Question

Problem 6.2A (Algo) Journalizing and posting adjusting and closing entries and preparing a postclosing trial balance. LO 6-1, 6-2 A completed worksheet for The King Group is given below. Account Name Cash Accounts receivable Supplies Propaid advertising Equipment Accumulated depreciation Equipment hecounts payable Delva King, Capital Delva King, Drawing Tees Income Supplies expense Advertising expense Depreciation expense-Equipment Salaries expense Utilities expense Totals Net income THE KING GROUP Worksheet Month Ended December 31, 20X1 Adjusted Trial Trial Balance Adjustments Balance Income Statement Balance Sheet Debit Credit Debie Credit Debit Credit Debit Credit Debit Credit 93,200 93,200 93,200 12,800 12,800 12,800 7,600 (a) 3,200 4,400 30,400 4,400 (b) 3,800 26,600 26,600 80,000 B0.000 80,000 (c) 3,200 3,200 3.200 12,800 12,800 12,800 140,000 140,000 140,000 9,200 9.200 9,200 97,800 97,800 (a) 3,200 97,800 3,200 3,200 (b) 3,800 3,800 3,000 (e) 1,200 3,200 3,200 15,200 15,200 15,200 2,200 2,200 2,200 250.600 250.600 10,200 10,200 253,800 253,800 27.600 97,800 226,200 156,000 70.200 10.200 97,800 97.800 226,200 226,200 Required: 1. Record the adjusting entries in the general Journal (transactions 1-3). 2. Record the closing entries in the general journal (transactions 4-7). 3. Post the adiusting entries and the closing entries to the general ledger accounts. Hint Be sure to enter beginning balances.

Answer 1

1) Adjusting Entries: Ref. No. Adjust-1 DEBIT $3,200 Adjust-2 Transact. ACCOUNT TITLES 1) Supplies Expense Supplies 2) Advertising Expense Prepaid Advertising 3) Depreciation Expense - Equipment Accumulated Depreciation-Equipment $3,800 CREDIT Workings & Remarks [Supplies used during the period] $3,200 [Prepaid advertising expired for the period] $3,800 [Depreciation expense for the period] $3,200 Adjust-3 $3,200 2) Closing entries are those entries recorded at the last day of reporting period to close revenue and expense accounts to capital account using a temperary account called Income summary. When closing entries are recorded for revenues, Income summary account shall be credited and Revenue accounts shall be debited; Similarly, when closing entries are recorded for expenses, Income summary account shall be debited and Expense accounts shall be credited. Balance in Income summary account will represent either Net income or Net loss for the reporting period which shall be closed to owner's capital account. Finaly, balance in withdrawals account shall be closed to owner's capital account, which will decrease the balance in owner's capital account after this entry is recorded.

Entry Ref. CREDIT Close (1) DEBIT $97,800 $97,800 Close (2) $27,600 Transact. ACCOUNT TITLES AND EXPLANATION 4) Fees Income Income Summary (To close revenue accounts) 5) Income Summary Supplies Expense Advertising Expense Depreciation Expense - Equipment Salaries Expense Utilities Expense (To close expense accounts) 6 Income Summary Delva, Capital (To close net income to owner's capital acount) 7) Delva, Capital Delva, Withdrawals (To close withdrawals to owner's capital account) $3,200 $3,800 $3,200 $15,200 $2,200 Close (3) $70,200 ($97800 - $27600] $70,200 Close (4) $9,200 $9,200

3) Accounts that are affected by adjusting and closing entries: Beg. Bal. Fees Income $97,800 $97,800 Beg. Bal. Adjust-1 Close (1) Supplies Expense $0 $3,200 $3,200 so Close (2) End. Bal. $0 End. Bal. Beg. Bal. Adjust-2 Advertising Expense $0 $3,800 $3,800 $0 Depreciation Expense - Equipment Beg. Bal. $0 Adjust-3 $3,200 $3,200 Close (3) End. Bal. $0 Close (2) End. Bal. Beg. Bal. Salaries Expense $15,200 $15,200 $0 Beg. Bal. Utilities Expense $2,200 $2,200 $0 Close (3) Close (2) End. Bal. End. Bal.

Beg. Bal. Delva, Withdrawals $9,200 $9,200 $0 Beg. Bal. Delva, Capital $140,000 $9,200 $70,200 Close (4) Close (4) Close (3) End. Bal. End. Bal. $ 201,000

THE KING GROUP Post-Closing Trial Balance December 31, 20X1 Account Titles Debit Credit Cash $93,200 Accounts Receivable $12,800 Supplies $4,400 Prepaid Advertising $26,600 Equipment $80,000 Accum. Depreciation-Equipment $3,200 Accounts Payable $12,800 Delva, Capital $ 201,000 Totals $217,000 $217,000 Workings: Delva, Capital (before recording closing entries) Add: Net income closed to owner's capital account Less: Drawings closed to owner's capital account Delva, Capital (after recording closing entries) $140,000 $70,200 $9,200 $ 201,000

4) Number of Accounts in Adjusted Trial Balance Number of Accounts in Post-Closing Trial Balance 15 [Ref: Adjusted Trial Balance in Worksheet given] 8 [Ref: Post-Closing Trial Balance in Part-3]