Option #1: Preparing Adjusting Entries in a Worksheet
Following is the unadjusted trial balance of Skylar Gaming, Inc. at the end of its first year of operations, December 31, 20x7:
Account Name |
DR. |
CR. |
Cash |
$71,550 |
|
Accounts Receivable |
$25,200 |
|
Supplies |
$550 |
|
Prepaid Insurance |
$12,000 |
|
Equipment |
$31,750 |
|
Accumulated Depreciation-Equipment |
$4,050 |
|
Accounts Payable |
$6,700 |
|
Salaries Payable |
$0 |
|
Unearned Revenue |
$2,200 |
|
Common Stock |
$45,700 |
|
Retained Earnings |
$23,850 |
|
Dividends |
$3,500 |
|
Revenue |
$80,750 |
|
Depreciation Expense-Equipment |
$2,000 |
|
Salaries Expense |
$4,750 |
|
Insurance Expense |
$3,100 |
|
Rent Expense |
$4,200 |
|
Supplies Expense |
$2,500 |
|
Utilities Expense |
$2,150 |
|
$163,250 |
$163,250 |
The following additional information is available:
Required:
ADJUSTING ENTRIES: | |||
1) | Salaries expense | 2000 | |
Salaries payable | 2000 | ||
Unearned revenue | 2000 | ||
Revenue | 2000 | ||
Accounts receivable | 500 | ||
Revenue | 500 | ||
Depreciation expense-Equipment | 1025 | ||
Accumulated expense-Equipment | 1025 | ||
Insurance expense | 1000 | ||
Prepaid insurance | 1000 | ||
Supplies expense (550-125) | 425 | ||
Supplies | 425 | ||
2) | CLOSING ENTRIES: | ||
Revenue | 83250 | ||
Income summary | 83250 | ||
(To close revenue accounts) | |||
Income summary | 23150 | ||
Depreciation Expense-Equipment | 3025 | ||
Salaries Expense | 6750 | ||
Insurance Expense | 4100 | ||
Rent Expense | 4200 | ||
Supplies Expense | 2925 | ||
Utilities Expense | 2150 | ||
(To close expense accounts) | |||
Income summary | 60100 | ||
Retained earnings | 60100 | ||
(To close income summary) | |||
Retained earnings | 3500 | ||
Dividend | 3500 | ||
(To close dividend account) |
Unadjusted Trial Balance | Adjustments | Aadjusted Trial Balance | ||||
Account Name | DR. | CR. | DR. | CR. | DR. | CR. |
Cash | 71550 | 71550 | ||||
Accounts Receivable | 25200 | 500 | 25700 | |||
Supplies | 550 | 425 | 125 | |||
Prepaid Insurance | 12000 | 1000 | 11000 | |||
Equipment | 31750 | 31750 | ||||
Accumulated Depreciation-Equipment | 4050 | 1025 | 5075 | |||
Accounts Payable | 6700 | 6700 | ||||
Salaries Payable | 0 | 2000 | 2000 | |||
Unearned Revenue | 2200 | 2000 | 200 | |||
Common Stock | 45700 | 45700 | ||||
Retained Earnings | 23850 | 23850 | ||||
Dividends | 3500 | 3500 | ||||
Revenue | 80750 | 2500 | 83250 | |||
Depreciation Expense-Equipment | 2000 | 1025 | 3025 | |||
Salaries Expense | 4750 | 2000 | 6750 | |||
Insurance Expense | 3100 | 1000 | 4100 | |||
Rent Expense | 4200 | 4200 | ||||
Supplies Expense | 2500 | 425 | 2925 | |||
Utilities Expense | 2150 | 2150 | ||||
163250 | 163250 | 6950 | 6950 | 166775 | 166775 | |
Net income | ||||||
INCOME STATEMENT | ||||||
Revenue | 83250 | |||||
Operating expenses: | ||||||
Depreciation Expense-Equipment | 3025 | |||||
Salaries Expense | 6750 | |||||
Insurance Expense | 4100 | |||||
Rent Expense | 4200 | |||||
Supplies Expense | 2925 | |||||
Utilities Expense | 2150 | |||||
Total operating expenses | 23150 | |||||
Net operating income | 60100 | |||||
RETAINED EARNINGS | ||||||
Beginning balance | 23850 | |||||
Add: Net income for the year | 60100 | |||||
Less: Dividends | 3500 | |||||
Ending balance | 80450 | |||||
BALANCE SHEET | ||||||
Current Assets: | ||||||
Cash | 71550 | |||||
Accounts receivable | 25700 | |||||
Supplies | 125 | |||||
Prepaid insurance | 11000 | |||||
Total current assets | 108375 | |||||
Non-Current assets: | ||||||
Equipment | 31750 | |||||
Accumulated Depreciation-Equipment | 5075 | 26675 | ||||
Total assets | 135050 | |||||
Current Liabilities: | ||||||
Accounts Payable | 6700 | |||||
Salaries Payable | 2000 | |||||
Unearned Revenue | 200 | |||||
Total current liabilities | 8900 | |||||
Shareholders' equity: | ||||||
Common Stock | 45700 | |||||
Retained Earnings | 80450 | 126150 | ||||
Total liabilities & shareholders' equity | 135050 |
Option #1: Preparing Adjusting Entries in a Worksheet Following is the unadjusted trial balance of Skylar...
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