Chapter 4, Problem 4.22E

Recording Four Adjusting Entries and Completing the Trial Balance Worksheet

Green Valley Company prepared the following trial balance at the end of its first year of operations ending December 31. To simplify the case, the amounts given are in thousands of dollars.

	UNADJUSTED		ADJUSTMENTS		ADJUSTED
Account Titles	Debit	Credit	Debit	Credit	Debit	Credit
Cash	20
Accounts receivable	13
Prepaid insurance	8
Machinery	85
Accumulated depreciation
Accounts payable		11
Wages payable
Income taxes payable
Common stock (4,000 shares)		4
Additional paid-in capital		67
Retained earnings	6
Revenues (not detailed)		82
Expenses (not detailed)	32
Totals	164	164

Other data not yet recorded at December 31 include:

1. a. Insurance expired during the current year, $7.
2. b. Wages payable, $4.
3. c. Depreciation expense for the current year, $9.
4. d. Income tax expense, $11.

Required:

1. 1. Prepare the adjusting entries for the current year.
2. 2. Complete the trial balance Adjustments and Adjusted columns.

Recording Closing Entries

Refer to E4-20.

Required:

1. 1. What are the purposes of “closing the books” at the end of the accounting period?
2. 2. Using the adjusted balances for Green Valley Company in E4-20, prepare the closing entry for the current year.