Prepare an adjusted trial balance. If an amount Ledger Accounts, Adjusting Entries, Financial Statements, and Closing Entries; Optional Spreadsheet The unadjusted trial balance of Recessive Interiors at January 31, 2019, the end of the year, follows: Recessive InteriorsUnadjusted Trial BalanceJanuary 31, 2019 Account No. Debit Balances Credit Balances Cash 11 13,100 Supplies 13 8,000 Prepaid Insurance 14 7,500 Equipment 16 113,000 Accumulated Depreciation-Equipment 17 12,000 Trucks 18 90,000 Accumulated Depreciation-Trucks 19 27,100 Accounts Payable 21 4,500 Jeanne McQuay, Capital 31 126,400 Jeanne McQuay, Drawing 32 3,000 Service Revenue 41 155,000 Wages Expense 51 72,000 Rent Expense 52 7,600 Truck Expense 53 5,350 Miscellaneous Expense 59 5,450 325,000 325,000 The following additional accounts from Recessive Interiors' chart of accounts should be used: Wages Payable, 22; Depreciation Expense-Equipment, 54; Supplies Expense, 55; Depreciation Expense-Trucks, 56; Insurance Expense, 57. The data needed to determine year-end adjustments are as follows: Supplies on hand at January 31 are $2,850. Insurance premiums expired during the year are $3,150. Depreciation of equipment during the year is $5,250. Depreciation of trucks during the year is $4,000. Wages accrued but not paid at January 31 are $900. Use the attached spreadsheet to complete parts 2, 3, and 6. Click on the Spreadsheet icon above to open and save the Excel file to your computer. Your input into the spreadsheet will not be included in your grade in CengageNOW on this problem. Required: 1. For each account listed in the trial balance, notice that the balance has been entered in the appropriate general ledger account balance column of the spreadsheet. Posting to the general ledger will take place in step 3 and step 6. 2. (Optional) In the attached spreadsheet, notice that the unadjusted trial balance amounts have been entered. Enter the adjusting entries and complete the worksheet. 3. Journalize the adjusting entries on page 26 of the journal. Then post to the appropriate accounts in the general ledger in the attached spreadsheet, inserting balances in the accounts affected. Journal PAGE 26 Date Account Post. Ref. Debit Credit a. Supplies Expense Supplies b. Insurance Expense Prepaid Insurance c. Accumulated Depreciation-Equipment Depreciation Expense-Equipment d. Depreciation Expense-Trucks Accumulated Depreciation-Trucks e. Wages Expense Wages Payable 4. Prepare an adjusted trial balance. If an amount box does not require an entry, leave it blank. Recessive InteriorsAdjusted Trial BalanceJanuary 31, 2019 Debit Balances Credit Balances Cash Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Trucks Accumulated Depreciation-Trucks Accounts Payable Wages Payable Jeanne McQuay, Capital Jeanne McQuay, Drawing Service Revenue Wages Expense Rent Expense Truck Expense Accumulated Depreciation-Equipment Supplies Expense Depreciation Expense-Trucks Insurance Expense Miscellaneous Expense 5. Prepare an income statement. Recessive InteriorsIncome StatementFor the Year Ended January 31, 2019 Service revenue $ Expenses: Wages expense $ Rent expense Truck expense Depreciation expense-equipment Supplies expense Depreciation expense-trucks Insurance expense Miscellaneous expense Total expenses Net income $ Prepare a Statement of Owner's Equity (no additional investments were made during the year.) Recessive InteriorsStatement of Owner's Equity For the Year Ended January 31, 2019 Jeanne McQuay, capital, January 31, 2019 $ Net income for the year $ Cash Decrease in owner's equity Net income for the year $ Prepare a balance sheet. Recessive InteriorsBalance SheetJanuary 31, 2019 Assets Liabilities Current assets: Current liabilities: Cash $ Accounts payable $ Supplies Wages payable Prepaid insurance Total liabilities $ Total current assets $ Property, plant, and equipment: Owner's Equity Equipment $ Jeanne McQuay, capital Less accumulated depreciation $ Trucks $ Less accumulated depreciation Total property, plant, and equipment Total assets $ Total liabilities and owner's equity $ 6. Journalize the closing entries on page 27 of the journal. Then post to the general ledger in the attached spreadsheet. For a compound transaction, if an amount box does not require an entry, leave it blank. Journal PAGE 27 Date Account Post. Ref. Debit Credit Close expenses, revenues&income/loss Close drawing 7. Prepare a post-closing trial balance. If an amount box does not require an entry, leave it blank. Recessive InteriorsPost-Closing Trial BalanceJanuary 31, 2019 Debit Balances Credit Balances Totals
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Ledger Accounts,
The unadjusted trial balance of Recessive Interiors at January 31, 2019, the end of the year, follows:
| Recessive Interiors Unadjusted Trial Balance January 31, 2019 |
||||||
| Account No. | Debit Balances | Credit Balances | ||||
| Cash | 11 | 13,100 | ||||
| Supplies | 13 | 8,000 | ||||
| Prepaid Insurance | 14 | 7,500 | ||||
| Equipment | 16 | 113,000 | ||||
| 17 | 12,000 | |||||
| Trucks | 18 | 90,000 | ||||
| Accumulated Depreciation-Trucks | 19 | 27,100 | ||||
| Accounts Payable | 21 | 4,500 | ||||
| Jeanne McQuay, Capital | 31 | 126,400 | ||||
| Jeanne McQuay, Drawing | 32 | 3,000 | ||||
| Service Revenue | 41 | 155,000 | ||||
| Wages Expense | 51 | 72,000 | ||||
| Rent Expense | 52 | 7,600 | ||||
| Truck Expense | 53 | 5,350 | ||||
| Miscellaneous Expense | 59 | 5,450 | ||||
| 325,000 | 325,000 |
The following additional accounts from Recessive Interiors' chart of accounts should be used: Wages Payable, 22; Depreciation Expense-Equipment, 54; Supplies Expense, 55; Depreciation Expense-Trucks, 56; Insurance Expense, 57.
