Chapter 3, Problem 3.5AP

(a)

To determine

Adjusting entries: Adjusting entries are those entries which are recorded to update all the balances in the financial statements to show the true financial information and to maintain the records according to accrual basis principle

Accounting rules for journal entries:

• To Increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
• To Decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

Adjusted Trial Balance: Adjusted Trial balance is that statement which contains complied list of accounts with their adjusted balances after all relevant adjustments have been made. This statement is prepared at the end of every financial period.

Income Statement: The income statement is that financial statement which shows the net income (or loss) of the Company. In the income statement, to calculate the net income, all expenses incurred by the Company are deducted from the total income of the Company.

Retained earnings: The retained earnings statement is that financial statement which shows the amount of net income which is actually retained by the Company on a particular date. These earnings can be utilized by the Company for the reinvestment and to pay its debts.

Balance sheet: The balance sheet of a Company is the one of the most important financial statements because it shows the financial position of the Company. The main components of the balance sheet are assets, liabilities and stockholder’s equity.

Journal entries, adjusting entries, posting to ledger accounts, adjusted trial balance, Income statement, Retained earnings statement and Balance sheet of the Schilling Equipment Repair.

(b)

To determine

To journalize: The transactions for November

(c)

To determine

Journal entries, adjusting entries, posting to ledger accounts, adjusted trial balance, Income statement, Retained earnings statement and Balance sheet of the Schilling Equipment Repair.

(d)

To determine

To prepare: Trial balance of SE Repairs as on November 30, 2015

(e)

To determine

To journalize: And post adjusting entries of SE Repairs.

(f)

To determine

To prepare: Adjusted trial balance of SE Repairs as on November 30, 2015.

(g)

To determine

To prepare: Income statement, retained earnings statement and Balance sheet of SE Repair.