Problem 3-69A (Algorithmic) Preparation of Closing Entries and an Income Statement Round Grove Alarm Company provides security services to homes in northwestern Indiana. At year-end 2019, after adjusting entries have been made, the following list of account balances is prepared: Accounts Receivable $36,800 Accounts Payable 23,250 Accumulated Depreciation, Equipment 124,000 Common Stock 150,000 Depreciation Expense, Equipment 45,300 Dividends 5,500 Equipment 409,500 Income Taxes Expense 30,800 Income Taxes Payable 24,300 Interest Expense 4,800 Notes Payable (due in 2022) 34,000 Other Assets 7,700 Prepaid Rent 4,750 Rent Expense 27,600 Retained Earnings, 12/31/2018 29,400 Salaries Payable 12,600 Salaries Expense 148,250 Service Revenue 614,200 Supplies Expense 51,900 Supplies 12,700 Utilities Expense 48,800 Wages Expense 183,000 Wages Payable 7,950 Required: 1. Prepare closing entries for Round Grove Alarm. If an amount box does not require an entry, leave it blank. Dec. 31 Service Revenue fill in the blank 23668fff100b04a_2 Income Summary fill in the blank 23668fff100b04a_4 (Close revenue account) Dec. 31 Income Summary fill in the blank 23668fff100b04a_6 fill in the blank 23668fff100b04a_7 Depreciation Expense, Equipment fill in the blank 23668fff100b04a_9 fill in the blank 23668fff100b04a_10 Income Taxes Expense fill in the blank 23668fff100b04a_12 fill in the blank 23668fff100b04a_13 Interest Expense fill in the blank 23668fff100b04a_15 fill in the blank 23668fff100b04a_16 Rent Expense fill in the blank 23668fff100b04a_18 fill in the blank 23668fff100b04a_19 Salaries Expense fill in the blank 23668fff100b04a_21 fill in the blank 23668fff100b04a_22 Supplies Expense fill in the blank 23668fff100b04a_24 fill in the blank 23668fff100b04a_25 Utilities Expense fill in the blank 23668fff100b04a_27 fill in the blank 23668fff100b04a_28 Wages Expense fill in the blank 23668fff100b04a_30 fill in the blank 23668fff100b04a_31 (Close expense accounts) Dec. 31 Income Summary fill in the blank 23668fff100b04a_33 Retained Earnings fill in the blank 23668fff100b04a_35 (Close Income Summary) Dec. 31 Retained Earnings fill in the blank 23668fff100b04a_37 Dividends fill in the blank 23668fff100b04a_39 (Close dividend account)
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Problem 3-69A (
Preparation of Closing Entries and an Income Statement
Round Grove Alarm Company provides security services to homes in northwestern Indiana. At year-end 2019, after
| $36,800 | |
| Accounts Payable | 23,250 |
| 124,000 | |
| Common Stock | 150,000 |
| Depreciation Expense, Equipment | 45,300 |
| Dividends | 5,500 |
| Equipment | 409,500 |
| Income Taxes Expense | 30,800 |
| Income Taxes Payable | 24,300 |
| Interest Expense | 4,800 |
| Notes Payable (due in 2022) | 34,000 |
| Other Assets | 7,700 |
| Prepaid Rent | 4,750 |
| Rent Expense | 27,600 |
| 29,400 | |
| Salaries Payable | 12,600 |
| Salaries Expense | 148,250 |
| Service Revenue | 614,200 |
| Supplies Expense | 51,900 |
| Supplies | 12,700 |
| Utilities Expense | 48,800 |
| Wages Expense | 183,000 |
| Wages Payable | 7,950 |
Required:
1. Prepare closing entries for Round Grove Alarm. If an amount box does not require an entry, leave it blank.
| Dec. 31 | Service Revenue | fill in the blank 23668fff100b04a_2 | |
| Income Summary | fill in the blank 23668fff100b04a_4 | ||
| (Close revenue account) | |||
| Dec. 31 | Income Summary | fill in the blank 23668fff100b04a_6 | fill in the blank 23668fff100b04a_7 |
| Depreciation Expense, Equipment | fill in the blank 23668fff100b04a_9 | fill in the blank 23668fff100b04a_10 | |
| Income Taxes Expense | fill in the blank 23668fff100b04a_12 | fill in the blank 23668fff100b04a_13 | |
| Interest Expense | fill in the blank 23668fff100b04a_15 | fill in the blank 23668fff100b04a_16 | |
| Rent Expense | fill in the blank 23668fff100b04a_18 | fill in the blank 23668fff100b04a_19 | |
| Salaries Expense | fill in the blank 23668fff100b04a_21 | fill in the blank 23668fff100b04a_22 | |
| Supplies Expense | fill in the blank 23668fff100b04a_24 | fill in the blank 23668fff100b04a_25 | |
| Utilities Expense | fill in the blank 23668fff100b04a_27 | fill in the blank 23668fff100b04a_28 | |
| Wages Expense | fill in the blank 23668fff100b04a_30 | fill in the blank 23668fff100b04a_31 | |
| (Close expense accounts) | |||
| Dec. 31 | Income Summary | fill in the blank 23668fff100b04a_33 | |
| Retained Earnings | fill in the blank 23668fff100b04a_35 | ||
| (Close Income Summary) | |||
| Dec. 31 | Retained Earnings | fill in the blank 23668fff100b04a_37 | |
| Dividends | fill in the blank 23668fff100b04a_39 | ||
| (Close dividend account) |
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