The following shows the unadjusted trial balance relating to Mark Wall Consulting Services for the accounting period ending December 31, 2007. Mark Wall Consulting Trial Balance as at December 31 2007 Requirements: 1. Journalize the following adjusting entries and prepare an adjusted trial balance as at December 31 2007 a. Supplies used during the period - $5000 b. All of the prepaid insurance expired at year end c. Depreciation expense – Building : $50,000 d. Depreciation expense – Furniture & Fixtures: $10,000 e. Accrued salary expense: $15,000 f. Unearned consultancy revenue at the end of the period: $10,000 A/C Name D R CR D R CR Cash 60,000 60,000 Accounts receivable 50,000 50,000 Supplies 10,000 5,000 Prepaid Insurance 120,000 - Buliding 500,000 500,000 Accumulated depreciation - Building 300,000 350,000 Furniture and Fixtures 100,000 100,000 Accumulated depreciation - Furniture and Fittings 40,000 50,000 Accounts payable 20,000 20,000 Salary Payable 15,000 Unearned Consultancy revenue 80,000 10,000 Mark Wall, Capital 240,000 240,000 Mark Wall, Withdrawal 250,000 250,000 Consultancy revenue 625,000 695,000 Salary expense 160,000 175,000 Supplies Expense 5,000 Insurance Expense 120,000 Utilities Expense 25,000 25,000 Depreciation expense - Furniture and Fixtures 10,000 Depreciation expense - Building 50,000 Advertising expense 30,000 30,000 1,305,000 1,305,000 1,380,000 1,380,000 Unadjusted Trial Balance Adjusted Trial Balance 2. Prepare the Income statement for the year ended December 31st, 2007 3. Prepare the Statement of owner’s equity for December 31st, 2007 4. Prepare the Balance sheet as at December 31st, 2007 5. Prepare the Closing entries 6. Prepare a Post-closing Trial Balance
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.
The following shows the unadjusted
the accounting period ending December 31, 2007.
Mark Wall Consulting
Trial Balance
as at December 31 2007
Requirements:
1. Journalize the following
December 31 2007
a. Supplies used during the period - $5000
b. All of the prepaid insurance expired at year end
c.
d. Depreciation expense – Furniture & Fixtures: $10,000
e. Accrued salary expense: $15,000
f. Unearned consultancy revenue at the end of the period: $10,000
A/C Name
D R CR D R CR
Cash 60,000 60,000
Supplies 10,000 5,000
Prepaid Insurance 120,000 -
Buliding 500,000 500,000
Furniture and Fixtures 100,000 100,000
Accumulated depreciation - Furniture and Fittings 40,000 50,000
Accounts payable 20,000 20,000
Salary Payable 15,000
Unearned Consultancy revenue 80,000 10,000
Mark Wall, Capital 240,000 240,000
Mark Wall, Withdrawal 250,000 250,000
Consultancy revenue 625,000 695,000
Salary expense 160,000 175,000
Supplies Expense 5,000
Insurance Expense 120,000
Utilities Expense 25,000 25,000
Depreciation expense - Furniture and Fixtures 10,000
Depreciation expense - Building 50,000
Advertising expense 30,000 30,000
1,305,000 1,305,000 1,380,000 1,380,000
Unadjusted Trial Balance Adjusted Trial Balance
2. Prepare the Income statement for the year ended December 31st, 2007
3. Prepare the Statement of owner’s equity for December 31st, 2007
4. Prepare the Balance sheet as at December 31st, 2007
5. Prepare the Closing entries
6. Prepare a Post-closing Trial Balance
Step by step
Solved in 7 steps
