The End-of-Period Spreadsheet and partially completed Income Summary Account are shown. Gimbel's Gifts and Gadgets End-of-Period Spreadsheet For Year Ended December 31, 20-1 TRIAL BALANCE ADJUSTMENTS ADJUSTED TRIAL BALANCE ACCOUNT TITLE DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT Cash 18,000.00 18,000.00 Accounts Receivable 12,500.00 12,500.00 Merchandise Inventory 67,600.00 (b) 76,400.00 (a) 67,600.00 76,400.00 Estimated Returns Inventory 2,880.00 (e) 3,880.00 (d) 2,880.00 3,880.00 Supplies 7,200.00 (f) 4,220.00 2,980.00 Prepaid Insurance 4,850.00 (g) 1,440.00 3,410.00 Land 117,000.00 117,000.00 Building 224,000.00 224,000.00 Accum. Depr.—Building 89,600.00 (h) 11,200.00 100,800.00 Store Equipment 90,000.00 90,000.00 Accum. Depr.—Store Equipment 36,000.00 (i) 4,500.00 40,500.00 Accounts Payable 8,650.00 8,650.00 Customer Refunds Payable 3,160.00 (c) 1,970.00 5,130.00 Wages Payable (j) 3,160.00 3,160.00 Sales Tax Payable 5,320.00 5,320.00 Unearned Subscriptions Revenue 8,010.00 (k) 3,960.00 4,050.00 J.M. Gimble, Capital 255,050.00 255,050.00 J.M. Gimble, Drawing 23,300.00 23,300.00 Income Summary (a) 67,600.00 (b) 76,400.00 67,600.00 76,400.00 (d) 2,880.00 (e) 3,880.00 2,880.00 3,880.00 Sales 472,625.00 472,625.00 Sales Returns and Allowances 13,050.00 (c) 1,970.00 15,020.00 Rent Revenue (k) 3,960.00 3,960.00 Purchases 112,600.00 112,600.00 Purchases Returns and Allowances 1,250.00 1,250.00 Purchases Discounts 1,630.00 1,630.00 Freight-In 1,900.00 1,900.00 Wages Expense 112,400.00 (j) 3,160.00 115,560.00 Advertising Expense 11,600.00 11,600.00 Supplies Expense (f) 4,220.00 4,220.00 Phone Expense 1,215.00 1,215.00 Utilities Expense 7,200.00 7,200.00 Insurance Expense (g) 1,440.00 1,440.00 Depr. Expense—Building (h) 11,200.00 11,200.00 Depr. Expense—Store Equipment (i) 4,500.00 4,500.00 Rent Expense 54,000.00 54,000.00 881,295.00 881,295.00 181,210.00 181,210.00 982,405.00 982,405.00 410,935.00 559,745.00 Net Income 148,810.00 ACCOUNT Income Summary ACCOUNT NO. 331 BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT 20-1 Dec. 31 Adjusting 67,600.00 67,600.00 Dec. 31 Adjusting 76,400.00 8,800.00 Dec. 31 Adjusting 2,880.00 5,920.00 Dec. 31 Adjusting 3,880.00 9,800.00 Required: 1. Prepare closing entries for Gimbel's Gifts and Gadgets in a general journal.
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.
Closing Entries
The End-of-Period Spreadsheet and partially completed Income Summary Account are shown.
