The unadjusted trial balance of Epicenter Laundry at June 30, 2019, the end of the fiscal year, follows:
Epicenter Laundry Unadjusted Trial Balance June 30, 2019 Debit Balances Credit Balances Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000 Laundry Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,500 Prepaid Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,600
Laundry Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232,600
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,400
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,800
Sophie Perez, Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,600
Sophie Perez, Drawing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Laundry Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232,200
Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,200
Rent Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 Utilities Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,700 Miscellaneous Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400 475,000 475,000
The data needed to determine year-end adjustments are as follows:
a. Laundry supplies on hand at June 30 are $3,600.
b. Insurance premiums expired during the year are $5,700.
c. Depreciation of laundry equipment during the year is $6,500.
d. Wages accrued but not paid at June 30 are $1,100.
Instructions
1. For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as “June 30 Bal.” In addition, add T accounts for Wages Payable, Depreciation Expense, Laundry Supplies Expense, and Insurance Expense.
2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (1) as needed.
3. Journalize and post the adjusting entries. Identify the adjustments as “Adj.” and the new balances as “Adj. Bal.”
4. Prepare an adjusted trial balance.
5. Prepare an income statement, a statement of owner’s equity (no additional investments were made during the year), and a balance sheet.
6. Journalize and post the closing entries. Identify the closing entries as “Clos.”
7. Prepare a post-closing trial balance.
Answer:
1., 3., and 6.
June 30 Bal. 11,000
June 30 Bal. 21,500 June 30 Adj. 17,900
30 Adj. Bal. 3,600
June 30 Bal. 9,600 June 30 Adj. 5,700
30 Adj. Bal. 3,900
June 30 Bal. 232,600
June 30 Bal. 125,400
30 Adj. 6,500
30 Adj. Bal. 131,900
June 30 Bal. 11,800
June 30 Adj. 1,100
June 30 Clos. 10,000 June 30 Bal. 105,600
30 Clos. 10,700
30 Bal. 106,300
June 30 Bal. 10,000 June 30 Clos. 10,000
Laundry Revenue
June 30 Clos. 232,200 June 30 Bal. 232,200
June 30 Bal. 125,200 June 30 Clos. 126,300
30 Adj. 1,100
30 Adj. Bal. 126,300
June 30 Bal. 40,000 June 30 Clos. 40,000
June 30 Bal. 19,700 June 30 Clos. 19,700
June 30 Adj. 17,900 June 30 Clos. 17,900
June 30 Adj. 6,500 June 30 Clos. 6,500
June 30 Adj. 5,700 June 30 Clos. 5,700
June 30 Bal. 5,400 June 30 Clos. 5,400
2. Optional (Appendix)
Account Title Debit Credit Debit Credit Debit Credit Debit Credit
Cash 11,00011,00011,000
Laundry Supplies 21,500 (a) 17,900 3,6003,600
Prepaid Insurance 9,600 (b) 5,700 3,9003,900
Laundry Equipment 232,600232,600232,600
Accum. Depreciation 125,400 (c) 6,500 131,900131,900
Accounts Payable 11,80011,80011,800
Wages Payable(d) 1,100 1,1001,100
Sophie Perez, Capital 105,600105,600105,600
Sophie Perez, Drawing 10,00010,00010,000
Laundry Revenue 232,200232,200 232,200
Wages Expense 125,200 (d) 1,100 126,300 126,300
Rent Expense 40,00040,000 40,000
Utilities Expense 19,70019,700 19,700
Laundry Supplies Exp.(a) 17,900 17,900 17,900
Depreciation Expense(c) 6,500 6,500 6,500
Insurance Expense(b) 5,700 5,700 5,700
Miscellaneous Expense 5,4005,400 5,400
475,000 475,000 31,200 31,200 482,600 482,600 221,500 232,200 261,100 250,400
Net income10,70010,700
232,200 232,200 261,100 261,100
3.
2019
June 30 Laundry Supplies Expense 17,900
Laundry Supplies17,900
Supplies used ($21,500 – $3,600).
30 Insurance Expense5,700
Prepaid Insurance5,700
Insurance expired.
30 Depreciation Expense6,500
Accumulated Depreciation6,500
Equipment depreciation.
30 Wages Expense1,100
Wages Payable1,100
Accrued wages.
4.
Debit Credit
Balances Balances
Cash11,000
Laundry Supplies3,600
Prepaid Insurance3,900
Laundry Equipment232,600
Accumulated Depreciation131,900
Accounts Payable11,800
Wages Payable1,100
Sophie Perez, Capital105,600
Sophie Perez, Drawing10,000
Laundry Revenue232,200
Wages Expense126,300
Rent Expense40,000
Utilities Expense19,700
Laundry Supplies Expense17,900
Depreciation Expense6,500
Insurance Expense5,700
Miscellaneous Expense5,400
482,600 482,600
5.
Laundry revenue$232,200
Expenses:
Wages expense$126,300
Rent expense40,000
Utilities expense19,700
Laundry supplies expense17,900
Depreciation expense6,500
Insurance expense5,700
Miscellaneous expense5,400
Total expenses221,500
Net income$ 10,700
Sophie Perez, capital, July 1, 2018$105,600
Net income for the year$ 10,700
Withdrawals(10,000)
Increase in owner’s equity700
Sophie Perez, capital, June 30, 2019$106,300
Current assets:
Cash$ 11,000
Laundry supplies3,600
Prepaid insurance3,900
Total current assets$ 18,500
Property, plant, and equipment:
Laundry equipment$232,600
Less accumulated depreciation 131,900
Total property, plant, and equipment100,700
Total assets$119,200
Current liabilities:
Accounts payable$ 11,800
Wages payable1,100
Total liabilities$ 12,900
Sophie Perez, capital106,300
Total liabilities and owner’s equity$119,200
6.
2019
June 30 Laundry Revenue232,200
Wages Expense126,300
Rent Expense40,000
Utilities Expense19,700
Laundry Supplies Expense17,900
Depreciation Expense6,500
Insurance Expense5,700
Miscellaneous Expense5,400
Sophie Perez, Capital10,700
30 Sophie Perez Capital10,000
Sophie Perez, Drawing10,000
7.
Debit Credit
Balances Balances
Cash11,000
Laundry Supplies3,600
Prepaid Insurance3,900
Laundry Equipment232,600
Accumulated Depreciation131,900
Accounts Payable11,800
Wages Payable1,100
Sophie Perez, Capital106,300
251,100 251,100
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