Question

(c) Prepare the closing entries. Use J14 for the journal page. d) Post the closing entries. Use the three-column form of account. Income Summary is D. Thao, are as follows. Cr. Account No. 101 112 126 130 157 158 200 201 212 230 301 306 400 610 631 711 722 726 905 THAO COMPANY Worksheet For the Year Ended December 31, 2017 Adjusted Trial Balance Account Titles Dr. Cash 5,300 Accounts Receivable 10,800 Supplies 1,500 Prepaid Insurance 2,000 Equipment 27,000 Accumulated Depreciation-Equipment 5,600 Notes Payable 15,000 Accounts Payable 6,100 Salaries and Wages Payable 2,400 Interest Payable 600 Owner's Capital 13,000 Owner's Drawings 7.000 Service Revenue 61,000 Advertising Expense 8,400 Supplies Expense 4,000 Depreciation Expense 5,600 Insurance Expense 3,500 Salaries and Wages Expense 28,000 Interest Expense 600 Totals 103,700 103,700 Instructions (a) Complete the worksheet by extending the balances to the financial statement columns. (b) Prepare an income statement, owner's equity statement, and a classified balance sheet. (Note: $5,000 of the notes payable become due in 2018.) D. Thao did not make any additional investments in the business during the year. No. 350. e) Prepare a post-closing trial balance.

Answer 1

1. Income Statement -

THAO COMPANY Income Statement For the Year Ended December 31, 2017 Service Revenue $ 61,000 Expenses: Advertising Expense Supplies Expense Depreciation Expense Insurance Expense Salaries and Wages Expense Interest Expense Total Expense $ 8,400 $ 4,000 $ 5,600 $ 3,500 $ 28,000 $ 600 $ 50,100 Net Income $ 10,900

2. Statement of Owner's Equity -

THAO COMPANY Statement of Owner's Equity For the Year Ended December 31, 2017 Owner's Capital, January 1 $ 13,000 Add: Net Income $ 10,900 Less: Drawings $ (7,000) $ 3,900 Owner's Capital, December 31 $ 16,900

3. Balance Sheet -

THAO COMPANY Balance Sheet As at December 31, 2017 Assets Current Assets: Cash $ 5,300 Accounts Receivable $ 10,800 Supplies $ 1,500 Prepaid Insurance $ 2,000 Total Current Assets $ 19,600 Equipment $ 27,000 (-) Accumulated Depreciation - Equipment $ (5,600) $ 21,400 Total Assets $ 41,000 Liabilities and Stockholder's Equity Liabilities: Notes Payable Accuonts Payable Salaries and Wages Payable Interest Payable $ 15,000 $ 6,100 $ 2,400 $ 600 Total Liabilities $ 24,100 Stockholder's Equity: Owner's Capital $ 16,900 Total Liabilities and Stockholder's Equity $ 41,000

4. Closing Entries -

Date Credit THAO COMPANY Closing Entries Accounts Title Debit Service Revenue $ 61,000 Income Summary (Being Revenue Account Closed) 1 $ 61,000 N $ 50,100 Income Summary Advertising Expense Supplies Expense Depreciation Expense Insurance Expense Salaries and Wages Expense Interest Expense (Being Expense account Closed) $ 8,400 $ 4,000 $ 5,600 $ 3,500 $ 28,000 $ 600 3 Income Summary $ 10,900 Owner's Capital (Being Balance Transfer to Owner's Capital) $ 10,900 4 Owner's Capital $ 7,000 Owner's Drawings (Being Drawings transfer to capital account and closed) $ 7,000

5. Post Closing Trial Balance -

Credit THAO COMPANY Post Closing Trial Balance Accounts Title Debit Cash $ 5,300 Accounts Receivable $ 10,800 Supplies $ 1,500 Prepaid Insurance $ 2,000 Equipment $ 27,000 Accumulated Depreciation - Equipment Notes Payable Accuonts Payable Salaries and Wages Payable Interest Payable Owner's Capital $ 5,600 $ 15,000 $ 6,100 $ 2,400 $ 600 $ 16,900 Total $ 46,600 $ 46,600