounts payable				1,036.00
16	B Bryan, capital				18,583.00
17	B Bryan, Drawaing		18,000.00
18	Fees earned				38,41700
19	Salaries expense		1,887.00
20	Advertising expense		1,887.00
21	Van operating expense		462.00
22	Utilities expense		685.00
23	Miscellaneous expense		164.00
			65,076.00		65,076.00

Required;

1. data for the adjustments are as follows

1. expired or used up insurance, $495
2. depreciation expense on equipment $670
3. depreciation expense on the van $1,190
4. salary accrued(earned) since the last payday, $540(owed and to be paid on the next payday).
5. Supplies used during the period, $97

2. Journalize the adjusting entries
3. Prepare an income statement
4. Prepare a statement of owner’s equity. Assume that there was an additional investment of $2,000 on June 10.
5. Prepare Balance sheet
6. Journalize the closing entries using the four steps in the correct sequence.

Answer 1

1.

Journal Entries Credit Date 30th June Debit 495 Particulars Insurance Expesnes Prepaid Expesnes To record insurance expenses used up from Prepaid expesnes 495 Debit Credit Date 30th June 670 Particulars Depreciation expesnes on Equipment Accumulated Depreciation, equipment To record depreciation 670 Date Credit Particulars Depreciation expesnes on Van Accumulated Depreciation, Van Debit 1,190 30th June 1,190 To record depreciation Credit Date 30th June Particulars Salary Expesnes Salary Payable Debit 540 540 Salary payment accrued for next pay day Date Credit Debit 97 30th June Particulars Supplies expesnes Supplies To record used supplies 97

2.

Income Statement Amounts 38417 Fees Earned Expesnes Salaries Expenses 2427 Advertising Expresnes Van operation expesnes Utilities Expesnes Miscellaneous Expenses Insurance Expenses Supplies Depreciation Exp Total Expesnes Net income 1,887 462 685 164 495 1860 8077 30340

Statement of Retained Earnings Amount Beginning Retained Earnings, Jan 1 Net income from month (from income statement) Total increase 30340 30340 Dividends (or withdrawals for non-corporations) Ending Retained Earnings, June 30 - 18000 12340

Balance Sheet
Assets
Cash	24204
Accounts receivable, net	624
Supplies on hand	300
Prepaid expenses	785
Equipment	6,497
Accumulated depreciation – equipment	-3,342
Van	10,989
Accumulated depreciation – Van	-5,558
Total assets	34499
Liabilities and stockholders’ equity
Accounts payable	1036
Salaries payable	540
B Bryan Capital	20,583
Retained earnings	12,340
Total liabilities and stockholders’ equity	34499

Cash Balance is taken as below  in BS as trial balance debit & credit is not matching there is difference of 16713 ( 65076-48363)

Cash Balance workings Balance as given Difference in trial balance Addional equity investment Total Cash Balance 5491 16713 2000 24204

ccount Ballance 7 Cash 8 Accounts receivable 9 Supplies 10 Prepaid 11 Equipment 12 Accumulated Depreciation, equipment 13 Van 14 Accumulated depreciation, Van Debit Credit 5,491.00 624 397 1,280.00 6,497.00 2,672.00 10,989.00 4,368.00 1,036.00 18,583.00 15 Accounts payable 16 B Bryan, capital 17 B Bryan, Drawaing 18 Fees earned 19 Salaries expense 18,000.00 38,417 1,887.00 20 Advertising expense 21 Van operating expense 22 Utilities expense 23 Miscellaneous expense 1,887.00 462 685 164 48,363.00 65,076.00

3. Closing entries

1 Close the revenue accounts with credit balances. We have 1 revenue accounts with a credit balance Debit Credit 38,417 Account Fees Earnes Income Summary To close revenue accounts with credit balances. 38471 2 Close contra-revenue accounts and expense accounts with debit balances. Debit Credit Account Income Summary 8077 2427 Salaries Expenses Advertising Expresnes Van operation expesnes Utilities Expesnes Miscellaneous Expenses 1,887 462 Insurance Expenses Supplies Depreciation Exp To close contra-revenue and expense accounts. 1860 3 Close income summary into retained earnings. We will take the difference between income summary in Credit Debit 30,340 Account Income Summary (38417-8077) Retained Earnings To close net income into retained earnings. 30340 4 Close the debit balance of dividends/ Drwaings into retained earnings. Remember, dividends/Drawings Account Debit Credit Retained Earnings 18,000 Dividends 18,000 To close dividends/ drawings into retained earnings.