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Kimberly Ashley, the bookkeeper for Interiors Designs, has just finished posting the closing entries for the year to the ledger. She is concerned about the following balances: Capital account balance in the general ledger: Ending capital balance on the statement of owner's equity: Ashley knows that these amounts should agree and asks for your assistance in reviewing her work. Your review of the general ledger of Interiors Designs reveals a beginning capital balance of $100,000. You also review the general journal for the accounting period and find the closing entries shown below. GENERAL JOURNAL Description Closing Entries Fees income Accumulated depreciation Account payable Income summary Date 20x1 Dec. 31 31 Income summary Salaries expense Supplies expense Depreciation expense Wade Wilson, Drawing Debit 196,000 17,000 66,000 184,800 Page 15 Credit 279,000 $194, 200 111, 200 156,000 10,000 4,800 14,000 Required: 2. Prepare a general journal entry to correct the errors made. 3. Reconcile the balance of capital account in the ledger after closing entries have been posted and the ending capital balance of owner's equity.

Kimberly Ashley, the bookkeeper for Interiors Designs, has just finished posting the closing entries for the year to the ledger. She is concerned about the following balances: Capital account balance in the general ledger: Ending capital balance on the statement of owner's equity: Ashley knows that these amounts should agree and asks for your assistance in reviewing her work. Your review of the general ledger of Interiors Designs reveals a beginning capital balance of $100,000. You also review the general journal for the accounting period and find the closing entries shown below. GENERAL JOURNAL Description Closing Entries Fees income Accumulated depreciation Account payable Income summary Date 20x1 Dec. 31 31 Income summary Salaries expense Supplies expense Depreciation expense Wade Wilson, Drawing Debit 196,000 17,000 66,000 184,800 Page 15 Credit 279,000 $194, 200 111, 200 156,000 10,000 4,800 14,000 Required: 2. Prepare a general journal entry to correct the errors made. 3. Reconcile the balance of capital account in the ledger after closing entries have been posted and the ending capital balance of owner's equity.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Reviewing Closing Entries in Accounting #### Scenario: Kimberly Ashley, the bookkeeper for Interiors Designs, has just finished posting the closing entries for the year to the ledger. She is concerned about the following balances: | Account Description | Amount | |---------------------|--------| | Capital account balance in the general ledger | $194,200 | | Ending capital balance on the statement of owner’s equity | $111,200 | Ashley knows that these amounts should agree and asks for your assistance in reviewing her work. #### Investigation: Your review of the general ledger of Interiors Designs reveals a beginning capital balance of $100,000. You also review the general journal for the accounting period and find the closing entries shown below: ##### General Journal (Page 15) | Date | Description | Debit | Credit | |-------|---------------------------|--------|---------| | 20X1 | Closing Entries | | | | Dec. 31 | Fees income | | 196,000 | | | Accumulated depreciation | 17,000 | | | | Account payable | 66,000 | | | | Income summary | | 279,000 | | | Income summary | 184,800| | | | Salaries expense | | 156,000 | | | Supplies expense | | 10,000 | | | Depreciation expense | | 4,800 | | | Wade Wilson, Drawing | | 14,000 | #### Required Tasks: 1. **Prepare a general journal entry to correct the errors made.** 2. **Reconcile the balance of the capital account in the ledger after closing entries have been posted and the ending capital balance of owner’s equity.** #### Explanation: There are two tables provided: 1. **Balance Comparison Table:** - Displays a discrepancy between the capital account balance in the general ledger ($194,200) and the ending capital balance on the statement of owner’s equity ($111,200). 2. **General Journal Table:** - Lists the closing entries for the accounting period, showing various credits and debits to income summary, supplies expense, salaries expense, and other accounts. By identifying and correcting any errors in these entries and ensuring they align with the beginning capital balance and other transactions, one can reconcile the discrepancies noted