The data needed to determine year-end adjustments are as follows:
- Supplies on hand at January 31 are $2,850.
- Insurance premiums expired during the year are $3,150.
- Depreciation of equipment during the year is $5,250.
- Depreciation of trucks during the year is $4,000.
- Wages accrued but not paid at January 31 are $900.
Use the attached spreadsheet to complete parts 2, 3, and 6. Click on the Spreadsheet icon above to open and save the Excel file to your computer. Your input into the spreadsheet will not be included in your grade in CengageNOW on this problem.
Required:
1. For each account listed in the trial balance, notice that the balance has been entered in the appropriate general ledger account balance column of the spreadsheet. Posting to the general ledger will take place in step 3 and step 6.
2. (Optional) In the attached spreadsheet, notice that the unadjusted trial balance amounts have been entered. Enter the adjusting entries and complete the worksheet.
3. Journalize the adjusting entries on page 26 of the journal. Then post to the appropriate accounts in the general ledger in the attached spreadsheet, inserting balances in the accounts affected.
| Journal | PAGE 26 | |||
|---|---|---|---|---|
| Date | Account | Post. Ref. | Debit | Credit |
| a. | Supplies Expense | |||
| Supplies | ||||
| b. | Insurance Expense | |||
| Prepaid Insurance | ||||
| c. | Accumulated Depreciation-Equipment | |||
| Depreciation Expense-Equipment | ||||
| d. | Depreciation Expense-Trucks | |||
| Accumulated Depreciation-Trucks | ||||
| e. | Wages Expense | |||
| Wages Payable |
4. Prepare an adjusted trial balance. If an amount box does not require an entry, leave it blank.
| Recessive Interiors Adjusted Trial Balance January 31, 2019 |
||
|---|---|---|
| Debit Balances | Credit Balances | |
| Cash | ||
| Supplies | ||
| Prepaid Insurance | ||
| Equipment | ||
| Accumulated Depreciation-Equipment | ||
| Trucks | ||
| Accumulated Depreciation-Trucks | ||
| Accounts Payable | ||
| Wages Payable | ||
| Jeanne McQuay, Capital | ||
| Jeanne McQuay, Drawing | ||
| Service Revenue | ||
| Wages Expense | ||
| Rent Expense | ||
| Truck Expense | ||
| Accumulated Depreciation-Equipment | ||
| Supplies Expense | ||
| Depreciation Expense-Trucks | ||
| Insurance Expense | ||
| Miscellaneous Expense | ||
5. Prepare an income statement.
| Recessive Interiors Income Statement For the Year Ended January 31, 2019 |
||
|---|---|---|
| Service revenue | $ | |
| Expenses: | ||
| Wages expense | $ | |
| Rent expense | ||
| Truck expense | ||
| Depreciation expense-equipment | ||
| Supplies expense | ||
| Depreciation expense-trucks | ||
| Insurance expense | ||
| Miscellaneous expense | ||
| Total expenses | ||
| Net income | $ |
Prepare a Statement of Owner's Equity (no additional investments were made during the year.)
| Recessive Interiors Statement of Owner's Equity For the Year Ended January 31, 2019 |
||
|---|---|---|
| Jeanne McQuay, capital, January 31, 2019 | $ | |
| Net income for the year | $ | |
| Cash | ||
| Decrease in owner's equity | ||
| Net income for the year | $ |
Prepare a balance sheet.
| Recessive Interiors Balance Sheet January 31, 2019 |
||||||
|---|---|---|---|---|---|---|
| Assets | Liabilities | |||||
| Current assets: | Current liabilities: | |||||
| Cash | $ | Accounts payable | $ | |||
| Supplies | Wages payable | |||||
| Prepaid insurance | Total liabilities | $ | ||||
| Total current assets | $ | |||||
| Property, plant, and equipment: | Owner's Equity | |||||
| Equipment | $ | Jeanne McQuay, capital | ||||
| Less accumulated depreciation | $ | |||||
| Trucks | $ | |||||
| Less accumulated depreciation | ||||||
| Total property, plant, and equipment | ||||||
| Total assets | $ | Total liabilities and owner's equity | $ |
6. Journalize the closing entries on page 27 of the journal. Then post to the general ledger in the attached spreadsheet. For a compound transaction, if an amount box does not require an entry, leave it blank.
| Journal | PAGE 27 | |||
|---|---|---|---|---|
| Date | Account | Post. Ref. | Debit | Credit |
| Close expenses, revenues &income/loss |
||||
| Close drawing | ||||
7. Prepare a post-closing trial balance. If an amount box does not require an entry, leave it blank.
| Recessive Interiors Post-Closing Trial Balance January 31, 2019 |
||
|---|---|---|
| Debit Balances | Credit Balances | |
| Totals |
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 8 images