| Gimbel's Gifts and Gadgets End-of-Period Spreadsheet For Year Ended December 31, 20-1 |
||||||||
|---|---|---|---|---|---|---|---|---|
| ADJUSTMENTS | ADJUSTED TRIAL BALANCE | |||||||
| ACCOUNT TITLE | DEBIT | CREDIT | DEBIT | CREDIT | DEBIT | CREDIT | ||
| Cash | 18,000.00 | 18,000.00 | ||||||
| 12,500.00 | 12,500.00 | |||||||
| Merchandise Inventory | 67,600.00 | (b) | 76,400.00 | (a) | 67,600.00 | 76,400.00 | ||
| Estimated Returns Inventory | 2,880.00 | (e) | 3,880.00 | (d) | 2,880.00 | 3,880.00 | ||
| Supplies | 7,200.00 | (f) | 4,220.00 | 2,980.00 | ||||
| Prepaid Insurance | 4,850.00 | (g) | 1,440.00 | 3,410.00 | ||||
| Land | 117,000.00 | 117,000.00 | ||||||
| Building | 224,000.00 | 224,000.00 | ||||||
| Accum. Depr.—Building | 89,600.00 | (h) | 11,200.00 | 100,800.00 | ||||
| Store Equipment | 90,000.00 | 90,000.00 | ||||||
| Accum. Depr.—Store Equipment | 36,000.00 | (i) | 4,500.00 | 40,500.00 | ||||
| Accounts Payable | 8,650.00 | 8,650.00 | ||||||
| Customer Refunds Payable | 3,160.00 | (c) | 1,970.00 | 5,130.00 | ||||
| Wages Payable | (j) | 3,160.00 | 3,160.00 | |||||
| Sales Tax Payable | 5,320.00 | 5,320.00 | ||||||
| Unearned Subscriptions Revenue | 8,010.00 | (k) | 3,960.00 | 4,050.00 | ||||
| J.M. Gimble, Capital | 255,050.00 | 255,050.00 | ||||||
| J.M. Gimble, Drawing | 23,300.00 | 23,300.00 | ||||||
| Income Summary | (a) | 67,600.00 | (b) | 76,400.00 | 67,600.00 | 76,400.00 | ||
| (d) | 2,880.00 | (e) | 3,880.00 | 2,880.00 | 3,880.00 | |||
| Sales | 472,625.00 | 472,625.00 | ||||||
| Sales Returns and Allowances | 13,050.00 | (c) | 1,970.00 | 15,020.00 | ||||
| Rent Revenue | (k) | 3,960.00 | 3,960.00 | |||||
| Purchases | 112,600.00 | 112,600.00 | ||||||
| Purchases Returns and Allowances | 1,250.00 | 1,250.00 | ||||||
| Purchases Discounts | 1,630.00 | 1,630.00 | ||||||
| Freight-In | 1,900.00 | 1,900.00 | ||||||
| Wages Expense | 112,400.00 | (j) | 3,160.00 | 115,560.00 | ||||
| Advertising Expense | 11,600.00 | 11,600.00 | ||||||
| Supplies Expense | (f) | 4,220.00 | 4,220.00 | |||||
| Phone Expense | 1,215.00 | 1,215.00 | ||||||
| Utilities Expense | 7,200.00 | 7,200.00 | ||||||
| Insurance Expense | (g) | 1,440.00 | 1,440.00 | |||||
| Depr. Expense—Building | (h) | 11,200.00 | 11,200.00 | |||||
| Depr. Expense—Store Equipment | (i) | 4,500.00 | 4,500.00 | |||||
| Rent Expense | 54,000.00 | 54,000.00 | ||||||
| 881,295.00 | 881,295.00 | 181,210.00 | 181,210.00 | 982,405.00 | 982,405.00 | |||
| 410,935.00 | 559,745.00 | |||||||
| Net Income | 148,810.00 |
| ACCOUNT | Income Summary | ACCOUNT NO. | 331 | |||
|---|---|---|---|---|---|---|
| BALANCE | ||||||
| DATE | ITEM | POST. REF. | DEBIT | CREDIT | DEBIT | CREDIT |
| 20-1 | ||||||
| Dec. 31 | Adjusting | 67,600.00 | 67,600.00 | |||
| Dec. 31 | Adjusting | 76,400.00 | 8,800.00 | |||
| Dec. 31 | Adjusting | 2,880.00 | 5,920.00 | |||
| Dec. 31 | Adjusting | 3,880.00 | 9,800.00 |
Required:
1. Prepare closing entries for Gimbel's Gifts and Gadgets in a general journal.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
