Question

need to make adjusting and closingent the end of every 4.63 (LO 1, 3) AP Nazari Electrical Services has an August 31 fiscal year end. The company's balance prior to adjustments follows: NAZARI ELECTRICAL SERVICES Trial Balance August 31, 2021 Credit Debit $ 13,870 23,400 18,000 108,000 $ 38,250 98,000 Cash Supplies Debt investments Equipment Accumulated depreciation--equipment Vehicles Accumulated depreciation-vehicles Accounts payable Unearned revenue Notes payable A. Nazari, capital A. Nazari, drawings Service revenue Interest revenue Repairs expense Insurance expense Interest expense Rent expense Salaries expense 42,875 7,115 4,500 48,000 68,175 32,400 180,115 360 25,235 8,550 2,535 18,900 40,500 $389,390 $389,390 Additional information: 1. The equipment has an expected useful life of 12 years. The vehicles' expected useful life is eight years. 2. A physical count showed $1,500 of supplies on hand at August 31, 2021. 3. As at August 31, 2021, there was $2,500 of revenue received in advance and the related services have not yet been performed.

Answer 1

a. In the books of Nazari Electrical Services:

Adjusting entries:

Date	Account Titles	Debit	Credit
Aug 31, 2021		$	$
1.	Depreciation Expense	21,250
	Accumulated Depreciation : Equipment		9,000
	Accumulated Depreciation : Vehicles		12,250
2.	Supplies Expense	21,900
	Supplies		21,900
3.	Unearned Revenue	2,000
	Service Revenue		2,000
4.	Interest Receivable ( $18,000 x 4 % x 4/12 )	240
	Interest Revenue		240
5.	Salaries Expense	1,850
	Salaries Payable		1,850
6.	No adjustment needed	0	0
7.	No adjustment needed	0	0

b.

Nazari Electrical Services Income Statement For the year ended August 31, 2021
Revenues
Service Revenue	$ 182,115
Interest Revenue	600
Total Revenues		$ 182,715
Expenses
Salaries Expense	42,350
Rent Expense	18,900
Supplies Expense	21,900
Insurance Expense	8,550
Repairs Expense	25,235
Depreciation Expense	21,250
Interest Expense	2,535
Total Expenses		140,720
Net Profit		$ 41,995

c. i.

Nazari Electrical Services Statement of Owner's Equity For the year ended August 31, 2021
A. Nazari, Capital, beginning	65,175
Additional capital introduced	3,000
Net Income	41,995
Less: A. Nazari, Drawiings	(32,400)
A. Nazari, Capital, ending	$ 77,770

c.ii.

Nazari Electrical Services Balance Sheet August 31, 2021
Assets
Current Assets
Cash		$13,870
Supplies		1,500
Interest Receivable		240
Total Current Assets			$ 15,610
Long-term Investments			18,000
Property Plant and Equiment
Equipment	108,000
Accumulated Depreciation	(47,250)	60,750
Vehicles	98,000
Accumulated Depreciation	(55,125)	42,875
Property Plant and Equipment, net			103,625
Total Assets			$ 137,235
Liabilities
Current Liabilities
Accounts Payable		$ 7,115
Salaries Payable		1,850
Unearned Revenue		2,500
Total Current Liabilities			11,465
Long-term Notes Payable			48,000
Total Liabilities			59,465
Owner's Equity
A. Nazari, Capital			77,770
Total Liabilities and Owner's Equity			$ 137,235

d.

Date	Account Titles	Debit	Credit
		$	$
August 31, 2021	Service Revenue	$ 182,115
	Interest Revenue	600
	Income Summary		182,715
	To close revenue accounts
August 31, 2021	Income Summary	140,720
	Salaries Expense		42,350
	Rent Expense		18,900
	Supplies Expense		21,900
	Insurance Expense		8,550
	Repairs Expense		25,235
	Depreciation Expense		21,250
	Interest Expense		2,535
	To close expense accounts
August 31, 2021	Income Summary	41,995
	A. Nazari, Capital		41,995
	To close income summary
August 31, 2021	A. Nazari, Capital	32,400
	A. Nazari, Drawings		32,400
	To close drawings account