Question

P4-39B Comple ting the accounting cycle from journal entries to post-closing optional worksheet 8. Calculate the 1, 2, 3, 4, 5 trial balance with an On December 1, Curt Wilson began an auto repair shop, Wilson's Quality Automotive. 572,080 The following transactions occurred during December: Dec. 1 Wilson contributed $63,000 cash to the business in exchange for capital. 1 Purchased $14,400 of equipment paying cash. OI 1 Paid $3,600 for a twelve-month insurance policy starting on December 1. 9 Paid $15,000 cash to purchase land to be used in operations. 10 Purchased office supplies on account, $2,200. Borrowed $24,000 from the bank for business use. Wilson signed a notes payable 19 to the bank in the name of the business. The note is due in five years. 22 Paid $2,000 for advertising expenses. 26 Paid $1,000 on account. 28 The business received a bill for utilities to be paid in January, $260. 31 Revenues earned during the month included $18,500 cash and $3,800 on account. 31 Paid employees' salaries $3,900 and building rent $800. Record as a compound entry. 31 The business received $1,380 for auto screening services to be performed next month. 31 Wilson withdrew cash of $5,000. The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Equipment; Accumulated Depreciation -Equipment; Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Notes Pay able; Wilson, Capital; Wilson, Withdrawals; Income Summary; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation Expense-Equipment. Adjustment data: a. Office Supplies used during the month, $600 b. Depreciation for the month, $240. c. One month insurance has expired. d. Accrued Interest Expense, $120. Comple Requirements 1. Prepare the journal entries, and post to the T-accounts. 2. Prepare an unadjusted trial balance. 3. Complete the worksheet for the month ended December 31, 2018 (optional). 4. Prepare the adjusting entries, and post to the T-accounts. 5. Prepare an adjusted trial balance. 6. Prepare the income statement, the statement of owner's equity, and the classified balance sheet in report form. 7. Prepare the closing entries, and post to the T-accounts. 8. Prepare a post-closing trial balance.

Answer 1

Wilson's Quality Automotive Journal Enteries Debit in $ Credit in $ Particulars Date 1.12.2018 Cash a/c Dr. 63000 To Bob Waldo, Capital 63000 (Capital Introduced) 1.12.2018 Equipment a/c Dr. 14400 To Cash 14400 (Equipment purchased for cash) Prepaid Insurance a/c Tо Cash 1.12.2018 Dr. 3600 3600 (12 month insurance paid) 9.12.2018 Land a/c 15000 Dr То Cash 15000 (Land purchased for cash) 10.12.2018 Office Supplies a/c 2200 Dr. To Accounts Payable 2200 (Supplies purchased on account) 19.12.2018 Cash a/c 24000 Dr. To Note Payable 24000 (Note Payable issued) 22.12.2018 Advertising Expense a/c Dr. 2000 To Cash 2000 (Advertising expense paid) 26.12.2018 Accounts Payable a/c Dr. 1000 To Cash 1000 (Cash paid to creditors) 28.12.2018 Utilities Expense a/c 260 Dr. To Accounts Payable 260 (Utilities Expense accrued) 31,12.2018 Cash a/c Dr. 18500 Accounts Receivable a/c Dr. 3800 To Revenue earned 22300 (Revenue earned) 31.12.2018 Salaries Expense a/c Rent Expense a/c То Cash ses paid Dr 3900 800 Dr 4700 31.12.2018 Cash a/c Dr. 1380 To Unearned Revenue 1380 (Advance received from customer) 31.12.2018 Bob Waldo, Withdrawal a/c Dr. 5000 To Cash 5000 (Cash withdrawn by client)

Adjusting Enteries Debit in $ Credit in $ Particulars Date 31.12.2018 Supplies Expense a/c To Office Supplies Dr. 600 600 |(Supplies Expensed) 31.12.2018 Depreciation Expense a/c Dr To Accum. Depre Equip 240 240 (To record depreciation) 31.12.2018 Insurance Expense a/c Dr. 300 To Prepaid Insurance Insurance Expensed) 31.12.2018 Interest Expense a/c Dr. 120 To Interest Payable 120 |(Interest expense accrued) Closing Enteries Debit in $ Credit in $ Particulars Date 31.12.2018 Income Summary a/c Dr. 8220 To Advertising Expense 2000 To Utilities Expense 260 To Salaries Expense 3900 To Rent Expense 800 To Supplies Expense 600 To Depreciation Expense 240 To Insurance Expense 300 To Interest Expense 120 (Expense accounts closed) 31.12.2018 Revenue earned a/c 22300 Dr. To Income Summary 22300 (Revenue accounts closed) 31.12.2018 Income Summary a/c To Bob Waldo, Capital Dr. 14080 14080 (Profits transferred) 31.12.2018 Bob Waldo, Capital a/c Dr To Bob Waldo, Withdrawal 5000 5000 (Withdrawals charged to Capital) O

Work Sheet For the Month ending 31.12.2018 Post Closing Unadjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Adjustment Adjusted Particulars Cash 61180 61180 61180 Accounts Receivable 3800 3800 3800 Prepaid Insurance Office Supplies 3600 300 3300 3300 2200 600 1600 1600 Land 15000 15000 15000 14400 Equipment 14400 14400 Accum. Depre Equip 240 240 240 unts Payable Ac 460 1460 Interest Payable 120 120 120 Unearned Revenue 1380 1380 1380 Note Payable 24000 24000 24000 Bob Waldo, Capital 63000 63000 72080 Bob Waldo, Withdrawal 5000 5000 Revenue earned 22300 22300 Advertising Expense 2000 2000 Utilities Expense 260 260 Salaries Expense 3900 3900 Rent Expense 800 800 Supplies Expense 600 600 Depreciation Expense 240 240 Insurance Expense 300 300 Interest Expense 120 120 Totals 112140 112500 99280 112140 1260 1260 112500 99280

Statement of Income For the Month ending 31.12.2018 Revenue earned 22300 Less: Advertising Expense 2000 Utilities Expense 260 Salaries Expense 3900 Rent Expense 800 Supplies Expense 600 Depreciation Expense 240 Insurance Expense 300 Interest Expense 8220 120 Net Income 14080 Statement of Owner's Equity For the Month ending 31.12.2018 Bob Waldo, Capital 63000 Net Income 14080 77080 Bob Waldo, Withdrawal -5000 72080

Balance sheet As at 31.12.2018 Amounts In$ Amounts In $ Liabilities Amounts In $ Amounts In $ Assets Current Liabilities Current Assets Accounts Payable Cash 61180 1460 Interest Payable Accounts Receivable 3800 120 Prepaid Insurance Office Supplies Unearned Revenue 2960 3300 1380 1600 69880 Non Current Liabilities Note Payable 24000 Non Current Assets Land 15000 Owner's Equity Equipment 1440 14160 Bob Waldo, Capital Accum. Depre - Equip 72080 -240 99040 Total Liabilities & Equity Total Assets 99040