Question

At year end 31/12/2019, the following information are avaiable for you. a. Insurance expired during the year, $2,000. b. Depreciation on furniture and equipment, 15000 per year c. A count of supplies on December 31, 2018, indicates that supplies of E5800 are on hand. d. Adam Company performed disinfecting services for a client in December 2018. The client will be billed €3,000. e. Salaries of 8000 are unpaid and due. Second: Prepare the necessary adjusting entries and then prepare the trial balance after the adjusting entries. Third: Prepare the Income Statement, Retained Eamings statement, and financial positon statement at 31/12/2019 Fourth: Prepare the necessary closing entries. Fifth: prepare a post-closing trial balance

Third Step

Answer 1

Second:

	Date	Account title and explanation	Debit	Credit
a	31/12/2019	Insurance expense	$2,000
		Prepaid insurance		$2,000
		[To record insurance expense]
b	31/12/2019	Depreciation expense	$15,000
		Accumulated depreciation-equipment		$15,000
		[To record depreciation expense]
c	31/12/2019	Supplies expense [10,800-5,800]	$5,000
		Supplies		$5,000
		[To record supplies expense]
d	31/12/2019	Accounts receivable	$3,000
		Service revenue		$3,000
		[To record accrued revenue earned]
e	31/12/2019	Salaries expense	$8,000
		Salaries payable		$8,000
		[To record accrued salaries expense]

Adjusted Trial Balance
For the year ended Dec 31,2019
	Debit	Credit
Cash	$12,000
Accounts receivable	$48,200
Land Purchase	$43,200
Supplies	$5,800
Equipment	$110,000
Accumulated depreciation-equipment		$15,000
Accounts payable		$10,800
Salaries payable		$8,000
Share capital		$99,000
Service revenue		$313,000
Prepaid insurance	$2,800
Utilities expense	$12,800
Salaries expense	$58,000
Rent expense	$131,000
Insurance expense	$2,000
Depreciation expense	$15,000
Supplies expense	$5,000
Total	$445,800	$445,800

Third:

Income statement
For the year ended Dec 31,2019
Service revenue		$313,000
Expenses:
Prepaid insurance	$2,800
Utilities expense	$12,800
Salaries expense	$58,000
Rent expense	$131,000
Insurance expense	$2,000
Depreciation expense	$15,000
Supplies expense	$5,000
Total expenses		$226,600
Net income		$86,400
Statement of retained earnings
For the year ended Dec 31,2019
Retained earnings as on Jan 1,2019		0
Net income		$86,400
Retained earnings as on Jan 1,2019		$86,400
Balanace Sheet
At Dec 31,2019
Assets
Cash		$12,000
Accounts receivable		$48,200
Land Purchase		$43,200
Supplies		$5,800
Equipment		$110,000
Accumulated depreciation-equipment		($15,000)
Total assets		$204,200
Liabilities
Accounts payable		$10,800
Salaries payable		$8,000
Total liabilities		$18,800
Stockholders' equity
Share capital		$99,000
Retained earnings		$86,400
Total stockholders' equity		$185,400
Total liabilities and stockholders' equity		$204,200

Fourth:

Date	Account title and explanation	Debit	Credit
31/12/2019	Service revenue	$313,000
	Income summary		$313,000
	[To close revenue accounts]
31/12/2019	Income summary	$226,600
	Prepaid insurance		$2,800
	Utilities expense		$12,800
	Salaries expense		$58,000
	Rent expense		$131,000
	Insurance expense		$2,000
	Depreciation expense		$15,000
	Supplies expense		$5,000
	[To close expenses account]
31/12/2019	Income summary [313,000-226,000]	$86,400
	Retained earnings		$86,400
	[To close income summary account]

Fifth:

Post-closiong Trial Balance
For the year ended Dec 31,2019
	Debit	Credit
Cash	$12,000
Accounts receivable	$48,200
Land Purchase	$43,200
Supplies	$5,800
Equipment	$110,000
Accumulated depreciation-equipment		$15,000
Accounts payable		$10,800
Salaries payable		$8,000
Share capital		$99,000
Retained earnings		$86,400
Total	$219,200	$219,200