Transcribed Image Text:### Reviewing Closing Entries in Accounting #### Scenario: Kimberly Ashley, the bookkeeper for Interiors Designs, has just finished posting the closing entries for the year to the ledger. She is concerned about the following balances: | Account Description | Amount | |---------------------|--------| | Capital account balance in the general ledger | $194,200 | | Ending capital balance on the statement of owner’s equity | $111,200 | Ashley knows that these amounts should agree and asks for your assistance in reviewing her work. #### Investigation: Your review of the general ledger of Interiors Designs reveals a beginning capital balance of $100,000. You also review the general journal for the accounting period and find the closing entries shown below: ##### General Journal (Page 15) | Date | Description | Debit | Credit | |-------|---------------------------|--------|---------| | 20X1 | Closing Entries | | | | Dec. 31 | Fees income | | 196,000 | | | Accumulated depreciation | 17,000 | | | | Account payable | 66,000 | | | | Income summary | | 279,000 | | | Income summary | 184,800| | | | Salaries expense | | 156,000 | | | Supplies expense | | 10,000 | | | Depreciation expense | | 4,800 | | | Wade Wilson, Drawing | | 14,000 | #### Required Tasks: 1. **Prepare a general journal entry to correct the errors made.** 2. **Reconcile the balance of the capital account in the ledger after closing entries have been posted and the ending capital balance of owner’s equity.** #### Explanation: There are two tables provided: 1. **Balance Comparison Table:** - Displays a discrepancy between the capital account balance in the general ledger ($194,200) and the ending capital balance on the statement of owner’s equity ($111,200). 2. **General Journal Table:** - Lists the closing entries for the accounting period, showing various credits and debits to income summary, supplies expense, salaries expense, and other accounts. By identifying and correcting any errors in these entries and ensuring they align with the beginning capital balance and other transactions, one can reconcile the discrepancies noted
**Journal Entry Worksheet** 1. **Instruction Box:** - "Record the entry to correct errors made in closing entries." 2. **Note:** - "Note: Enter debits before credits." 3. **General Journal Table:** - **Date:** - Dec 31, 20X1 - **General Journal Columns:** - **Debit/Amount Debit:** - Wade Wilson, Capital: $83,000 - **Credit/Amount Credit:** - Accumulated depreciation: $17,000 - Accounts payable: $66,000 - **Name only (No Debit/Credit Amounts):** - Income summary 4. **Buttons (Actions):** - **Record entry** - **Clear entry** - **View general journal** 5. **Navigation:** - Arrows to navigate between journal entry pages. - "Required 2" (indicates the step or requirement previous to this one) - "Required 3" (indicates the next step or requirement following this one) ### Explanation of Elements - **General Journal Table:** This table is used to record financial transactions affecting the accounts of a business. It includes: - Date of the journal entry. - Accounts involved in the transaction. - The debit or credit amount assigned to each account. - **Debit and Credit Columns:** Financial transactions are recorded with debits on the left side and credits on the right side. Debits must always equal credits to maintain a balanced ledger. - **Buttons Functionality:** - **Record entry:** Saves the current journal entry. - **Clear entry:** Clears the fields so a new entry can be made without previous values. - **View general journal:** Takes the user to a comprehensive view of all journal entries made. - **Navigation Arrows:** Allow users to move between different journal entry tasks or steps seamlessly. This worksheet is part of a systematic process to ensure accuracy in financial reporting by making necessary corrections to closing entries.
Transcribed Image Text:**Journal Entry Worksheet** 1. **Instruction Box:** - "Record the entry to correct errors made in closing entries." 2. **Note:** - "Note: Enter debits before credits." 3. **General Journal Table:** - **Date:** - Dec 31, 20X1 - **General Journal Columns:** - **Debit/Amount Debit:** - Wade Wilson, Capital: $83,000 - **Credit/Amount Credit:** - Accumulated depreciation: $17,000 - Accounts payable: $66,000 - **Name only (No Debit/Credit Amounts):** - Income summary 4. **Buttons (Actions):** - **Record entry** - **Clear entry** - **View general journal** 5. **Navigation:** - Arrows to navigate between journal entry pages. - "Required 2" (indicates the step or requirement previous to this one) - "Required 3" (indicates the next step or requirement following this one) ### Explanation of Elements - **General Journal Table:** This table is used to record financial transactions affecting the accounts of a business. It includes: - Date of the journal entry. - Accounts involved in the transaction. - The debit or credit amount assigned to each account. - **Debit and Credit Columns:** Financial transactions are recorded with debits on the left side and credits on the right side. Debits must always equal credits to maintain a balanced ledger. - **Buttons Functionality:** - **Record entry:** Saves the current journal entry. - **Clear entry:** Clears the fields so a new entry can be made without previous values. - **View general journal:** Takes the user to a comprehensive view of all journal entries made. - **Navigation Arrows:** Allow users to move between different journal entry tasks or steps seamlessly. This worksheet is part of a systematic process to ensure accuracy in financial reporting by making necessary corrections to closing entries.
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