Question

The following shows the unadjusted trial balance relating to Mark Wall Consulting Services for the accounting period ending December 31, 2007. Mark Wall Consulting Trial Balance as at December 31 2007 Requirements: 1. Journalize the following adjusting entries and prepare an adjusted trial balance as at December 31 2007 a. Supplies used during the period - $5000 b. All of the prepaid insurance expired at year end c. Depreciation expense – Building : $50,000 d. Depreciation expense – Furniture & Fixtures: $10,000 e. Accrued salary expense: $15,000 f. Unearned consultancy revenue at the end of the period: $10,000 A/C Name D R CR D R CR Cash 60,000 60,000 Accounts receivable 50,000 50,000 Supplies 10,000 5,000 Prepaid Insurance 120,000 - Buliding 500,000 500,000 Accumulated depreciation - Building 300,000 350,000 Furniture and Fixtures 100,000 100,000 Accumulated depreciation - Furniture and Fittings 40,000 50,000 Accounts payable 20,000 20,000 Salary Payable 15,000 Unearned Consultancy revenue 80,000 10,000 Mark Wall, Capital 240,000 240,000 Mark Wall, Withdrawal 250,000 250,000 Consultancy revenue 625,000 695,000 Salary expense 160,000 175,000 Supplies Expense 5,000 Insurance Expense 120,000 Utilities Expense 25,000 25,000 Depreciation expense - Furniture and Fixtures 10,000 Depreciation expense - Building 50,000 Advertising expense 30,000 30,000 1,305,000 1,305,000 1,380,000 1,380,000 Unadjusted Trial Balance Adjusted Trial Balance 2. Prepare the Income statement for the year ended December 31st, 2007 3. Prepare the Statement of owner’s equity for December 31st, 2007 4. Prepare the Balance sheet as at December 31st, 2007 5. Prepare the Closing entries 6. Prepare a Post-closing Trial Balance

Answer 1

1. Preparing Adjusting Entries:-

Mark Wall Consulting Services

Adjusting Entries

For the Year Ended December 31,2007

Date	Accounts	Debit	Credit
December 31	Supplies Expense	$5,000
	Supplies		$5,000
December 31	Insurance Expense	$120,000
	Prepaid Insurance		$120,000
December 31	Depreciation Expense, Building	$50,000
	Accumulated Depreciation, Building		$50,000
December 31	Depreciation Expense, Furniture and Fixtures	$10,000
	Accumulated Depreciation, Furniture and Fixtures		$10,000
December 31	Salaries Expense	$15,000
	Salaries Payable		$15,000
December 31	Unearned Consultancy Revenue ($80,000-$10,000)	$70,000
	Consultancy Revenue		$70,000

Mark Wall Consulting Services

Adjusted Trial Balance

December 31,2007

Accounts	Amount	Amount
Cash	$60,000
Accounts Receivable	50,000
Supplies	5,000
Prepaid Insurance	0
Building	500,000
Accumulated Depreciation, Building		$350,000
Furniture and Fixtures	100,000
Accumulated Depreciation, Furniture and Fixtures		50,000
Accounts Payable		20,000
Salary Payable		15,000
Unearned Consultancy Revenue		10,000
Mark Wall, Capital		240,000
Mark Wall, Withdrawals	250,000
Consultancy Revenue		695,000
Salary Expense	175,000
Supplies Expense	5,000
Insurance Expense	120,000
Utilities Expense	25,000
Depreciation Expense, Furniture and Fixtures	10,000
Depreciation Expense, Building	50,000
Advertising Expense	30,000
Totals	$1,380,000	$1,380,000

2. Preparing Income Statement:-

Mark Wall Consulting Services

Income Statement

For the year ended December 31,2007

Accounts	Amount	Amount
Consultancy Revenue		$695,000
Expenses:-
Salary Expense	$175,000
Supplies Expense	5,000
Insurance Expense	120,000
Utilities Expense	25,000
Depreciation Expense, Furniture and Fixtures	10,000
Depreciation Expense, Building	50,000
Advertising Expense	30,000
Total Expenses		$(415,000)
Net Income		$280,000

3. Preparing Statement of Owner's Equity:-

Mark Wall Consulting Services

Statement of Owner's Equity

For the year ended December 31,2007

Accounts	Amount
Mark Wall, Capital	$240,000
Add:- Net Income	280,000
	$520,000
Less:- Mark Wall, Withdrawals	(250,000)
Mark Wall, Capital Ending	$270,000

4. Preparing Balance Sheet:-

Mark Wall Consulting Services

Balance Sheet

December 31,2007

Accounts	Amount	Amount
Assets:-
Current Assets:-
Cash	$60,000
Accounts Receivable	50,000
Supplies	5,000
Prepaid Insurance	0
Total Current Assets		$115,000
Fixed Assets:-
Building	$500,000
Less:- Accumulated Depreciation, Building	(350,000)
Furniture and Fixtures	100,000
Less:- Accumulated Depreciation, Furniture and Fixtures	(50,000)
Total Fixed Assets		$200,000
Total Assets		$315,000
Liabilities and Owner's Equity:-
Current Liabilities:-
Accounts Payable	$20,000
Salary Payable	15,000
Unearned Consultancy Revenue	10,000
Total Current Liabilities		$45,000
Owner's Equity:-
Mark Wall, Capital Ending	$270,000
Total Owner's Equity		$270,000
Total Liabilities and Owner's Equity		$315,000

5. Preparing Closing Entries:-

Mark Wall Consulting Services

Closing Entries

December 31,2007

Date	Accounts Title and Explanation	Debit	Credit
December 31	Consultancy Revenue	$695,000
	Income Summary		$695,000
	(To close Revenue Account)
December 31	Income Summary	$415,000
	Salary Expense		$175,000
	Supplies Expense		$5,000
	Insurance Expense		$120,000
	Utilities Expense		$25,000
	Depreciation Expense, Furniture and Fixtures		$10,000
	Depreciation Expense, Building		$50,000
	Advertising Expense		$30,000
	(To close Expenses Accounts)
December 31	Income Summary	$280,000
	Mark Wall, Capital		$280,000
	(To close Income Summary)
December 31	Mark Wall, Capital	$250,000
	Mark Wall, Withdrawals		$250,000
	(To close Withdrawals Account)

6. Preparing Post Closing Trial Balance:-

Mark Wall Consulting Services

Post Closing Trial Balance

December 31,2007

Accounts	Debit	Credit
Cash	$60,000
Accounts Receivable	50,000
Supplies	5,000
Prepaid Insurance	0
Building	500,000
Accumulated Depreciation, Building		$350,000
Furniture and Fixtures	100,000
Accumulated Depreciation, Furniture and Fixtures		50,000
Accounts Payable		20,000
Salary Payable		15,000
Unearned Consultancy Revenue		10,000
Mark Wall, Capital Ending		270,000
Totals	$715,000	$715,000